Richard receives government transfer payments and currently consumes 5 guns and 6 goose livers. Assume the price of guns decreases by 10% and the price of goose liver increases by 20%. The government raises Richard's transfer payments so he can still afford 5 guns and 6 goose livers. Does this constitute a true cost-of-living adjustment (COLA)?
A) No. Richard is overcompensated.
B) No. Richard is undercompensated.
C) Yes. The payment just achieves the right level of compensation.
D) Not enough information.
A
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The marginal propensity to consume is the proportion of each new dollar's worth of income that is spent
Indicate whether the statement is true or false
Gary consumes 10,000 units of electricity when his income is $500. When his income increases to $1,000, his consumption of electricity increases to 18,000 units. What is Gary's income elasticity of demand for electricity?
A) 0.5 B) 0.8 C) 1.8 D) 2
If a price hike of 5 percent increases the quantity demanded of another good by 2 percent, the goods must be ________ and the cross elasticity of demand equals ________
A) substitutes; 0.40 B) substitutes; 2.5 C) complements; 0.40 D) complements; 2.5
Pair-wise majority voting entails:
A. voting on options that is done in pairs, and the majority vote wins. B. voters ranking all available options and the option most approved of wins. C. one vote with many options, and the option with the most votes wins. D. None of these describes pair-wise majority voting.