Suppose that the income elasticity of demand for new clothes is positive. Other things being equal, which of the following statements is correct?
A. New clothes are a normal good.
B. The quantity demanded of new clothes decreases as a consumer's income declines.
C. There exists a positive relationship between income and the demand for new clothes.
D. All of these
Answer: D
You might also like to view...
The economy in the period 1950 to 1998 behaved differently than the economy in the 1870 to 1940 time period. Economists explain this difference
a. in part because of the use of stabilization policy. b. because of increases in U.S. population due to the "baby boom." c. in part because of the globalization of the economy. d. in part because of the use of competition policy.
The interest rate charged by the Fed to member banks is called the _____
Fill in the blank(s) with correct word
The political business cycle refers to
a. the fact that about every four years some politician advocates greater government control of the Fed. b. the potential for a central bank to increase the money supply and therefore real GDP to help the incumbent get re-elected. c. the part of the business cycle caused by the reluctance of politicians to smooth the business cycle. d. changes in output created by the monetary rule the Fed must follow.
A monopolist is producing a level of output at which price is $65, marginal revenue is $35, average total cost is $35, and marginal cost is $50. In order to maximize profit, the firm should
A. produce less. B. produce more. C. decrease price. D. keep output the same. E. both c and d