For an inferior good, a rise in price causes
a. negative income and substitution effects
b. positive income and substitution effects
c. a negative income effect and a positive substitution effect
d. a positive income effect and a negative substitution effect
e. a positive income effect, but no substitution effect
D
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In the figure above, the ________ gap is equal to ________
A) recessionary; $1 trillion B) inflationary; $1 trillion C) recessionary; $12 trillion D) inflationary; $12 trillion E) recessionary; $13 trillion
An efficiency loss (or deadweight loss):
A. is measured as the combined loss of consumer surplus and producer surplus. B. results from producing a unit of output for which the maximum willingness to pay exceeds the minimum acceptable price. C. can result from underproduction, but not from overproduction. D. can result from overproduction, but not from underproduction.
The deadweight loss generated by a perfect-price-discriminating monopoly
A) equals the deadweight loss of a single-price monopoly. B) is greater than the deadweight loss of a single-price monopoly. C) equals zero. D) equals the sum of all lost consumer surplus.
The marginal propensity to import is the change in imports divided by the change in income.
Answer the following statement true (T) or false (F)