The real-income effect of a price change is most significant when
A) the substitution effect is insignificant.
B) the substitution effect is significant too.
C) the good under consideration constitutes a major portion of the consumer's budget.
D) the marginal utility per dollar spent on the last unit is high.
Answer: C
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Assuming an interior solution, a production plan is profit maximizing if and only if all marginal revenue products are equal to input prices.
Answer the following statement true (T) or false (F)
A disadvantage of the corporate form of business organization is
A) double taxation. B) limited access to capital. C) that the corporation can only do business in the state where it was incorporated. D) unlimited liability for shareholders.
Entry continues as long as
A) economic profits are zero. B) accounting profits are positive. C) accounting profits are positive and economic profits are negative. D) economic profits are positive.
Suppose the price elasticity of supply for soccer balls is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for soccer balls causes the price of soccer balls to increase by 20%, then the quantity supplied of soccer balls will increase by about
a. 0.67% in the short run and 0.17% in the long run. b. 3% in the short run and 1.2% in the long run. c. 6% in the short run and 24% in the long run. d. 66.7% in the short run and 16.7% in the long run.