Suppose that the income elasticity of demand for peanut butter is 0.75. Which of the following is TRUE?
A) Peanut butter is a normal good, because income elasticity is positive.
B) Peanut butter is an inferior good, because income elasticity is positive.
C) Peanut butter is a normal good, because income elasticity is less than 1.
D) Peanut butter is an inferior good, because income elasticity is less than 1.
Answer: A
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A) less; less B) less; more C) more; less D) more; more
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A) reaches a peak before the peak of the business cycle B) reaches a trough before the peak of the business cycle C) reaches a trough along with the trough of a business cycle D) all of the above E) none of the above
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Goods that are subject to excludability provide examples of private goods.
Answer the following statement true (T) or false (F)