Which of the following goods is likely to have the highest income elasticity?
A) a designer blouse
B) tomato soup
C) hamburger
D) can of tuna
A
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Suppose that the owner of a local ice cream store, knowing that demand for ice cream is higher when the weather is warmer, always charges a price in cents for a scoop of ice cream that is equal to two times the current outdoor temperature, measured in Fahrenheit (so that if it is 90 degrees outside, the ice cream is $1.80 per scoop). This type of behavior is ________.
A. exactly the type of behavior that Keynes believed most firms exhibit. B. free from menu costs. C. inconsistent with the key assumption upon which the basic Keynesian model is built. D. known as meeting demand.
Inducements to act in particular ways are called
A) collusive tactics. B) incentives. C) trade-offs. D) opportunity costs.
Historical episodes allow economists to illustrate and evaluate current economic theories
a. True b. False Indicate whether the statement is true or false
Refer to the Economics in Practice on page 360. Advertisements provide information in two ways-what they say and what they omit.
Answer the following statement true (T) or false (F)