With only two goods, if the income effect is in the opposite direction as the substitution effect but the substitution effect dominates then the good is
a. normal
b. inferior but not Giffen
c. Giffen
d. There is not enough information to answer.
b
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A Pigouvian subsidy
a. cannot achieve an efficient outcome b. is a per-unit payment on a good that is set equal to the marginal external benefit at QE c. achieves efficiency as long as it is set equal to the MEC at the competitive output level d. lowers the MPB vertically by the amount of the subsidy
Suppose your expenses for this term are as follows: tuition: $5,000, room and board: $3,000, books and other educational supplies: $500
Further, during the term, you can only work part-time and earn $4,000 instead of your full-time salary of $10,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college? A) $5,500 B) $8,500 C) $11,500 D) $14,500
Which of the following statements is correct?
A) The Social Security program funnels transfers from retired individuals to the youngest children of low-income families. B) Social Security is an entitlement which is available to everyone, including those who have not contributed to the fund during their active work years. C) Social Security benefits are received by people who had contributed to the fund during their active work years. D) As a public transfer payment, Social Security benefit is available only to the poor.
The primary reason that short-lived shocks can have long-run effects is
A. the presence of propagation mechanisms. B. the nonneutrality of money. C. misperceptions by the public over the actual price level and the expected price level. D. the presence of rational expectations among the public.