Consider a two-good world, with commodities X and Y. If X is an inferior good, then an increase in consumer income cannot:
A. decrease the demand for X.
B. increase the demand for Y.
C. decrease the demand for Y.
D. make the consumer better off.
Answer: C
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In order to practice third degree price discrimination all of the following conditions must hold except that the firm
a. has monopoly power. b. is able to exercise control over resales. c. is willing to sell more to each customer at lower prices. d. charges a lower price to groups with more elastic demand.
From 1950 to 2009, the average length of recessions in the United States has been
A) less than 1 year. B) between 1 year and 2 years. C) between 2 years and 3 years. D) longer than 3 years.
If marginal cost is less than average total cost,
a. marginal cost must be falling b. average total cost must be increasing c. average variable cost equals average total cost d. average variable cost must be decreasing e. average variable cost may be increasing or decreasing
An increase in the price of gasoline shifts the demand for tires to the
a. left, because gasoline and tires are substitutes. b. left, because gasoline and tires are normally used together. c. right, because gasoline and tires are substitutes. d. right, because gasoline and tires are normally used together.