The real-income effect shows that
A. a decrease in the price of a good increases the purchasing power of the consumer's income.
B. when the price of a good rises, consumers are able to buy more of other goods because of the increase in the purchasing power of income.
C. if a good is inferior, a decrease in the purchasing power of income results in less of the good being consumed.
D. if the consumer's income rises, he or she buys more of inferior goods and less of normal goods.
Answer: A
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The benefit (or satisfaction) that an individual expects to derive from an activity is called
a. opportunity cost.
b. utility.
c. marginal cost.
d. scarcity.
Conflicts of interest arising from management advisory services brought down ________ in 2002
A) Enron B) WorldComm C) Arthur Andersen D) Global Crossing
You are an analyst with a perfectly competitive firm that makes DRAM memory chips. You must manufacture the chips before you know what the demand will be. If demand turns out to be high, then producing where E[MR] = MC rather than where MRH = MC lowers your profit by an amount equal to ________.
A) area A
B) area A plus the trapazoidal area marked by E and E
C) the trapezoidal area marked by E and E
D) area B + area C
When price is $2
A. there is a surplus.
B. there is a shortage.
C. quantity demanded is less than quantity supplied.
D. price must fall to get to equilibrium.