Gerald spends his weekly income on gin and cocktail olives. The price of gin has risen from $7 to $9 per bottle, the price of cocktail olives has fallen from $6 to $5 per jar, and Gerald's income has stayed fixed at $46 per week. Since the price changes, Gerald has been buying 4 bottles of gin and 2 jars of cocktail olives per week. At the original prices, 4 bottles of gin and 2 jars of cocktail
olives would have
a. exactly exhausted his income.
b. cost more than his income.
c. cost less than his income.
d. could have maximized his satisfaction given his budget constraint.
c
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In one day, Sue can change the oil on 20 cars or change the tires on 20 cars. In one day, Fred can change the oil on 20 cars or change the tires on 10 cars
Sue's opportunity cost of changing oil is ________ than Fred's and her opportunity cost for changing tires is ________ than Fred's. A) greater; less B) less; greater C) less; less D) greater; greater
Your income response for bicycle riding changes with the amount of income you earn. At low levels of income, you view bicycle riding as an inferior good and substitute other types of transportation (e.g., auto travel) as your income rises
However, you view bicycle riding as a normal good after your income rises above a particular level. What shape does your Engel curve for bicycle riding have? A) Vertical line B) Horizontal line C) C-shaped D) Upward sloping E) none of the above
Suppose that the demand for electricity has been found to be price inelastic. The most likely explanation for this finding is that:
A. electricity is a luxury good. B. electricity is sold in a monopoly market. C. the fraction of income spent on electricity is large. D. few substitutes for electricity exist.
Which of the following is not associated with global poverty?
A. Prevalence of HIV. B. The inequality trap. C. Lack of education. D. Long life expectancy.