If the price of an inferior good falls, the income effect will result in households buying ________ of the good and the substitution effect will result in households buying ________ of the good.
A. more; more
B. more; less
C. less; more
D. less; less
Answer: C
You might also like to view...
With reference to the graph above, if the intended aim of the price ceiling set at $6 was a net increase in the well-being of consumers:
A. then the policy was effective since consumers gained in surplus overall.
B. then the policy was ineffective since consumers gained in surplus overall.
C. then the policy was ineffective since consumers lost surplus overall.
D. then the policy was effective since consumers lost surplus overall.
An example of an intangible good is: a. an automobile. b. a new house
c. a snowplow. d. friendship.
What are the two distinguishing characteristics of a public good?
a. nonrivalry in consumption and nonexcludability b. indivisibility in production and excludability of nonpaying customers c. provision by government and funding through taxation d. mass production and comparative advantage
Jorge deposited $1,000 into an account three years ago. The first two years he earned 5 percent interest; the third year he earned 6 percent interest. How much money does Jorge have in his account today?
a. $1,157.90 b. $1,168.65 c. $1,176.00 d. None of the above are correct to the nearest cent.