The real-income effect is likely to be greater when
A) the substitution effect is not very large.
B) the marginal utility of the last unit is high.
C) the marginal utility per dollar spent on the last unit is high.
D) the good is an expensive good.
Answer: D
You might also like to view...
For which rate of inflation given below will the real interest rate be higher than the nominal interest rate?
a. –0.5% b. 0.2% c. 0.5% d. 1.5%
You have two options for how to spend the afternoon. You can either go see a movie with your roommate or work as a tutor for the Math Department. From experience, you know that going to see a movie gives you $20 worth of enjoyment, and with your student discount, a movie ticket only costs $12. If you spend the afternoon working as a math tutor, you will get paid $45. On a typical day, you wouldn't be willing to spend the afternoon working as a math tutor for less than $35. What is your economic surplus from working as a math tutor instead of going to the movies?
A. $2 B. $8 C. $12 D. $10
Members of the Board of Governors of the Federal Reserve System are
A. elected by member banks to serve four-year terms. B. appointed by Congress for 14-year terms. C. appointed by the president for 14-year terms. D. appointed by the Supreme Court for lifetime terms.
Refer to the graph shown. An increase in the U.S. price level would shift:
A. D1 left and S1 right, causing a depreciation of the euro. B. D1 right and S1 right, causing a depreciation of the euro. C. D1 left and S1 left, causing an appreciation of the euro. D. D1 right and S1 left, causing an appreciation of the euro.