In general, an increase in the price of a good:
A. will cause the substitution effect to be bigger than the income effect.
B. will cause the income effect to be bigger than the substitution effect.
C. will cause both an income and substitution effect.
D. usually will have no effect.
C. will cause both an income and substitution effect.
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M2 money includes all the following except
a. travelers' checks b. savings accounts c. large denomination time deposits d. money market deposit accounts e. money market mutual accounts
Answer the next question based on the following payoff matrix for two oligopolistic firms in which the numbers indicate the profit in millions of dollars for each firm. Firm A? High PriceLow PriceFirm BHigh priceA = $250A = $325??B = $250B = $200?Low priceA = $200A = $175??B = $325B = $175If firm A adopts the low-price strategy, then firm B would adopt the
A. low-price strategy and earn $325. B. high-price strategy and earn $250. C. high-price strategy and earn $200. D. low-price strategy and earn $175.
One reason stagflation is difficult to recover from is because:
A. less output requires less inputs to be hired. B. prices tend to adjust more quickly downward than upward. C. wages are sticky downward. D. input prices increase with output prices.
The law of demand states that
A. there is a direct positive relationship between relative price and quantity demanded. B. if the price of a good increases both relatively and absolutely, there will be no change in quantity demanded. C. consumers will exhaust their incomes as they purchase goods and services at given absolute prices. D. the quantity demanded of a good is higher at a lower relative price than at a higher relative price.