In the demand equation log(Q) = a - b log(P) + b2 log(P2) + c log(I), where P is the price of the good in question, P2 is the price of a second good and I
is income, the second good must be:
A. a complement for the good in question.
B. a normal good.
C. an inferior good.
D. a substitute for the good in question.
D. a substitute for the good in question.
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The cyclical unemployment rate changes with business cycle fluctuations
Indicate whether the statement is true or false
The learning curve describes the ________ relationship between ________ and ________
A) inverse; unit cost; cumulative output B) direct; unit cost; cumulative output C) inverse; education; annual income D) direct; education; annual income E) direct; education; labor productivity
Suppose the economy is initially in long-run and short-run equilibrium. If the Fed decides to pursue a contractionary monetary policy, we will see
A) bond prices fall, interest rates fall, aggregate demand remains unchanged as consumption spending decreases, but investment spending increases. GDP remains constant in both the short run and the long run, but the price level falls in both. B) bond prices fall, interest rates rise, aggregate demand falls as investment and consumption spending decrease, and real GDP and the price level decreasing in the short-run, but only the price level decreasing in the long run. C) bond prices fall, interest rates rise, aggregate demand falls as investment spending decreases and consumption spending remains unchanged, and real GDP and the price level decrease in the short run, but only the price level falls in the short run. D) interest rates rise but no change in bond prices. Aggregate demand falls as consumption spending and investment spending decrease, and the price level and real GDP fall in both the short run and the long run.
Assume Brandon's benefit function for water is S(W) = ?W and he consumes water both in droughts, WD, or in the rainy season, WR. Assume his current consumption bundle is WD = 36 and WR = 25 and the probability of drought is 0.75. Brandon's risk premium is:
A. 66.31 units of water. B. 0.19 units of water. C. 33.16 units of water. D. 3.20 units of water.