The term ______ describes a situation where a ______ causes a reduction in the buying power of income, even though actual income has not changed.
a. intertemporal budget; lower price
b. income effect; higher price
c. intertemporal budget; higher price
d. substitution effect; lower price
Answer: b. income effect; higher price
You might also like to view...
Which of the following is considered by economists to be the most fundamentally scarce?
A. Money B. Ideas C. Needs D. Food E. Physical resources
Suppose there is a tradeable goods market (such as products like textiles that can be shipped across markets) and a non-tradable goods market (such as services like hair cuts). Can outsourcing impact wages in the non-tradable market?
What will be an ideal response?
If a perfectly competitive firm manufacturing chairs decides to produce 100 more chairs, what happens to the market price of a chair?
What will be an ideal response?
Metering is
a. A form of indirect price discrimination b. A form of direct price discrimination c. An evaluation of a product d. An example of bundling