When Ryan has an income of $2,000 . he consumes 30 units of good A and 50 units of good B. After Ryan's income decreases to $1,500, he consumes 23 units of good A and 55 units of good B. Which of the following statements is correct?
a. Both goods A and B are normal goods.
b. Both goods A and B are inferior goods.
c. Good A is a normal good, and good B is an inferior good.
d. Good A is an inferior good, and good B is a normal good.
c
You might also like to view...
The impact of declining stock prices in the U.S. during the period 2000-2002 on U.S. household wealth was at least partially offset by:
A. an increase in the saving rate. B. an increase in public saving. C. a decrease in the saving rate. D. increasing housing prices
Assume that the full-employment level of output is $1,000 and the price level associated with full-employment output is 100. Also assume that the economy's current level of output is $1,100 and, at the price level of 100, current aggregate demand is $1,200. If the government wants to move the economy back to the full-employment level of output and the MPC is 0.75, then it should
A. reduce government purchases by $100. B. reduce government purchases by $200. C. reduce government purchases by $50. D. reduce government purchases by $25.
Joshua consumes only apples and bread and is in consumer equilibrium. Joshua reads that eating bread is healthy, so his total utility from each loaf of bread increases. At his new consumer equilibrium Joshua would consume
A) more apples and less bread. B) fewer apples and more bread. C) some combination of apples and bread corresponding to a lower ratio of the marginal utility of bread to the marginal utility of apples. D) the same quantity of apples and the same quantity of bread.
Fixed investment is typically ________
A) smaller than inventory investment B) calculated as the change in holdings of raw materials and finished goods C) planned spending on equipment, structures, and new residential housing D) all of the above E) none of the above