Suppose the price of a good rises. When will the resulting income effect reduce the quantity demanded of the good?
a. Always.
b. Whenever the good is a non-Giffen good.
c. Only when the good is normal.
d. Only when the good is inferior.
c. Only when the good is normal.
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An individual may borrow a certain sum of money from any of the three banks in his town
Bank 1 offers him loans at an annual rate of 5%, Bank 2 offers him loans at an annual rate of 3% per year, and Bank 3 offers him a loan at an annual rate of interest of 10%. A rational individual will: A) borrow from Bank 2. B) borrow from Bank 1. C) borrow from Bank 3. D) be indifferent about borrowing from any of the three banks.
All of the following characteristics are common to both monopolistic competition and perfect competition except
A) firms act to maximize profit. B) firms take market prices as given. C) entry barriers into the industries are low. D) the market demand curves are downward-sloping.
Court rulings in the 19th century
(a) tended to favor business and profit-making activities. (b) tended to protect traditional amenity rights of property, such as the right to clean air, clean water, scenery and quiet enjoyment of property. (c) tended to favor small business activities over big business corporate activities. (d) tended to promote worker safety and ensure that employers were fully liable for worker injuries, should they occur.
Which of the following statements is correct?
a. Compensating wage differentials reflect different skills of workers. b. Discrimination by employers affects the marginal productivity of workers. c. The signaling theory of education suggests that schooling does not affect worker productivity. d. The superstar phenomenon explains why more talented entertainers earn more than less talented entertainers.