Into what two effects can we divide the effect of a price change?
What will be an ideal response?
A price change can be divided into a substitution effect and an income effect. The substitution effect is the effect of a change in price on the quantity bought when the consumer remains indifferent between the original situation and the new situation. The income effect is the effect of a change in income sufficient to get the consumer to the highest indifference curve that is affordable on the new budget line reflecting the price change.
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More generous unemployment benefits ________ the opportunity cost of looking for a new job and therefore ________ the job search process
A) lower; extend B) lower; does not change C) lower; shorten D) raise; extend E) raise; shorten
In 1870, the wealthiest fifth of the Southern population:
a. owned about 25 percent of the land. b. had lost most of their land through post-War land reforms. c. owned about the same portion of the land as they had owned before the War. d. generally chose to reduce their investments in land and increase their investments in other assets.
Capital is a flow of resources into the production of investment goods
a. True b. False Indicate whether the statement is true or false
A usury ceiling will be effective depending on
a. whether the usury rate is above 10 percent. b. whether the usury rate is above 8 percent. c. whether that rate is below what the equilibrium rate of interest would have been in a free market. d. how well organized the lending institutions are.