Assume that a college student purchases only Ramen noodles and textbooks. If Ramen noodles are an inferior good and textbooks are a normal good, then the substitution effect associated with a decrease in the price of a textbook, by itself, will result in
a. a decrease in the consumption of textbooks and a decrease in the consumption of Ramen noodles.
b. a decrease in the consumption of textbooks and an increase in the consumption of Ramen noodles.
c. an increase in the consumption of textbooks and an increase in the consumption of Ramen noodles.
d. an increase in the consumption of textbooks and a decrease in the consumption of Ramen noodles.
d
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The largest percentage of federal income tax revenue in the United States is paid by the
A) middle income taxpayers. B) highest income taxpayers. C) lowest income taxpayers. D) All groups of taxpayers—low income, high income and middle income—pay the same percent of federal income taxes.
International data suggests that countries with different steady states will
a. converge to the same growth rates of output. b. converge to the same per-capita output levels. c. not converge. d. converge to the same steady state in the long-run.
The Ricardian notion that of diminishing returns implies that
a. as more input is used more output will be made. b. as more input is used less output will be made. c. as more input is used the increase in output will increase. d. as more input is used the increase in output will decrease.
When economic profits are positive, accounting profits could be:
A. positive. B. negative. C. zero. D. All of these are possible.