Assume the price of pizza decreases. As a result, your real income increases and you increase the quantity of pizza purchased each month. This is an example of the:
A. substitution effect.
B. income effect.
C. revenue effect.
D. consumer price effect.
Answer: B
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Refer to Table 6-5. Katie Graham owns a kayak rental service in Santa Barbara. Table 6.5 shows her estimated demand schedule for kayak rentals per week. She would like to increase her sales revenue by changing the price she charges for rentals
At present she charges $75. Based on the information in the table, Katie A) should raise her price to $80 to increase her revenue because the demand for kayak rentals is price inelastic. B) should raise her price to earn the most revenue. C) should lower her price to $60 to increase her revenue because the demand for kayak rentals is price elastic. D) is not able to increase her revenue by changing her price because the demand for kayak rentals is unit elastic.
Suppose total factor productivity increases. Which of the following is incorrect?
A) Households are better off. B) Consumption goes up. C) The real wage goes down. D) Output goes up.
Imposing a quota on metal softball bats shipped into the United States would likely:
a. increase the price of the bats but decrease the quantity of domestically made bats purchased in the United States. b. increase the price of the bats and the quantity of domestically made bats purchased in the United States c. leave the price of the bats unchanged but decrease the quantity purchased in the United States. d. leave both the price of bats and the quantity purchased in the United States unchanged.
If businesses spend an additional $150 billion for investment projects in 2010, what will be the impact on national income (Y) if the multiplier is 2?
a. Y will increase by $50 billion. b. Y will increase by $150 billion. c. Y will increase by $300 billion. d. Y will increase by $450 billion.