The income effect of a lower price for good A
a. invariably leads a consumer to buy more of good A, because the combination of unchanged money income and lower price raises that consumer's real income or purchasing power
b. invariably leads a consumer to buy less of good A because the combination of unchanged money income and lower price encourages that consumer to buy more of other goods
c. may lead to a larger, smaller, or even an unchanged quantity of good A demanded; it all depends on the nature of the good itself
d. creates a change in the good's relative price and, therefore, causes the consumer to substitute good A in place of other goods
e. causes a parallel outward shift of the budget line, enabling the consumer to buy more of all goods than before
C
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Exit from a market will stop when
A) accounting losses are zero. B) the cost of capital is equal to the risk-free rate of return. C) economic losses are zero. D) none of these choices.
Which of the following statements about the consumers' responses to rising gasoline prices is correct?
a. Because gasoline is a necessity, consumers do not decrease their quantity demanded in either the short run or the long run. b. Consumers react to a 10% increase in price with about a 10% decrease in quantity demanded in both the short run and long run. c. Consumers decrease their quantity demanded more in the short run than in the long run. d. Consumers decrease their quantity demanded more in the long run than in the short run.
Refer to the information provided in Figure 24.4 below to answer the question(s) that follow.
Figure 24.4Refer to Figure 24.4. What is the value of Point B?
A. $7,000 billion B. $6,000 billion C. $3,500 billion D. cannot be determined from the given information
If a household's income doubles, its budget constraint will
A. shift in parallel to the old one. B. shift out parallel to the old one. C. pivot at the Y-intercept. D. be unaffected.