Suppose Ramen noodles, an inexpensive but a quite tasty dish, are an inferior good. Why do grocery stores in college towns, that is, towns with a large fraction of college students, stock a lot of Ramen noodles?
What will be an ideal response?
Generally, college students' incomes are relatively low because they cannot hold high paying, full-time jobs. Hence the demand for inferior goods is strong in college towns. Hence the demand curve for Ramen noodles in a college town lies to the right of the demand curve for Ramen noodles in a similar size town not dominated by a college. Thus the equilibrium quantity of Ramen noodles is quite large in a college town and so stores stock a lot of Ramen noodles.
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Exhibit 12-7 Negative income tax
As shown in Exhibit 12-7, a family of four pays income taxes at:
A. an income of $5,000. B. any income between zero and $40,000. C. all levels of income. D. any income above $40,000.
If the Federal Reserve raises or lowers interest rates too late, it could result in a ________ policy that destabilizes the economy
A) fiscal B) budgetary C) procyclical D) countercyclical
In which case would you be most likely to expect inflation to occur?
A. The government runs a sustained primary deficit by increasing purchases. B. The government funds its sustained deficit by increasing the money supply. C. The government runs a sustained government deficit by increasing purchases. D. The government runs a sustained government deficit by lowering taxes.
Refer to the information provided in Table 31.1 below to answer the question(s) that follow.Table 31.1PeriodQuantity of Labor (L)Quantity of Capital (K)Total Output (Y)1 50 50 2002 60 50 2203 70 50 2354 80 50 245Refer to Table 31.1. From Period 3 to Period 4, the marginal return to labor is equal to
A. 1.0. B. 3.06. C. 3.36. D. 10.0.