The demand curve for corn is downward sloping. If the price of corn, an inferior good, falls, then
A) the income effect which causes you to increase your corn purchases is larger than the substitution effect which causes you to reduce your corn purchases, resulting in a net increase in quantity demanded.
B) the income effect which causes you to reduce your corn purchases is smaller than the substitution effect which causes you to increase your corn purchases, resulting in a net increase in quantity demanded.
C) the income and substitution effects offset each other but the price effect of an inferior good leads you to buy less corn.
D) both the income and substitution effects reinforce each other to increase the quantity demanded.
B
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Two events occur simultaneously in the market for automobiles: (1) an improvement in assembly line technology and (2) the economy enters a recession (which decreases consumers' income). An economist would predict with certainty that
a. equilibrium quantity will rise b. equilibrium quantity will fall c. equilibrium price will rise d. equilibrium price will fall e. the equilibrium price will remain the same
The short run is a time period such that:
a. the existing firms in the market do not have sufficient time to change the amounts of any of the inputs that they employ. b. the existing firms in the market do not have sufficient time to either increase or decrease their current rate of output. c. the existing firms in the market do not have sufficient time to increase the size of their existing plant or build a new factory. d. new firms may build plants and enter the industry.
Which of the following is not correct?
a. The slope of a line will be a small positive number for a fairly flat upward-sloping line. b. The slope of a line will be a large positive number for a steep upward-sloping line. c. The slope of a line will be a negative number for a downward-sloping line. d. The slope of a line will be infinite for a horizontal line.
A farmer sells $25,000 worth of apples to individuals who take them home to eat, $50,000 worth of apples to a company that uses them all to produce cider, and $75,000 worth of apples to a grocery store that will sell them to households. How much of the farmer's sales will be included as apples in GDP?
a. $25,000 b. $150,000 c. $100,000 d. $125,000