The income effect of an increase in the price of hominy grits (an inferior good) is a(n)
a. decrease in the demand for hominy grits
b. decrease in the quantity demanded of hominy grits
c. increase in the demand for hominy grits
d. increase in the quantity demanded of hominy grits
e. new demand curve because everything else is no longer constant
D
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If the newspaper reported that wearing plaid clothing was a sure way to obtain good grades, students'
A) budget lines would shift rightward to compensate for the higher price of plaid clothing. B) budget lines would rotate so that more plaid clothing would be purchased. C) preferences would change in favor of more plaid clothing. D) none of the above
If two indifference curves cross, all points on both curves would yield an equal level of utility, which would violate the "more is better" property
a. True b. False Indicate whether the statement is true or false
Which of the following is required for a monopolist to receive positive economic profits in the long run?
a. Minimal entry barriers b. Exchange of technological know-how with rival firms c. High barriers that block new entry d. Allowing rival firms to produce close substitute products
If the use of fossil fuels is harming our nation, according to the specificity rule the optimal policy to use to mitigate this harm is to
A. tax the consumption of fossil fuels. B. levy taxes on the extraction of coal and petroleum. C. subsidize research and development on alternate fuel sources. D. impose tariffs on the importation of fossil fuels.