The definition of a normal good suggests that the
A. income elasticity of demand for the good is greater than 0.
B. income elasticity of demand for the good is negative.
C. price elasticity of demand for the good is negative.
D. cross-price elasticity of demand for the good is positive.
Answer: A
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The dummy variable trap is an example of
A) imperfect multicollinearity B) something that is of theoretical interest only C) perfect multicollinearity D) something that does not happen to university or college students
Economists object to monopolies on the grounds that monopolies:
a. can fix prices at levels that are too high. b. lack productive efficiency. c. lack allocative efficiency. d. can only exist hypothetically.
Suppose that the labor cost-total cost ratio in industry A is 82 percent while in industry B it is 21 percent. Other things equal, labor demand will be:
A. more elastic in industry A than in B. B. relatively inelastic in both industries A and B. C. more elastic in industry B than in A. D. relatively elastic in both industries A and B.
The equilibrating force in the credit market in the classical model is
A. the interest rate. B. the price level. C. fiscal policy. D. full employment.