For an inferior good, the income effect
a. is zero
b. at least partially offsets the substitution effect
c. operates to increase the quantity demanded
d. helps explain why the demand curve slopes upward
e. does not exist
B
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A temporary embargo on oil from the Middle East going in to the United States would
A) shift both the short-run and long-run aggregate supply curves to the left. B) shift only the short-run aggregate supply curve to the left. C) shift the long-run aggregate supply curve to the right. D) shift only the long-run aggregate supply curve to the left.
Studies have shown that the price elasticity of demand for necessities, such as food, are higher in developing countries and lower in developed countries. What is the reason for this difference in elasticity?
What will be an ideal response?
The statement that there is an inverse relationship between x and y means that
a. x causes y b. y causes x c. x and y move in opposite directions d. either y causes x or x causes y e. there is no causal relationship between x and y
One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?
a. He fears that low rents will cause low-income people to move into the city, reducing the quality of life for other people. b. He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in the city. c. He fears that rent controls will cause a construction boom, which will make the city crowded and more polluted. d. He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.