In economic terminology, a normal good is a good
A) on which a monetary value cannot be placed.
B) that is liked only by normal people.
C) for which demand increases when price increases.
D) for which demand increases when income increases.
D
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Neither the supply of nor demand for a good is perfectly elastic or perfectly inelastic. So, imposing a tax on the good results in a ________ in the price paid by buyers and ________ in the equilibrium quantity
A) rise; an increase B) rise; a decrease C) fall; an increase D) fall; a decrease E) rise; no change
In a market with a rent ceiling set below the equilibrium rent, the producer and consumer surplus
A) both increase. B) both decrease, but generally not to zero. C) do not change. D) are eliminated. E) are both totally converted into deadweight loss.
Suppose the production function for good q is given by q = 3K + 2 L where K and L are capital and labor inputs. Consider three statements about this function: I. The function exhibits constant returns to scale. II. The function exhibits diminishing marginal productivities to all inputs. III. The function has a constant rate of technical substitution. Which of these statements is true?
a. All of them. b. None of them. c. I and II but not III. d. I and III but not II. e. only I.
An example of a good that can be used for money that has no intrinsic value is:
A. gold. B. paper dollar bills. C. cigarettes. D. Hershey kisses.