Good X is a Giffen good. When the price of X increases, the consumer will consume
a. more X.
b. the same amount of X.
c. less X.
d. more or less X depending on the size of the income effect relative to the size of the substitution effect.
a
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Explain the productivity curve and how the components interact
What will be an ideal response?
An effective agreement to divide up the market among firms selling products that are close substitutes
A) allows each firm to earn positive net revenue even though its marginal cost is greater than its marginal revenue. B) allows each firm to earn positive net revenue by preventing cooperation from reducing each firm's marginal revenue below its marginal cost. C) tends to keep each firm's price and marginal revenue above its marginal cost. D) tends to result in both higher prices and larger output.
"A $1,000 tax paid by a poor person may be a larger sacrifice than a $10,000 tax paid by a wealthy person" is an argument in favor of
a. the horizontal equity principle. b. the benefits principle. c. a regressive tax argument. d. the ability-to-pay principle.
If market participants believe next year's corn crop is likely to be unusually large:
A. it will be impossible to find someone to take the long position in a futures contract. B. the current spot market price of corn is likely to be above the futures price of corn. C. the current spot market price of corn is likely to be below the futures price of corn. D. it would be impossible to find someone to take the short position in a futures contract.