The change in the quantity demanded of a good that results from the effect of a change in the price on consumer products purchasing power holding all other factors constant.
What will be an ideal response?
Income effect
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The Haig-Simons definition of income and the Fisher definition of income are virtually identical
a. True b. False
Marco earns more than Antonio. A legislator proposes taxing Marco to supplement Antonio's income. A libertarian would view this proposal as
a. a way to improve the welfare of all in society. b. a way to enhance Antonio's income in a socially responsible way. c. validation of the role of diminishing marginal utility over the maximin criterion. d. an inappropriate role for government, since government should not redistribute income.
If individuals are rational, they should choose actions that yield the:
A. largest total benefits. B. largest economic surplus. C. smallest total costs. D. smallest economic surplus.
The kinked-demand curve model helps to explain price rigidity because:
A. there is a gap in the marginal revenue curve within which changes in marginal cost will not affect output or price. B. demand is inelastic above and elastic below the going price. C. the model assumes firms are engaging in some form of collusion. D. the associated marginal revenue curve is perfectly elastic at the going price.