For a particular good, a 3 percent increase in price causes a 10 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
a. The relevant time horizon is short.
b. The good is a necessity.
c. The market for the good is broadly defined.
d. There are many close substitutes for this good.
d
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An increase in demand will cause the equilibrium price and quantity to rise, ceteris paribus
Indicate whether the statement is true or false
What is the crowding-out effect and how does it work?
What will be an ideal response?
An example of an excise tax is the
a. poll tax on every citizen b. property tax on real estate c. corporate income tax d. property tax on personal belongings e. unit tax on a movie ticket
Refer to Figure 6.1. Assume that L1 represents the budget line before a price change. Which change in budget lines represents compensation?
A. L1 to L2
B. L2 to L3
C. L3 to L2
D. L1 to L3