There is an increase in both consumer income and in the price of jet fuel, an important resource used to produce air travel. If air travel is a normal good, how will these changes influence the price and quantity purchased of air travel? The change in the price of air travel will (be) ____ and the change in the quantity purchased will (be) ____
a. indeterminate; decrease
b. increase; indeterminate
c. decrease; indeterminate
d. indeterminate; increase
b
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The above table has data from the nation of Atlantica. Based on these data, when disposable income equals 8.0 there is
A) dissavings of $0.5 trillion. B) dissavings of $15.5 trillion. C) savings of $15.5 trillion. D) savings of $0.5 trillion. E) dissavings of $7.5 trillion.
In a 2-good model, suppose that all individuals have tastes that are quasilinear in either good 1 or in good 2 (with some of each represented in the group.) The quasilinearity of everyone's tastes is then sufficient to insure that we can treat the group as if it were a single representative consumer.
Answer the following statement true (T) or false (F)
In professional golf, a tournament winner might win, say, $1 million, whereas second place wins only $600,000. Why might golf have a 40% reduction in prize money from first and second place?
A) To ensure that there is enough money to pay those who finish near last. B) To motivate golfers to take risks they might not otherwise take. C) To motivate golfers to not take risks they might otherwise take. D) The Professional Golfers Association is a cartel.
Which requirement for perfect competition rules out trade associations or other collusive arrangements in which firms work together to influence price?
a. Freedom of entry and exit. b. Homogeneity of product. c. Perfect information. d. Numerous small firms and customers.