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Tneary Tneary
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5 years ago

Question 1.

If you expect the economy is going to experience a boom and average income in the economy will rise in the foreseeable future, the type of firm that would be able to increase its sales if your expectations are met is

• one that sells an inferior good.

• one that sells a necessity good.

• one that sells a luxury good.

• one that sells a price-inelastic good.

Question 2.

Last year, Sefton purchased 60 pounds of potatoes to feed his family of five when his household income was $30,000. This year, his household income fell to $20,000 and Sefton purchased 80 pounds of potatoes. All else constant, Sefton's income elasticity of demand for potatoes is

• negative, so Sefton considers potatoes to be an inferior good.

• positive, so Sefton considers potatoes to be an inferior good.

• positive, so Sefton considers potatoes to be a normal good and a necessity.

• negative, so Sefton considers potatoes to be a normal good.
Textbook 
Microeconomics

Microeconomics


Edition: 7th
Authors:
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blazeypoohblazeypooh
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Tneary Author
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5 years ago
Thanks for your help!
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