If the income elasticity for a particular good is 0.8, we would expect to see more of that good:

If the income elasticity for a particular good is 0.8, we would expect to see more of that good:
 a. d and e.
  b. consumed in wealthier countries.
  c. on supermarket shelves.
  d. consumed in poorer countries.
  e. consumed in low-income communities.

QUESTION 2

A competitive firm maximizes its profits (or minimizes is losses) by producing the quantity where the market price equals the firm's:
 a. marginal cost.
  b. average total cost.
  c. average variable cost.
  d. average fixed cost.

QUESTION 3

The Smith family buys much more macaroni when someone in the family is laid off. This means that the Smiths' ____ is negative.
 a. demand curve for macaroni
  b. income elasticity for macaroni
  c. Engel's law
  d. income
  e. price elasticity of demand for macaroni

QUESTION 4

In the short run, if a perfectly competitive firm is producing at a price above average total cost, its economic profit must be:
 a. positive.
  b. zero.
  c. negative.
  d. normal.

QUESTION 5

If the income elasticity of demand for a good is .59, then it is what type of good?
 a. Price elastic.
  b. Price inelastic.
  c. Income inelastic.
  d. Income elastic.
  e. Inferior.

QUESTION 6

In the short run, if a perfectly competitive firm is producing at a price below average total cost, its economic profit is:
 a. positive.
  b. zero.
  c. negative.
  d. normal.

QUESTION 7

Suppose the value of income elasticity of demand for a private college education is equal to 1.5 . This means that:
 a. every 1 increase in income provides an incentive for a 1.50 increase in expenditures on private college education.
  b. every 1.50 increase in income provides an incentive for a 1 increase in expenditures on private college education.
  c. a 10 percent increase in income causes a 15 percent increase in the quantity of private college education purchased.
  d. a 15 percent increase in income causes a 10 percent increase in the quantity of private college education purchased.
  e. a 10 percent decrease in private college tuition will have a large enough income effect to increase spending on private college education by 15 percent.

QUESTION 8

A perfectly competitive firm sells its output for 100 per unit and marginal cost is 100 per unit. To maximize short-run profit, the firm should:
 a. increase output.
  b. decrease output.
  c. maintain its current output.
  d. shut down.

QUESTION 9

If a 1 percent change in income generates a greater than 1 percent change in quantity demanded of boating expenditures, then boating is an:
 a. example of Engel's law.
  b. inferior good.
  c. income inelastic good.
  d. income elastic good.
  e. example of a substitute good.