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Questions and Answers
What is the relation between a Giffen good and an inferior good?
What is the relation between a Giffen good and an inferior good?
- An inferior good must be a Giffen good
- A Giffen good is inferior. When its price drops, the income effect is dominated by the substitution effect.
- A Giffen good is inferior. When its price drops, the income effect dominates the substitution effect. (correct)
- A Giffen good cannot be inferior.
If Adam spends 70% of his income on steak, how many loaves of bread does Adam consume?
If Adam spends 70% of his income on steak, how many loaves of bread does Adam consume?
- 100
- 500
- 350
- 150 (correct)
If P=20-Q, the marginal buyer when Q=10 is _______.
If P=20-Q, the marginal buyer when Q=10 is _______.
- the buyer who is willing to pay $20
- the buyer who is willing to pay $10 (correct)
- none of the above
- the buyer who is willing to pay $5
Which statement is TRUE?
Which statement is TRUE?
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