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11111nata11111 [884]
3 years ago
11

The income effect of a price change: A. produces a backward-bending income-consumption curve. B. is always positive. C. reinforc

es the substitution effect in the normal good case. D. is always larger than the substitution effect in the inferior good case.
Business
1 answer:
MArishka [77]3 years ago
6 0

Answer: The correct answer is "C. reinforces the substitution effect in the normal good case.".

Explanation: When the Price of a Good changes, a change occurs in the Real Income. If the price of the Good falls, leaving the prices of the other Goods and the nominal Income constant, with the same Nominal Income you can acquire more of the Good whose Price fell, of other Goods or of all of them.  The opposite occurs when the Price of the good rises. Thus, a change in prices induces a change in real income.

In the case of normal goods the income effect of a price change reinforces the substitution effect because people prefer not to buy that good and <u>replace</u> it with a lower one that costs a lower price.

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2 years ago
Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produ
Elan Coil [88]

Answer: Higher; Comparative advantage

Explanation:

A country or a firm has a comparative advantage in producing a commodity if the opportunity cost of producing that commodity in terms of other commodities is lower than the other country or firm.

Opportunity cost is the benefit that is foregone for an individual by choosing one alternative over other alternatives available to him.

If the opportunity cost is lower for an individual then this will benefit him whereas if the opportunity cost is higher then this will not benefit the individuals.

Therefore,

United states's Opportunity cost of producing a pair of shoes = \frac{100}{20}

= 5 apples have to be foregone for producing a pair of shoes

Canada's Opportunity cost of producing a pair of shoes = \frac{20}{10}

= 2 apples have to be foregone for producing a pair of shoes

Hence, Canada has a comparative advantage in producing pairs of shoes because Canada's opportunity cost of producing a pair of shoes is lower than United states opportunity cost.

5 0
3 years ago
If a consumer chooses not to perceive they are reaching ________.
Yuliya22 [10]
Quality value price reach consumer goods
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You were asked to investigate extremely high, unexplained merchandise shortages at a department store chain. Classify each of th
Nutka1998 [239]

Answer:

(a) INDICATOR OF FRAUD

Explanation:

The reason is that the supervisor has an outside business setup related to the department's setup which gives rise to a conflict of interest.

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