Billy's income elasticity of demand for ground beef is -0.5 and his income elasticity of demand for pork chops is 1.2 . Is ground beef a normal or inferior good? Explain. What about pork chops?
What will be an ideal response?
Because his income elasticity of demand for ground beef is negative, Billy views ground beef as an inferior good. Because his income elasticity of demand for pork chops is positive, Billy views pork chops as a normal good.
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Alan Jones owns a company that sells life insurance. When he employs 10 salespersons his firm sells $200,000 worth of contracts per week, and when he employs 11 salespersons, total revenue is $210,000 . The marginal revenue product of the 11th salesperson is:
a. $410,000. b. $10,000. c. $20,000. d. $210,000.
If inflation is the major problem in the economy, which of the following would be an appropriate monetary policy response?
a. decreasing reserve requirements b. increasing the discount rate c. buying government bonds d. none of the above