Suppose that consumer income increases and that ground meat is an inferior good. Which of the following will occur in the market for ground meat?

A) Market clearing price will rise, and equilibrium quantity will rise.
B) Market clearing price will fall, and equilibrium quantity will fall.
C) Market clearing price will rise, and equilibrium quantity will fall.
D) Market clearing price will fall, and equilibrium quantity will rise.

Answer: B

Economics

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A proportional tax is one in which the fraction of income paid in taxes rises as a person’s income increases.

Answer the following statement true (T) or false (F)

Economics

The drug maker Wyeth produces the hormone-therapy drug Premarin, which is derived from the urine of pregnant mares. Not even Wyeth knows exactly what chemicals are in it, and the method of making the drug is a trade secret. Barr Laboratories has been trying to make a pill that is close enough to Premarin to be approved by the U.S. Food and Drug Administration as an "equivalent" drug. This story illustrates the importance of:

A. declining long-run cost curves as a way of preserving monopoly. B. economies of scope in cementing a monopoly position. C. barriers to entry in keeping a monopoly position. D. declining demand curves as an essential ingredient in keeping monopoly.

Economics