The "income effect" in the market for aspirin means that
A) aspirin are generally taken by people with higher than average incomes.
B) a decrease in the price of a substitute good like acetaminophen will make aspirin takers feel a little poorer than they were before.
C) an increase in the price of aspirin will reduce the total purchasing power of aspirin takers, making them able to afford fewer aspirin.
D) an increase in the price of aspirin will cause headache sufferers to look for a lower priced remedy.
C
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The above figure shows Bob's utility function. He currently has $100 of wealth, but there is a 50% chance that it could all be stolen. Bob's expected wealth is
A) $0. B) $50. C) $75. D) $100.
Which of the following is the best example of a tariff? a. a tax placed on all small cars sold in the domestic market
b. a limit imposed on the number of small cars that can be imported from a foreign country. c. a subsidy from the U.S. government to domestic manufacturers of small cars so they can compete more effectively with foreign producers of small cars. d. a $100-per-car fee imposed on all small cars imported.