Suppose Spam is an inferior good. If the U.S. economy hit bad times, and demanders' incomes were to fall, which of the following would tend to occur?
A) Spam sales would increase.
B) Spam demand would decrease.
C) The price of Spam would increase.
D) Both A and C above.
E) Both B and C above.
D
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A government subsidy
A) is a policy that can be used to help eliminate the deadweight loss from an external cost. B) can help achieve an efficient amount of output when the good has an external benefit. C) increases consumers' marginal benefit from the good. D) Both answers A and C are correct. E) Both answers B and C are correct.
In the theory of consumer choice, when a person is choosing which good or service to consume, how does he or she select the units of good or service to consume? a. The person selects the good or service based on need
b. The person selects the units of a good or service that generates the greatest marginal utility. This process continues until there budget is spent. c. The person selects the units of a good or service that generates the greatest marginal utility per dollar spent. This process continues until the person's budget is spent. d. The person randomly selects what they buy until the budget is spent.