A factory closes, laying off hundreds of workers, and consumer spending in the town falls. What factor is affecting demand?
a. consumer expectation
b. consumer taste
c. income
d. substitutes
Ans: c. income
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Under the current structure of Medicare, the movement of the baby boom generation into the retirement phase of life will
a. reduce the overall demand for medical services because the elderly will not have to pay for hospitalization in the future. b. place downward pressure on healthcare prices. c. cause Medicare expenditures to increase and necessitate the need for higher taxes to finance the program. d. do all of the above.
The principal-agent problem arises in labor markets because:
A. a firm may realize excessively large profits. B. workers may provide less-than-expected work effort. C. compensating wage differences do not pay for differences in the nonmonetary aspects of jobs. D. human capital investments vary among workers.