Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent. Hence to Joe, Ramen noodles are
A) a normal good with a price elasticity of demand of 0.5.
B) a substitute good with a cross elasticity of 0.5.
C) a good with a price elasticity of supply of -0.5.
D) an inferior good with an income elasticity of -0.5.
E) an inferior good with an income elasticity of -2.0.
D
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Economic profits in a competitive industry are signals that
a. attract new firms into the industry b. prevent firms from adopting newer technologies c. encourage existing firms to continue to operate inefficiently d. indicate that business conditions are improving e. cause the industry's resources to be used in lower valued uses
In order to earn an economic profit, a firm needs to charge a price in excess of
A) accounting average cost. B) normal average costs. C) economic average cost. D) long-run fixed costs.