Discuss the basic determinants for an individual’s demand for a specific good or service
Please provide the best answer for the statement.
The three determinants of individual demand are (1) preferences, (2) money income, and (3) the relative prices. Individual preferences influence how much of the product the individual is willing to purchase. Individual demand represents the amount of the product the person is willing and able to purchase. Money income limits the amount an individual is able to purchase, constraining the demand for a given product. Relative prices are also important in determining individual demand. If a given product becomes relatively more expensive, individual demand may fall due to the product consuming a greater percentage of the individual’s money income.
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Even though government spending and net exports in Country A has increased, its GDP has decreased. Which of the following statements is most likely to be true of the given scenario? a. Consumption expenditure in Country A has significantly increased. b. Consumption expenditure in Country A has significantly decreased. c. Investment expenditure in Country A has significantly increased
d. The number of new firms in every industry has increased in Country A.
You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) a person with no income would pay no taxes, and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person. Which of the following statements is correct?
a. A lump-sum tax would achieve the second goal but not the first. b. A regressive tax would achieve the second goal but not the first. c. A progressive tax could achieve both goals. d. A proportional tax could achieve the second goal but not the first.