Explain the difference between a normal good and an inferior good
What will be an ideal response?
A normal good is something for which the demand increases when income rises and the demand decreases when income falls. An inferior good is something for which the demand decreases when income rises and the demand increases when income falls.
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When the Fed increases the required reserve ratio, a bank's
A) excess reserves are unaffected. B) excess reserves are increased. C) excess reserves are decreased. D) required reserves are decreased. E) b and d
If a purely competitive firm is producing at some level less than the profit-maximizing output, then:
A. price is necessarily greater than average total cost. B. fixed costs are large relative to variable costs. C. price exceeds marginal revenue. D. marginal revenue exceeds marginal cost.