A normal good is defined as a good
A) for which demand increases when income increases.
B) with a downward sloping demand curve.
C) for which demand increases when the number of demanders increases.
D) for which demand increases when the price of a substitute rises.
E) for which demand increases when the price of a complement falls.
A
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Which of the following are examples of situations involving a positive network externality?
A. Toys and fads B. A social network C. The bandwagon effect D. All of the above
Suppose Bev's Bags makes two kinds of handbags-large and small. Bev rents an industrial space where she keeps the fabric, the industrial sewing machine, her measuring board and cutting shears, extra needles, thread and buttons, and labels. If Bev were to produce no bags, which of the following is true regarding Bev's costs?
A. The variable cost of fabric would drop to zero. B. The fixed cost of thread would stay the same. C. The variable cost of cutting shears would drop to zero. D. All of these are true.