Many economists consider medical care a superior good. Which of the following statements is true regarding a superior good?
a. Consumers want more of a superior good regardless of its price.
b. When the price of a superior good increases, consumers demand more of it.
c. As consumer income increases a larger percentage of that income is spent on superior goods.
d. A superior good has an income elasticity of demand greater than one.
e. Both c and d are true of superior goods.
E
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Parity pricing can be used as a substitute for price floors because it
a. creates the same excess demand b. allows farmers to earn income without producing goods c. determines the value of farm goods using market mechanisms d. has the same effect as a rationing scheme e. is designed to maintain farmers' purchasing power
Juanita, a lawyer, can type faster than Jill, her secretary. Jill, on the other hand, does not have the ability or skills to practice law. Applying the principles of international trade to this situation, an economic consultant advises Juanita to
a. fire Jill, practice law and do the typing because she's better at both b. practice law and leave all the typing to Jill c. divide her time equally between typing and practicing law d. quit law and concentrate on typing because that's her comparative advantage e. quit law and concentrate on typing because that's her absolute advantage