For which of the following goods does the income elasticity of demand most clearly exceed unity?
A. Public goods like roads and bridges
B. Food grains
C. Luxury automobiles
D. Lifesaving drugs
Answer: C
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Suppose you have spent your entire budget and the marginal utilities per dollar spent on all the goods you buy are equal. Which of the following is true?
a. You are not being rational. b. There is a way to increase your utility by reallocating your purchases. c. You will reduce your utility if you allocate your income in any other way. d. You are minimizing your total utility. e. You have chosen a consumption bundle that lies below your budget line.
Which of the following statements is true?
a. Economic theory does not make unrealistic assumptions. b. Economists should not ignore details while focusing on complex problems. c. Abstraction forms an important part of economic analysis. d. The word theory means same for both economists and laymen.