Explain how a consumer's income and the prices of goods limit consumption possibilities
What will be an ideal response?
A consumer's consumption possibilities are limited by the consumer's income and the prices of the goods. The consumer is unable to consume limitless quantities of goods and services because the consumer must pay a price for each good or service consumed and the consumer's income is limited. If the consumer's income increases and/or the prices of the goods and services fall, the quantity of goods and services the consumer can afford increases, thereby increasing the consumer's consumption possibilities.
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Refer to Table 6-6. Based on the data in the table, between a price of $9.99 and $14.99, the demand for books is
A) elastic. B) inelastic. C) unit elastic. D) perfectly inelastic.
Sugarcane can be used for producing both sugar and ethanol. New regulations in certain countries now allow a higher level of ethanol in gasoline. An economist would expect sugarcane prices to ____, and quantity sold to ____
a. rise; rise. b. fall; fall. c. rise; fall. d. fall; remain the same.