Since income and substitution effects point in the same direction for normal goods, the leisure demand curve will be shallower if leisure is a normal good than if leisure is an inferior good.
Answer the following statement true (T) or false (F)
False
Rationale: While income and substitution effects point in the same direction for a normal good when the price of that good has changed and income is exogenous, this does not apply in the case of the leisure demand curve where the budget emerged endogenously from an endowment and an increase in the wage actually looks like a decrease in the price of consumption if the budget were viewed as exogenous.
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When inflation begins to rise, people can prevent their wealth from deteriorating by doing all of the following except
A) holding more cash. B) converting their cash into foreign currencies. C) spending their cash on goods and services. D) investing in financial instruments such as stocks or precious metals.
To maximize net revenue, a price searcher should
A) set total revenue equal to total cost. B) set marginal revenue equal to marginal cost. C) set net revenue equal to zero. D) reduce output if marginal costs are increasing.