Consider the following:
(i) Can a good have both a downward-sloping Engel curve and a downward-sloping demand curve? Why or why not?
(ii) Can a good have both an upward-sloping Engel curve and an upward-sloping demand curve? Why or why not?
(i) Yes, the Engel and demand curves can both be downward sloping. This occurs when the good is inferior but not Giffen.
(ii) No, the Engel and demand curves cannot both be upward sloping. If the Engel curve is upward sloping, then the good must be normal. However, the law of demand always holds for normal goods, because the income effect reinforces the substitution effect in this case. Thus an upward-sloping Engel curve guarantees that the demand curve is downward sloping.
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A legal barrier is created when a firm
A) has economies of scale, which allow it to produce at a lower cost than two or more firms. B) is granted a public franchise, government license, patent, or copyright. C) produces a unique product or service. D) produces a standardized product or service. E) has an ownership barrier to entry.
How does the Open Market Trading Desk conduct its operations?
A) directly with private securities dealers on the floor of the New York Stock Exchange B) directly with private securities dealers on the floor of the Federal Reserve Bank of New York C) over-the-counter electronically with private securities dealers D) by sending its buy and sell orders to the U.S. Treasury for execution