If indifference curves and budget lines are used to analyze consumer choice, an inferior good will
A. escape detection when income rises.
B. be easily identified because the quantity purchased will fall as income rises.
C. be easily identified because the quantity purchased will rise as income rises.
D. be easily identified because it will change the slope of the budget line.
E. escape detection because this model does not show that relationship.
Answer: B
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According to the diagram in the figure above, an allocatively efficient use of resources requires that production and consumption of gasoline be
A) 1 million gallons of gasoline per month. B) 2 million gallons of gasoline per month. C) 3 million gallons of gasoline per month. D) 4 million gallons of gasoline per month.
To determine whether two goods are substitutes or complements, an economist would estimate the:
a. price elasticity of demand. b. income elasticity of demand. c. cross-elasticity of demand. d. price elasticity of supply.