If the Income Elasticity of Demand for a Good Is

question 122

Multiple Choice

If the income elasticity of demand for a good is negative, this implies that

• A) only the poor will buy the good.
• B) as incomes fall, less will be spent on the good.
• C) as incomes rise, the demand for the good will fall.
• D) the good does not obey the law of demand.

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Definitions:

Labor Supply

The total hours that workers are willing and able to work at a given wage rate, across all jobs available in the economy.

Monopsonistic Employer

A labor market condition where a single employer significantly controls the market for workers and can dictate terms of employment.

Competitive Market

A market structure characterized by a large number of buyers and sellers where no single participant can significantly influence price.

MRP of Labor

Marginal Revenue Product of Labor; the additional revenue generated by employing one more unit of labor.