To Determine Whether a Good Is Considered Normal or Inferior,one

question 8

Multiple Choice

To determine whether a good is considered normal or inferior,one could examine the value of the

• A)income elasticity of demand for that good.
• B)price elasticity of demand for that good.
• C)price elasticity of supply for that good.
• D)cross-price elasticity of demand for that good.

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Definitions:

Market Economy

An economic system where economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's citizens and businesses with minimal government intervention.

Command System

A method of organizing an economy in which property resources are publicly owned and government uses central economic planning to direct and coordinate economic activities; socialism; communism. Compare with market system.

Laissez-faire Capitalism

An economic system where government intervention in business and markets is minimal, and the forces of supply and demand are allowed to regulate the economy.

Central Planning

A system where economic decisions, such as the allocation of resources, are made by the government or a centralized authority.