Assume That Potatoes Are an Inferior Good

question 148

Multiple Choice

Assume that potatoes are an inferior good.Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes to decrease?

• A)an increase in consumer income
• B)a freeze that sharply reduces potato output
• C)a decrease in consumer income
• D)a technological advancement that results in a bumper crop of potatoes

Comprehend the role of government in financing basic scientific research and its implications on public goods and externalities.

Identify the optimal level of R&D expenditure for firms based on marginal cost and benefit analysis.

Grasp how successful product innovations increase consumer utility and spending efficiency.

Analyze the inverted-U theory relationship between R&D expenditures and industry concentration.

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Definitions:

Retained Earnings

Net income that the corporation retains for future use.

Operating Expenses

Expenses incurred through the normal operations of a business, including rent, utilities, and salaries, but excluding costs of goods sold.

Vertical Analysis

A financial analysis method that lists each line item in a single period financial statement as a percentage of a base line figure.

Operating Expenses

The day-to-day costs involved in running a business, excluding the cost of goods sold.