If You Expect the Economy Is Going to Experience a Boom

question 7

Multiple Choice

If you expect the economy is going to experience a boom and average income in the economy will rise in the foreseeable future, the type of firm that would be able to increase its sales if your expectations are met is

• A)one that sells an inferior good.
• B)one that sells a necessity good.
• C)one that sells a luxury good.
• D)one that sells a price-inelastic good.

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Definitions:

Preexisting Expectations

Assumptions or beliefs that one has before encountering new information or experiences.

Internal Attributions

The tendency to explain one's behavior or the behavior of others based on internal, personal characteristics rather than external situations.

Behavior

The actions, reactions, or conduct of an individual, often studied in psychology to understand individuals and groups.

Personal Characteristics

Attributes or traits that define an individual's unique personal identity, including behavioral patterns, emotional responses, and cognitive processes.