Which of the Following Is Most Likely to Be TRUE

question 110

Multiple Choice

Which of the following is most likely to be TRUE?

• A) Income elasticity of demand for fur coats exceeds that of oatmeal.
• B) Income elasticity of demand for oatmeal exceeds that of fur coats.
• C) Income elasticity of demand for fur coats equals that of oatmeal.
• D) It is not possible to make any prediction about relative income elasticities.

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Definitions:

Economists

Experts or professionals who study, develop, and apply theories and concepts in economics to analyze how societies utilize scarce resources.

Monopoly

A market condition where a single firm has exclusive control over a product or service, eliminating competition.

Negative Externalities

Adverse effects suffered by a third party or the public as a result of an economic transaction or activity.

Principal-Agent Problem

At a firm, a conflict of interest that occurs when agents (workers or managers) pursue their own objectives to the detriment of the principals’ (stockholders’) goals. In public choice theory, a conflict of interest that arises when elected officials (who are the agents of the people) pursue policies that are in their own interests rather than policies that would be in the better interests of the public (the principals).