If There Are Two Goods and If Income Doubles and the Price

question 73

Multiple Choice

If there are two goods and if income doubles and the price of good 1 doubles while the price of good 2 stays constant, a consumer's demand for good

• A)1 will increase only if it is a Giffen good for her.
• B)2 will decrease only if it is a Giffen good for her.
• C)2 will increase only if it is an inferior good for her.
• D)2 will decrease only if it is an inferior good for her.
• E)None of the above.

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Definitions:

Private Property

The legal right to own and control property (such as land or buildings) by individuals or corporations.

Profit Making

The activity of earning more money than what is spent on producing or buying goods or services, resulting in financial gain.

Industrial Revolution

A period of major industrialization that took place during the late 1700s and early 1800s, leading to significant changes in agriculture, manufacturing, mining, transportation, and technology, which had a profound effect on the socioeconomic and cultural conditions of the times.

Private Enterprise System

A system where private individuals or groups own and operate businesses with minimal government intervention, emphasizing profit and free market principles.