Which of the Following Statements Is True

question 64

Multiple Choice

Which of the following statements is true?

• A) No good can be inferior at all levels of income.
• B) The income elasticity of demand is negative for normal goods.
• C) It is possible for a good to be inferior at all income levels.
• D) It is possible for all of the goods a consumer buys to be inferior.

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Definitions:

Marginal Costs

The amount spent on producing an extra unit of a product or service.

Fixed Costs

Costs that do not vary with the level of output or sales in the short term, such as rent or salaries.

Sunk Costs

Costs that have already been incurred and cannot be recovered or refunded, and thus should not factor into future decision-making processes.

Fixed Costs

Fixed expenditures that are unaffected by changes in production or sales volumes, like rent, wages, and insurance costs.