Matt Graduates from College and Gets a Job Paying $70,000

question 18

Multiple Choice

Matt graduates from college and gets a job paying $70,000 a year. While in school, he consumed 5 pounds of chicken and 10 pounds of shrimp a month. After he starts working, he consumes 4 pounds of chicken and 12 pounds of shrimp a month. If everything else is held constant, we know that

• A) chicken and shrimp are normal goods for Matt.
• B) chicken is an inferior good and shrimp is a normal good for Matt.
• C) chicken is an inferior good for Matt.
• D) shrimp is a normal good for Matt.

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Definitions:

Green Shoe Pricing

A term NO.

Yield Burning

The practice of financial intermediaries marking up the prices on bonds to reduce the yield, often in the context of municipal bond refinancing.

Underpricing

The practice of setting the initial offering price of a security, typically a stock, below its market value.

Public Issue

The offering of shares by a company to the public for the first time to raise capital.