The substitution effect can be measured holding ________ constant. A) income B) utility C) the price of one good D) the price of all goods ANSWER B
Date: September 9th, 2020
If a good is considered a normal good, the demand curve will shift ________ when income increases because ________. A) right; the income and substitution effects move in the same direction. B) right; the income and substitution effects move in the opposite direction. C) left; the income and substitution effects move in the same direction. […]
Date: September 9th, 2020
In the case of a normal good, A) demand curves always slope downward. B) the income effect and substitution effect are in the same direction. C) the Engel curve slopes upward. D) All of the above. ANSWER D
Date: September 9th, 2020
For an inferior good, if the income effect more than offsets the substitution effect, we call that good A) a Giffen good. B) a normal good. C) an inferior good. D) a neutral good. ANSWER A
Date: September 9th, 2020
A movement upward along an upward sloping Engel curve corresponds to A) upward sloping indifference curves. B) crossing indifference curves. C) a rotation in the budget constraint. D) a parallel shift in the budget constraint. ANSWER D
Date: September 9th, 2020
An inferior good exhibits A) a negative income elasticity. B) a downward sloping Engel curve. C) a decline in the quantity demanded as income rises. D) All of the above. ANSWER D
Date: September 9th, 2020
If consumer income and prices increase by the same percentage, A) the consumer will buy more of both goods. B) the consumer will buy more of both goods if they are both normal goods. C) the consumer will buy less of both goods if they are both inferior goods. D) the consumer’s utility maximizing bundle […]
Date: September 9th, 2020
Ten individuals have $100 and identical preferences for picnics, p, and kayak trips, k, where U(p, k) = k0.5p0.5. The price of picnics is $5 and the price per kayak trip is $ 10. What is the shortage/surplus in the market when the supply of picnics totals 120? A) There is a surplus of 20. […]
Date: September 9th, 2020
If the price-consumption curve is upward sloping when the price of the good measured on the horizontal axis changes, then the demand curve for that good will be upward sloping. Indicate whether the statement is true or false ANSWER False. An upward-sloping price-consumption curve indicates that as the price of the good falls, more […]
Date: September 9th, 2020
A demand curve for a Giffen good would be A) upward sloping. B) downward sloping. C) horizontal. D) vertical. ANSWER A
Date: September 9th, 2020
