Running a supermarket involves
Correct answer(s):
- A lower level of risk than running a gourmet shop
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If you include in your offerings some inferior goods, the demand for these products will increase
Correct answer(s):
- During bad economic times
Many gourmet shops go out of business during recessions since they sell almost exclusively
Correct answer(s):
- Normal goods
When the price of a good increases with other things unchanged, the real income of the consumer
Correct answer(s):
- Decreases
The substitution effect reflects how a consumer will react to a different
Correct answer(s):
- Market rate of substitution
If you sell an inferior good, offering to sell gift certificates to those looking for a gift may result in
Correct answer(s):
- A greater quantity sold than if the customer resorts to giving a cash gift
If a consumer is given a $10 gift certificate, good for items in store X and all items in store X are inferior goods, then consumer desires to consume
Correct answer(s):
- Less goods in store X
If a consumer is given a $10 gift certificate, good only for items in store X and all items in store X are normal goods, then the consumer desires to consume
Correct answer(s):
- More goods in store X
Which is more preferred between a cash gift and an in-kind gift?
Correct answer(s):
- A cash gift
A cash gift causes the budget line to
Correct answer(s):
- Shift to the right in a parallel fashion
An in-kind gift causes the budget line to
Correct answer(s):
- None of the statements associated with this question are correct
If income increases, then the
Correct answer(s):
- Budget line shifts to the right
If the price of computers decreases, then the
Correct answer(s):
- Sales of a substitute, such as a telephone, decreases
Under the buy one, get one free regime, the
Correct answer(s):
- Budget set expands
If the price of a good rises, then the equilibrium consumption of that good
Correct answer(s):
- Decreases if it is a normal good
If an increase in the price of good X leads to a decrease in the consumption of good Y, then goods X and Y are called
Correct answer(s):
- Complements
If an increase in the price of good X leads to an increase in the consumption of good Y, then goods X and Y are called
Correct answer(s):
- Substitutes
If the slope of the indifference curve is steeper than the slope of the budget line, and X is on the horizontal axis
Correct answer(s):
- The consumer is willing to give up more of good Y to get an additional unit of good X than is necessary under the current market prices
At the equilibrium consumption bundle, which of the following holds?
Correct answer(s):
- MRSX,Y = PX /PY
The equilibrium consumption bundle is
Correct answer(s):
- The affordable bundle that yields the greatest satisfaction to the consumer