Suppose that consumers’ preferences are well behaved in that properties 4-1-4-4 are satisfied. Furthermore, assume that X is a normal good, Y is an inferior good and the price of good X increases. Then the substitution effect will lead consumers to consume
Subject: Economics Multiple Choice Quiz ( MCQ ) and Answer
Suppose that consumers’ preferences are well behaved in that properties 4-1-4-4 are satisfied. Furthermore, assume goods X and Y are normal goods and the price of good X decreases. Then the substitution effect will lead consumers to consume
When the price of one good decreases, the associated substitution effect is represented by a
When the price of one good increases, the associated income effect is represented by a move from one indifference curve to a
Consider a two good world, with commodities X and Y. If X is an inferior good, then an increase in consumer income cannot
Sam Voter prefers Jack to Rob, Rob to Mark, and Jack to Mark. Sam’s preferences
Given that income is $300, the price of good Y is $15, and the price of good X is $20. What is the vertical intercept of the budget line?
The maximum quantity of good Y that is affordable is:
Suppose earnings are given by E = $50 + $20(24 – L), where E is earnings and L is the hours of leisure. What is the price to the worker of consuming an additional hour of leisure?
The total earnings of a worker are represented by E = 150 + $12(24 – L), where E is earnings and L is the number of hours of leisure. How much will the worker earn if he takes 16 hours of leisure per day?
A price decrease causes a consumer’s “real” income to:
The substitution affect isolates the change in the consumption of a good caused by:
If the price of good X decreases, what will happen to the budget line?
Given that income is $750 and PX = $32 and PY = $8, what is the market rate of substitution between goods X and Y?
What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and PX = $10, PY = $15, X = 30, and M = 600?
A decrease in the price of good Y will have what effect on the budget line on a normal X-Y graph?
The rate at which a consumer is willing to substitute one good for another, while still maintaining a given level of satisfaction is called the
Which combination of the properties given below rules out indifference curves that intersect one another?
The difference between a price increase and a decrease in income is that
If money income doubles and the prices of all goods triples, then the
Joe consumes 10 units of food and 12 units of clothing. Since food is an inferior good, a gift to Joe of a $12 gift certificate at a clothing store will
At any point on an indifference curve, the slope indicates