PAM_2000_Sp_2009_Problem_Set_3 - PAM 2000 Intermediate...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
1 PAM 2000, Intermediate Microeconomics Problem Set 3 Return to TA by beginning of class Tuesday, March 3 I. True, False or Uncertain. Explain . No credit given without explanation. Use graphs to help explain your answer whenever possible (2 points each). Total: 8 points 1) If a consumer is compensated for the income effect that occurs when the price of a good increases, then his demand curves can never slope upward. 2) Suppose Sue consumes only two goods, bananas and pears. If the price of bananas rises, then the quantity of pears consumed will always fall (use the consumer equilibrium diagram to help explain your answer). 3) If the Engel curve for a good is upward sloping, the demand curve for that good must be downward sloping. . 4) Using the CPI to compensate workers for inflation is appropriate because, in the face of a change in relative prices, people should be allowed to purchase the same bundle as they did before the price changes. II. Problem Solving (2.5 points each)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/03/2009 for the course PAM 2000 taught by Professor Evans,t. during the Spring '07 term at Cornell.

Page1 / 4

PAM_2000_Sp_2009_Problem_Set_3 - PAM 2000 Intermediate...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online