201-2008_sq_6 - Sample Quiz#6 Ec 201 Michigan State...

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Sample Quiz #6 Ec 201 Spring, 2008 Michigan State University L. Martin 1. When the price of a good falls, the substitution effect a. encourages the individual to consume more of the good; b. encourages the individual to consume less of the good; c. leads to more consumption if the good is an inferior good, but less if it is a normal good; d. leads to less consumption if the good is an inferior good, but more if it is a normal good; e. a. and c. 2. When the price of a good falls, the income effect a. encourages the individual to consume more of the good; b. encourages the individual to consume less of the good; c. leads to more consumption if the good is an inferior good, but less if it is a normal good; d. leads to less consumption if the good is an inferior good, but more if it is a normal good; e. a. and c. 3. The idea that the chosen alternative is at least as good as the other alternatives in the opportunity set is called a. diminishing returns; b. the substitution effect; c. income elasticity;
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201-2008_sq_6 - Sample Quiz#6 Ec 201 Michigan State...

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