CHAP21 - CHAPTER 21 Consumer Behavior and Utility...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 21 Consumer Behavior and Utility Maximization Topic Question numbers ___________________________________________________________________________________________________ 1. Income and substitution effects 1-9 2. Law of diminishing marginal utility 10-26 3. Utility-maximizing rule 27-54 4. Marginal utility, demand curve, and elasticity 55-72 5. Applications; extensions 73-85 Last Word 86-88 True-False 89-101 Appendix 6. Budget lines 102-127 7. Indifference curves 128-137 8. Consumer equilibrium; changes in equilibrium 138-156 True-False 157-168 ___________________________________________________________________________________________________ Multiple Choice Questions Income and substitution effects 1. The income effect indicates that: A) a rise in money income will cause consumers to buy smaller quantities of normal goods. B) when the price of a product falls, the lower price will induce the consumer to buy more of that product now that it is relatively cheaper. C) consumers should substitute among various products until the marginal utility from the last unit of each product purchased is the same. D) when the price of a product falls, a consumer will be able to buy more of it with a specific money income. 2. If the price of normal good X rises, the income: A) and substitution effects will both induce the consumer to buy less of X. B) and substitution effects will both induce the consumer to buy more of X. C) effect will induce the consumer to buy more of X and the substitution effect will induce him to buy less. D) effect will induce the consumer to buy less of X and the substitution will induce him to buy more. Page 1
Background image of page 1

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

View Full DocumentRight Arrow Icon
3. "If the price of a product falls, that product becomes cheaper and people will want to purchase more of it in place of other goods." This statement best describes: A) the income effect. B) the substitution effect. C) a complementary good. D) an inferior good. 4. "A fall in the price of a good increases the real income or purchasing power of consumers so that they are able to buy more of the product." This statement best describes: A) the income effect. B) a complementary good. C) the substitution effect. D) an inferior good. 5. Which of the following is correct? When the price of normal good Z falls: A) both income and substitution effects cause the consumer to buy more. B) both income and substitution effects cause the consumer to buy less. C) the income effect causes the consumer to buy less, but the substitution effect causes her to buy more. D) the income effect causes the consumer to buy more, but the substitution effect causes her to buy less. 6. If steak is a normal good and its price rises: A) the amount purchased may either increase or decrease depending on the relative importance of the income and substitution effects. B)
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/24/2008 for the course ECO 201/202 taught by Professor N/a during the Spring '08 term at VCCS.

Page1 / 35

CHAP21 - CHAPTER 21 Consumer Behavior and Utility...

This preview shows document pages 1 - 3. Sign up to view the full document.

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