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# AnsQ3 - Econ 301 Intermediate Microeconomic Theory NAME...

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Unformatted text preview: Econ 301: Intermediate Microeconomic Theory NAME: Korinna K. Hansen Quiz 3 Make sure that you label all your axes and curves. You can use arrows to denote increases, shiﬁs etc. Graph clearly and explain brieﬂy if the following statements are true or false. Put quantity of good 1 on the horizontal axis and quantity of good 2 on the vertical axis. (Note that price effect is always equal to the sum of substitution and income effect.) 1). (5 Points) If good 1 is a normal good the income effect will reinforce the substitution effect aﬁer a decrease in p1. NWMOQ 00., A) “La '" slope—ﬂ I)” (314% . f2, Tru e. Iuoowe 29kg} ran/(Rang); “Jodi-Miro»: W 9N 9- lager PWCe egg,“ _ ﬂSiOPZ. —/;LL 2 &>1 I £4 7C 74 .w) 4 if M) , ‘ h WW) f” ‘0‘ 2). (5 Points) If good 1 is an inferior good the income effect will not reinforce the substitution effect aﬁer a decrease in p1, it will actually take way some of the substitution effect for a smaller price effect. ' Ia -Fe,rfor GaocQ Suzi-lsl-l'lul-u‘m ef—Iuk ’la-f 0.. saw“ pn'ce eHeoi'. ...
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