1 NNNOOORRRTTTHHHCCCAAARRROOOLLLIIINNNAAASSSTTTAAATTTEEEUUUNNNIIIVVVEEERRRSSSIIITTTYYYCollege of Management – Department of Economics Instructor: Kosmas Marinakis 3rdHomework Assignment Questions with (*) are optional. Remember solving the homework is necessary for doing well on the tests but is not sufficient. Chapter 4 1. Explain the difference between each of the following terms: a.a price consumption curve and a demand curve; b.an individual demand curve and a market demand curve; 2. Explain the difference between the income effect and the substitution effect. 3. Suppose that an individual allocates his or her entire budget between two goods, food and clothing. Can both goods be inferior? Explain. 4. Explain whether the following statements are true or false. a. The marginal rate of substitution diminishes as an individual moves downward along the demand curve.
This is the end of the preview.
access the rest of the document.