This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: IZ MI R U N I V E R S I T Y O F E C O N O M I C S Econ 201  Microeconomics Name: Quiz 3  2008 Student No: Assist. Prof. Efe Postalcı Answer the following 6 questions the space given below. You have 45 minutes. 1. 2. 3. 4. 5. 6. 1. Cindy consumes goods x and y. Her demand for x is given by x ( p x ,m ) = 0 . 05 m 5 . 15 p x . Now her income is $419, the price of x is $3, and the price of y is $1. If the price of x rises to $4 and if we denote the income effect on her demand for x by DI and the substitution effect on her demand for x by DS, then (a) DI = 0.28 and DS = 0.52. (b) DI = 0.28 and DS = 4.88. (c) DI = 0.52 and DS = 0.52. (d) DI = 0 and DS = 2.00. (e) None of the above. 2. The following can be said about the income and substitution effects of a price increase on the demand for a good whose price rose: (a) The former is always positive and the latter is always negative....
View
Full
Document
This note was uploaded on 05/05/2010 for the course ECONMOICS ECON 203 taught by Professor Josephpetry during the Spring '10 term at University of Illinois, Urbana Champaign.
 Spring '10
 JOSEPHPETRY

Click to edit the document details