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AK3 - 1 By denition it is false 2 Dierence between his...

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1. By de°nition, it is false. 2. Di/erence between his willingness to pay for something and the price of it is positive. So consumer±s surplus is positive. 3. Compensating variation is the change in her income necessary to restore her to her original utility level (indi/erence curve). 4. Aggregate demand depends on income distribution as well. Aggregate demand for something when everybody is rich is di/erent from that when everybody is poor. 5. The aggregate demand function is sum of two demand functions. 6. The price elasticity of demand is the percentage change in quantity divided by the percentage change in price. So it is not the same even though the amount of changes is the same at all prices. 7. Inferior good concept is not directly related to the price elasticity because it is about the demand changes when the income changes. 8. When price is 11, consumer 1 demands 4 and consumer 2 demands 3. So the total amount of demand is 7. 9. An allocation is a feasible allocation if the total amount of each good consumed is equal to the total amount available.
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