EXERCISE 3

EXERCISE 3 - EXERCISE 3 Due Monday September 20 NAME

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: EXERCISE 3 Due Monday September 20 NAME _______________________________ 1) As we move downward along a demand curve for apples, A) consumer well-being decreases. B) the marginal utility of apples decreases. C) the marginal utility of apples increases. D) Both A and B are true. E) Both A and C are true. 2) The change in the price of one good has no effect on the quantity demanded of another good. These goods are: A) complements. B) substitutes. C) both inferior. D) both Giffen goods. E) none of the above 3) An individual demand curve can be derived from the __________ curve. A) price-consumption B) price-income C) income-substitution D) income-consumption E) Engel 4) Which of the following claims is true at each point along a price-consumption curve? A) Utility is maximized but income is not all spent. B) All income is spent, but utility is not maximized. C) Utility is maximized, and all income is spent. D) The level of utility is constant. 5) Which of the following is true regarding income along a price-consumption curve? A) Income is increasing. B) Income is decreasing. C) Income is constant. D) The level of income depends on the level of utility. 6) If an Engel curve has a positive slope A) both goods are normal. B) the good on the horizontal axis is normal C) as the price of the good on the horizontal axis increases, more of both goods in consumed. D) as the price of the good on the vertical axis increases, more of the good on the horizontal axis is consumed. 7) When the income-consumption curve has a positive slope throughout its entire length, we can conclude: A) both goods are inferior. B) both goods are normal. C) the good on the vertical (y) axis is inferior. D) the good on the horizontal (x) axis is inferior. 8) When negative network externalities are present A) the demand curve is more elastic than otherwise. B) the demand curve is less elastic than otherwise. C) the demand curve shifts to the right. D) the demand curve shifts to the left. 9) Due to the bandwagon effect, demand for some products is __________ elastic than it would be without the positive network externality. A) more B) less C) equally D) more strongly unitary 10) Use the following two statements in answering this question: I. For all Giffen goods the substitution effect is larger than the income effect. II. For all inferior goods the substitution effect is larger than the income effect. A) I and II are true. B) I is true, and II is false. C) I is false, and II is true. D) I and II are false. Scenario A: Suppose that the demand for artichokes (Qa) is given as: Qa = 200 - 4P 11) Use the information in Scenario A. What is the price elasticity of demand if the price of artichokes is $10? A) 0 B) -0.25 C ) -1 D ) -4 E) negative infinity 12) Use the information in Scenario A. Suppose that the price of artichokes is increased slightly from $10. The total expenditure by consumers on artichokes will __________ and the number of artichokes sold will __________. A) rise, rise B) rise, fall C) fall, rise D) fall, fall 13) Use the information in Scenario A. At what price, if any, is the demand for artichokes completely elastic? A) 50 B) 30 C) 10 D) 0 E) none of the above ...
View Full Document

Ask a homework question - tutors are online