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Lecture+06+quiz

# Lecture+06+quiz - increase in good X What kind of good is X...

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Quiz Econ 100A, fall2010, lecture 6 slide# 2 Question 1: Assuming x1 and x2 are not perfect complements, when the price of good one goes up, what is the direction of the substitution effect on good one? A. Positive. B. Negative. C. Depends on the elasticity of substitution. D. Depends on whether good two is normal or inferior. E. Depends on whether good one is normal or inferior. Quiz Econ 100A, fall2010, lecture 6 slide# 3 Question 2: When the price of good one goes up, the direction of the income effect is?

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Quiz Econ 100A, fall2010, lecture 6 slide# 4 Question 3: In this diagram, as income increases, consumption shifts from A to B, representing a slight
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Unformatted text preview: increase in good X. What kind of good is X? A. Inferior. B. Normal. C. Necessity. D. A and C. E. B and C. Quiz Econ 100A, fall2010, lecture 6 slide# 5 Question 4: Cobb-Douglas preferences are represented by the utility function ܷ ݔ ଵ ݔ ଶ ൌ ݔ ଵ ఈ ݔ ଶ ఉ . The demand functions for the two goods are ݔ ଵ כ ݌ ଵ ǡ ݌ ଶ ǡ ܫ = ఈ ఈାఉ ή ூ ௣ భ and ݔ ଶ כ ݌ ଵ ǡ ݌ ଶ ǡ ܫ = ఉ ఈାఉ ή ூ ௣ మ . What are the cross-price elasticities of demand for these two goods? A. ఈ ሺఈାఉሻ௣ భ and ఉ ሺఈାఉሻ௣ మ respectively. B. െ ఈ ሺఈାఉሻ ூ ௣ భ మ and െ ఉ ሺఈାఉሻ ூ ௣ మ మ respectively. C. Zero for both goods. D. The answer cannot be determined without additional information...
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