Exam 4: Consumers in the Marketplace

A compensated demand curve contains no

With an increase in income,a consumer can increase the quantity consumed of

What types of goods have downward-sloping Engel curves?

When the price of a good rises,the income effect always reduces the quantity demanded of the good.

In order to isolate the substitution effect of a price increase,a consumer

Define the term normal good.How can a normal good be recognized from

Estimates of the price elasticity of demand depend,in part,on the units used to measure price and quantity.

An inferior good is one that is of lower quality than a substitute.

An outward,parallel shift in the budget line indicates that

The income and substitution effect always go in opposite directions.

If the cross-price elasticity for oranges with respect to apples is 1.2 and the price of apples increase by 5%,then we can expect the quantity demanded of oranges to decrease by 6%.

Consider the following:

Which of the following best describes the substitution effect caused by a price increase?

Normal goods have upward-sloping Engel curves.

The substitution and income effects are in opposition when the price of an inferior good changes.

If the income elasticity of demand for a good is zero,then

If the price of goods X and Y change proportionally,then which of the following is true?

An Engel curve shows the relationship between price and quantity demanded.

Normal goods have income elasticities greater than 1,while inferior goods have income elasticities less than 1.

The price elasticity of cigarettes has been estimated as -0.5.The government has decided that they want to decrease the amount that people in the United States smoke by 10%.It follows that they must institute measures that would raise the price of cigarettes by