Exam 4: Demand and Behavior in Markets

A demand curve represents graphically the relationship between the quantity of a good demanded by a consumer and the

-Refer to Exhibit 4-4. Which curve represents the compensated demand function?

The primary difference between compensated and uncompensated demand functions is the presence or absence of the income effect that results from price changes.

The price-consumption path is the curve

Demand curves are generated by the

The substitution effect is the

The income effect is the

A normal is a good whose demand curve is downward sloping.

-Refer to Exhibit 4-3. The budget line rotates from BB" to BB' because the price of good 1

-Refer to Exhibit 4-4. Which curve represents the uncompensated demand function?

A Giffen good is a good whose demand curve

Markets in which the identity of the traders and their size in the market do not affect the price at which they trade are called

The ratio that tells how much a consumer in a market would have to forgo of one good in order to receive units of another good is called relative prices.

Describe how prices are set in impersonal markets.

A good for which demand increases as the income of the consumer increases and the relative prices remain constant is called a(n)

-Refer to Exhibit 4-3. The budget line rotates from BB' to BB" because the price of good 1

Will the income effect always cause an increase in the quantity demanded?

The path connecting optimal consumption bundles that shows how a consumer changes the quantity demanded of specified goods as income changes and prices remain constant is called the

If a demand curve has flat segments, the agent most likely has

How is the price-consumption path derived?