Question 1

A good may be inferior at some income levels and normal at others.

Accepted Answer

A) True 
 B)False

Question 2

What is the primary difference between the substitution and the income effect of a price change?

Accepted Answer

A)  The substitution effect holds income constant and the income effect holds utility constant. 
B)  The substitution effect is always positive and the income effect is always negative. 
C)  The substitution effect holds utility constant and the income effect holds prices constant. 
D)  The substitution effect is always negative and the income effect is always positive. 
A)  The substitution effect holds income constant and the income effect holds utility constant. 
B)  The substitution effect is always positive and the income effect is always negative. 
C)  The substitution effect holds utility constant and the income effect holds prices constant. 
D)  The substitution effect is always negative and the income effect is always positive.

Question 3

Deriving Demand Curves
 
-The above figure shows Bobby's indifference map for juice and snacks.Also shown are three budget lines resulting from different prices for snacks assuming he has $20 to spend on these goods.Which of the following points are on Bobby's price-consumption curve?

Accepted Answer

A)  10 snacks and 20 juices 
B)  10 snacks and 0 juices 
C)  10 snacks and 5 juices 
D)  10 snacks and 15 juices 
A)  10 snacks and 20 juices 
B)  10 snacks and 0 juices 
C)  10 snacks and 5 juices 
D)  10 snacks and 15 juices

Question 4

An increase in unearned income always creates a disincentive to work.

Accepted Answer

A) True 
 B)False

Question 5

Using the CPI to compensate workers for inflation is appropriate because,in the face of a change in relative prices,people should be allowed to purchase the same bundle as they did before the price changes.

Accepted Answer

A) True 
 B)False

Question 6

Draw budget constraints,indifference curves,and the income consumption curve for a good that has an income elasticity that is perfectly inelastic.

Accepted Answer

@#IMG-DLM& See the a

Question 7

When deriving an Engel curve,the prices of both goods

Accepted Answer

A)  are held constant. 
B)  increase by the same percentage as income. 
C)  decrease by the same percentage as income. 
D)  can either decrease, increase or stay the same. 
A)  are held constant. 
B)  increase by the same percentage as income. 
C)  decrease by the same percentage as income. 
D)  can either decrease, increase or stay the same.

Question 8

What might explain a professional baseball player having lower production the year after signing a multi-million dollar contract?

Accepted Answer

A)  the substitution effect 
B)  the endowment effect 
C)  bounded rationality 
D)  the income effect 
A)  the substitution effect 
B)  the endowment effect 
C)  bounded rationality 
D)  the income effect

A good may be inferior at some income levels and normal at others.

What is the primary difference between the substitution and the income effect of a price change?

Deriving Demand Curves -The above figure shows Bobby's indifference map for juice and snacks.Also shown are three budget lines resulting from different prices for snacks assuming he has $20 to spend on these goods.Which of the following points are on Bobby's price-consumption curve?

An increase in unearned income always creates a disincentive to work.

Using the CPI to compensate workers for inflation is appropriate because,in the face of a change in relative prices,people should be allowed to purchase the same bundle as they did before the price changes.

Draw budget constraints,indifference curves,and the income consumption curve for a good that has an income elasticity that is perfectly inelastic.

When deriving an Engel curve,the prices of both goods

What might explain a professional baseball player having lower production the year after signing a multi-million dollar contract?

Introduction

Supply and Demand

Applying the Supply and Demand Model

Consumer Choice

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 5: Applying Consumer Theory

A good may be inferior at some income levels and normal at others.

What is the primary difference between the substitution and the income effect of a price change?

Deriving Demand Curves -The above figure shows Bobby's indifference map for juice and snacks.Also shown are three budget lines resulting from different prices for snacks assuming he has $20 to spend on these goods.Which of the following points are on Bobby's price-consumption curve?

An increase in unearned income always creates a disincentive to work.

Using the CPI to compensate workers for inflation is appropriate because,in the face of a change in relative prices,people should be allowed to purchase the same bundle as they did before the price changes.

Draw budget constraints,indifference curves,and the income consumption curve for a good that has an income elasticity that is perfectly inelastic.

When deriving an Engel curve,the prices of both goods

What might explain a professional baseball player having lower production the year after signing a multi-million dollar contract?

Introduction

Supply and Demand

Applying the Supply and Demand Model

Consumer Choice

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters