Question 1

An individual's demand curve

Accepted Answer

A) represents the various quantities that a consumer is willing to purchase of a good at various price levels. 
B) is derived from an individual's indifference curve map. 
C) will shift if preferences,prices of other goods,or income change. 
D) all of these answers are correct. 
A) represents the various quantities that a consumer is willing to purchase of a good at various price levels. 
B) is derived from an individual's indifference curve map. 
C) will shift if preferences,prices of other goods,or income change. 
D) all of these answers are correct. D

Question 2

Demand functions are "homogeneous of degree zero in all prices and income." This means

Accepted Answer

A) a proportional increase in all prices and income will leave quantities demanded unchanged. 
B) a doubling of all prices will not alter consumption decisions. 
C) prices directly enter individuals' utility functions. 
D) an increase in income will cause all quantities demanded to increase proportionately. 
A) a proportional increase in all prices and income will leave quantities demanded unchanged. 
B) a doubling of all prices will not alter consumption decisions. 
C) prices directly enter individuals' utility functions. 
D) an increase in income will cause all quantities demanded to increase proportionately. A

Question 3

If there are only two goods and these are consumed in fixed proportions,the price elasticities of demand for these two goods will sum to

Accepted Answer

A) 0.0 
B) -0.5 
C) -1.0 
D) a number between 0 and -1. 
A) 0.0 
B) -0.5 
C) -1.0 
D) a number between 0 and -1. C

Question 4

The price elasticity of demand for a linear demand curve follows the pattern (moving from high prices to low prices)

Accepted Answer

A) elastic,unit elastic,inelastic. 
B) unit elastic,inelastic,elastic. 
C) inelastic,unit elastic,elastic. 
D) elastic,inelastic,unit elastic. 
A) elastic,unit elastic,inelastic. 
B) unit elastic,inelastic,elastic. 
C) inelastic,unit elastic,elastic. 
D) elastic,inelastic,unit elastic.

Question 5

The price elasticity of demand for good x is defined as

Accepted Answer

A) percentage change in px / percentage change in x. 
B) percentage change in x /percentage change in px . 
C) percentage change in x/percentage change in income. 
D) percentage change in x /percentage change in py . 
A) percentage change in px / percentage change in x. 
B) percentage change in x /percentage change in px . 
C) percentage change in x/percentage change in income. 
D) percentage change in x /percentage change in py .

Question 6

If income doubles and the quantity demanded of good x more than doubles,then good x can be described as a

Accepted Answer

A) substitute good. 
B) complement good. 
C) necessity. 
D) luxury. 
A) substitute good. 
B) complement good. 
C) necessity. 
D) luxury.

Question 7

The price elasticity of demand for a vertical demand curve is

Accepted Answer

A) 0. 
B) 1 
C) 1. 
D) infinity. 
A) 0. 
B) 1 
C) 1. 
D) infinity.

Question 8

Consider the following three concepts: 
I. Marshallian Demand [x = x(px,,py ,I)]
II. Indirect Utility [V = g (px,,py ,I)]
III.Compensated Demand [x = xc (px,,py ,U)]
Which of these functions is necessarily homogeneous of degree zero in all its argument?

Accepted Answer

A) All of them. 
B) None of them. 
C) Only I. 
D) I and III,but not II. 
A) All of them. 
B) None of them. 
C) Only I. 
D) I and III,but not II.

Question 9

A decrease in demand is represented by

Accepted Answer

A) a shift outward of the entire demand curve. 
B) a shift inward of the entire demand curve. 
C) a movement along the demand curve in a southeasterly direction. 
D) a movement along the demand curve in a northwesterly direction. 
A) a shift outward of the entire demand curve. 
B) a shift inward of the entire demand curve. 
C) a movement along the demand curve in a southeasterly direction. 
D) a movement along the demand curve in a northwesterly direction.

Question 10

Which of the following demand functions is not homogenous of degree zero in px ,py ,and I?

Accepted Answer

A) x = I / (px,+ py ). 
B) $x = I ^ { .5 } p _ { x } ^ { - 03 } p _ { y } ^ { - 0.2 }$ . 
C) $x = I p _ { y } / p _ { x } ^ { 2 }$ . 
D) $x = I p _ { y } / p _ { x }$ . 
A) x = I / (px,+ py ). 
B) $x = I ^ { .5 } p _ { x } ^ { - 03 } p _ { y } ^ { - 0.2 }$ . 
C) $x = I p _ { y } / p _ { x } ^ { 2 }$ . 
D) $x = I p _ { y } / p _ { x }$ .

Question 11

If an individual buys only two goods and these must be used in a fixed relationship with one another (e.g.,coffee and cream for a coffee drinker who never varies the amount of cream used in each cup),then

Accepted Answer

A) there is no substitution effect from a change in the price of coffee. 
B) there is no income effect from a change in the price of coffee. 
C) Giffen's Paradox must occur if both coffee and cream are inferior goods. 
D) an increase in income will not affect cream purchases. 
A) there is no substitution effect from a change in the price of coffee. 
B) there is no income effect from a change in the price of coffee. 
C) Giffen's Paradox must occur if both coffee and cream are inferior goods. 
D) an increase in income will not affect cream purchases.

Question 12

Which of the following will not cause a demand curve to shift position?

Accepted Answer

A) A doubling of the good's price. 
B) A doubling of the price of a closely substitutable good. 
C) A doubling of income. 
D) A shift in preferences. 
E) A doubling of both the price of X and the price of Y. 
A) A doubling of the good's price. 
B) A doubling of the price of a closely substitutable good. 
C) A doubling of income. 
D) A shift in preferences. 
E) A doubling of both the price of X and the price of Y.

Question 13

If the prices of all goods increase by the same proportion as income,the quantity demanded of good x will

Accepted Answer

A) decrease. 
B) increase. 
C) remain unchanged. 
D) change in a way that cannot be determined from the information given. 
A) decrease. 
B) increase. 
C) remain unchanged. 
D) change in a way that cannot be determined from the information given.

Question 14

Consider the two following statements: 
I.x is an inferior good.
II.x exhibits Giffen's Paradox.
Which of the following is true?

Accepted Answer

A) I implies II,but II does not necessarily imply I. 
B) II implies I,but I does not necessarily imply II. 
C) I and II are statements of the same phenomenon. 
A) I implies II,but II does not necessarily imply I. 
B) II implies I,but I does not necessarily imply II. 
C) I and II are statements of the same phenomenon.

Question 15

Assume x and y are the only two goods a person consumes.If after a rise in px the quantity demanded of y increases,one could say

Accepted Answer

A) the income effect dominates the substitution effect. 
B) the substitution effect dominates the income effect. 
C) it is still impossible to determine whether the substitution or income effect dominates. 
D) none of these answers is correct. 
A) the income effect dominates the substitution effect. 
B) the substitution effect dominates the income effect. 
C) it is still impossible to determine whether the substitution or income effect dominates. 
D) none of these answers is correct.

Question 16

The price elasticity of demand for a horizontal demand curve is

Accepted Answer

A) 0. 
B) -1. 
C) 1. 
D) -infinity. 
A) 0. 
B) -1. 
C) 1. 
D) -infinity.

Question 17

If a consumer purchases only two goods (x and y)and the demand for x is elastic,then a rise in the price of x

Accepted Answer

A) will cause total spending on good y to rise. 
B) will cause total spending on good y to fall. 
C) will cause total spending on good y to remain unchanged. 
D) will have an indeterminate effect on total spending on good y. 
A) will cause total spending on good y to rise. 
B) will cause total spending on good y to fall. 
C) will cause total spending on good y to remain unchanged. 
D) will have an indeterminate effect on total spending on good y.

Question 18

If the compensated and Marshallian demand curves for a good intersect,at that point the Marshallian curve will be

Accepted Answer

A) flatter if this is a normal good. 
B) steeper if this is a normal good. 
C) flatter if this is an inferior good. 
D) horizontal. 
A) flatter if this is a normal good. 
B) steeper if this is a normal good. 
C) flatter if this is an inferior good. 
D) horizontal.

Question 19

If the demand for a product is elastic,then a rise in price will

Accepted Answer

A) cause total spending on the good to increase. 
B) cause total spending on the good to decrease. 
C) keep total spending the same,but reduce the quantity demanded. 
D) keep total spending the same,but increase the quantity demanded 
A) cause total spending on the good to increase. 
B) cause total spending on the good to decrease. 
C) keep total spending the same,but reduce the quantity demanded. 
D) keep total spending the same,but increase the quantity demanded

An individual's demand curve

Demand functions are "homogeneous of degree zero in all prices and income." This means

If there are only two goods and these are consumed in fixed proportions,the price elasticities of demand for these two goods will sum to

The price elasticity of demand for a linear demand curve follows the pattern (moving from high prices to low prices)

The price elasticity of demand for good x is defined as

If income doubles and the quantity demanded of good x more than doubles,then good x can be described as a

The price elasticity of demand for a vertical demand curve is

Consider the following three concepts: I. Marshallian Demand [x = x(p_x,,p_y,I)] II. Indirect Utility [V = g (p_x,,p_y,I)] III.Compensated Demand [x = x^c (p_x,,p_y,U)] Which of these functions is necessarily homogeneous of degree zero in all its argument?

A decrease in demand is represented by

Which of the following demand functions is not homogenous of degree zero in p_x,p_y,and I?

If an individual buys only two goods and these must be used in a fixed relationship with one another (e.g.,coffee and cream for a coffee drinker who never varies the amount of cream used in each cup),then

Which of the following will not cause a demand curve to shift position?

If the prices of all goods increase by the same proportion as income,the quantity demanded of good x will

Consider the two following statements: I.x is an inferior good. II.x exhibits Giffen's Paradox. Which of the following is true?

Assume x and y are the only two goods a person consumes.If after a rise in p_x the quantity demanded of y increases,one could say

The price elasticity of demand for a horizontal demand curve is

If a consumer purchases only two goods (x and y)and the demand for x is elastic,then a rise in the price of x

If the compensated and Marshallian demand curves for a good intersect,at that point the Marshallian curve will be

If the demand for a product is elastic,then a rise in price will

Preferences and Utility

Utility Maximization and Choice

Demand Relationships Among Goods

Uncertainty and Information

Strategy and Game Theory

Production Functions

Cost Functions

Profit Maximization

The Partial Equilibrium Competitive Model

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Labor Markets

Capital and Time

Asymmetric Information

Externalities and Public Goods

Filters

Exam 3: Income and Substitution Effects

An individual's demand curve

Demand functions are "homogeneous of degree zero in all prices and income." This means

If there are only two goods and these are consumed in fixed proportions,the price elasticities of demand for these two goods will sum to

The price elasticity of demand for a linear demand curve follows the pattern (moving from high prices to low prices)

The price elasticity of demand for good x is defined as

If income doubles and the quantity demanded of good x more than doubles,then good x can be described as a

The price elasticity of demand for a vertical demand curve is

Consider the following three concepts: I. Marshallian Demand [x = x(px,,py ,I)] II. Indirect Utility [V = g (px,,py ,I)] III.Compensated Demand [x = xc (px,,py ,U)] Which of these functions is necessarily homogeneous of degree zero in all its argument?

A decrease in demand is represented by

Which of the following demand functions is not homogenous of degree zero in px ,py ,and I?

If an individual buys only two goods and these must be used in a fixed relationship with one another (e.g.,coffee and cream for a coffee drinker who never varies the amount of cream used in each cup),then

Which of the following will not cause a demand curve to shift position?

If the prices of all goods increase by the same proportion as income,the quantity demanded of good x will

Consider the two following statements: I.x is an inferior good. II.x exhibits Giffen's Paradox. Which of the following is true?

Assume x and y are the only two goods a person consumes.If after a rise in px the quantity demanded of y increases,one could say

The price elasticity of demand for a horizontal demand curve is

If a consumer purchases only two goods (x and y)and the demand for x is elastic,then a rise in the price of x

If the compensated and Marshallian demand curves for a good intersect,at that point the Marshallian curve will be

If the demand for a product is elastic,then a rise in price will

Preferences and Utility

Utility Maximization and Choice

Demand Relationships Among Goods

Uncertainty and Information

Strategy and Game Theory

Production Functions

Cost Functions

Profit Maximization

The Partial Equilibrium Competitive Model

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Labor Markets

Capital and Time

Asymmetric Information

Externalities and Public Goods

Filters

Consider the following three concepts: I. Marshallian Demand [x = x(p_x,,p_y,I)] II. Indirect Utility [V = g (p_x,,p_y,I)] III.Compensated Demand [x = x^c (p_x,,p_y,U)] Which of these functions is necessarily homogeneous of degree zero in all its argument?

Which of the following demand functions is not homogenous of degree zero in p_x,p_y,and I?

Assume x and y are the only two goods a person consumes.If after a rise in p_x the quantity demanded of y increases,one could say