Macro Homework 2

Which of the following would not shift the demand curve for a good or​ service? A. a change in the price of the good or service B. a change in expectations about the future price of the good or service C. a change in income D. a change in the price of a related good

A. a change in the price of the good or service

If the price of prime rib​ falls, the income effect due to the price change will cause A. an increase in the quantity of prime rib demanded. B. an increase in the quantity of prime rib supplied. C. an increase in the demand for flank​ steak, a substitute for prime rib. D. an increase in the demand for prime rib.

A. an increase in the quantity of prime rib demanded.

When the price of a good​ rises, consumers buy a smaller quantity because of the​ ________ effect and the​ ________ effect. A. ​substitution; income B. ​substitute; complement C. ​normal; inferior D. ​supply; demand

A. ​substitution; income

If the price of beef jerky​ rises, the substitution effect due to the price change will cause A. an increase in the quantity of beef jerky demanded. B. an increase in the demand for hot​ sauce, a complement for beef jerky. C. a decrease in the quantity of beef jerky demanded. D. an increase in the demand for beef jerky.

C. a decrease in the quantity of beef jerky demanded.

A​ ________ demand curve for shampoo would be caused by a change in the price of shampoo. A. rightward shift of the B. leftward shift of the C. movement along the D. positively sloped

C. movement along the

An inferior good is a good for which the quantity demanded increases as the price​ decreases, holding everything else constant. True False

False

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a substitute product. True False

False

A normal good is a good for which the demanded decreases as income​ decreases, holding everything else constant. True False

True

​________ is used to describe how changes in price affect a​ consumer's purchasing​ power, and​ ________ is used to describe how a change in price affects the quantity demanded of a good by making it more or less expensive than substitute goods. A. The law of​ demand; the income effect B. The income​ effect; the substitution effect C. The substitution​ effect; the income effect D. The substitution​ effect; the law of demand

B. The income​ effect; the substitution effect

​If, in response to a decrease in the price of​ coffee, the quantity of coffee demanded​ increases, economists would describe this as A. an increase in demand. B. an increase in quantity demanded. C. a change in consumer income. D. an increase in​ consumers' taste for coffee.

B. an increase in quantity demanded.