Chapter 3A Demand Curves
Which of the following will not cause a demand curve to shift position?
A doubling of the good's price.
With only two goods, if the income effect is in the opposite direction as the substitution effect but the income effect dominates then the good is
Giffen
Consider the two statements: I. X is an inferior good. II. X exhibits Giffen's Paradox. Which of the following is true?
II implies I, but I does not necessarily imply II.
An increase in quantity demanded is represented by
a movement along the demand curve in a southeasterly direction in response to a decline in the good's price.
Demand functions are "homogeneous of degree zero in all prices and income." This means
a proportional increase in all prices and income will leave quantities demanded unchanged
A decrease in demand is represented by
a shift inward of the entire demand curve
A change in the distribution of income which leaves total income constant will not shift the market demand curve for a product if
a.everyone has an income elasticity of demand of zero for the product. b.everyone has the same income elasticity of demand for the product. c.individuals have differing income elasticities for the product, but the average income elasticity for income gainers is equal to the average income elasticity for income losers. d.any of the above conditions occur.
An individual's demand curve
a.represents the various quantities that a consumer is willing to purchase of a good at various prices. 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 the above.
The relationship between changes in income and purchase of a good indicates
a.whether the good is a luxury or necessity. b.whether the good is normal or inferior. d. Both a and b
Two goods, X and Y, are called complements if
an increase in PX causes less Y to be bought.
Two goods, X and Y, are called substitutes if
an increase in PX causes more Y to be bought.
An increase in the price of good X will be accompanied by
b.a shift in the market demand curve for good Y (a substitute for good X). c.a movement along the market demand curve for good X. d.Both b and c.
If an individual's housing purchases are always a constant fraction of income, then the income elasticity of demand for housing is
equal to one
If demand is elastic, a decrease in quantity will cause the total spending(PxQ) to
fall
With only two goods, if the income effect is in the opposite direction as the substitution effect but the substitution effect dominates then the good is
inferior but not Giffen
If income doubles and the quantity demanded of good X more than doubles, then good X can be described as a
luxury
If goods X and Y are complements, then the cross price elasticity of demand between them will be
negative
With only two goods, if the income effect is in the same direction as the substitution effect then the good is
normal
If a good is normal and its price increases,
the income effect will be negative and the substitution effect will be negative.
If a good is inferior and its price decreases,
the income effect will be negative and the substitution effect will be positive.
If a good is Giffen and its price increases,
the income effect will be positive and the substitution effect will be negative.
If a good is inferior and its price increases,
the income effect will be positive and the substitution effect will be negative.
If a good is normal and its price decreases,
the income effect will be positive and the substitution effect will be positive.
Assume X and Y are the only two goods a person consumes. If after a rise in the quantity demanded of Y increases, one could say
the substitution effect dominates the income effect for Y.
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
there is no substitution effect from a change in the price of coffee
If good X is a normal good and its price rises, then quantity demanded
will always fall
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
will cause total spending on good Y to rise.