Econ 4001.01 quiz 3

Which of the following is true concerning the income effect of a decrease in price? -It will lead to an increase in consumption only for a normal good. -It always will lead to an increase in consumption. -It will lead to an increase in consumption only for an inferior good. -It will lead to an increase in consumption only for a Giffen good.

It will lead to an increase in consumption only for a normal good.

When the income-consumption curve has a positive slope throughout its entire length, we can conclude that -both goods are inferior. -both goods are normal. -the good on the vertical (y) axis is inferior. -the good on the horizontal (x) axis is inferior.

both goods are normal

The difference between what a consumer is willing to pay for a unit of a good and what must be paid when actually buying it is called -producer surplus. -consumer surplus. -cost benefit analysis. -net utility.

consumer surplus

Recently, Skooterville has experienced a large growth in population. As a result, the market demand curve for housing in Skooterville: -has shifted to the right. -has shifted to the left. -has shifted down. -both B and C are correct. -none of the above.

has shifted to the right

When the price of wood (which is an input in the production of furniture) falls, the consumer surplus associated with the consumption of furniture -increases. -decreases. -does not change. -could be any of the above

increases

Assume that yogurt is a normal good. If the price of yogurt rises, then the substitution effect results in the person buying ________ of the good and the income effect results in the person buying ________ of the good. -more, more -more, less -less, more -less, less

less, less

The change in the price of one good has no effect on the quantity demanded of another good. These goods are: -complements. -substitutes. -both inferior. -both Giffen Goods -none of the above.

none of the above

The change in the quantity demanded of a good resulting from a change in relative price with the level of utility held constant is called the ________ effect. -Giffen -real price -income -substituition

substitution

As we move downward along a demand curve for apples, -consumer well-being decreases. -the marginal utility of apples decreases. -the marginal utility of apples increases. -Both A and B are true. -Both A and C are true.

the marginal utility of apples decreases.

The market demand for sirloin steak is probably more elastic than the market demand for all meat because -steak is very expensive. -people are worried about cholesterol. -cattle raising is not very profitable. -there are more substitutes for sirloin steak than for all meats.

there are more substitutes for sirloin steak than for all meats.