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.