Question 1

Two goods,X and Y,are called substitutes if

Accepted Answer

A) an increase in PX causes more Y to be bought. 
B) an increase in PX causes less Y to be bought. 
C) an increase in PY causes less Y to be bought. 
D) an increase in income causes more of both X and Y to be bought. 
A) an increase in PX causes more Y to be bought. 
B) an increase in PX causes less Y to be bought. 
C) an increase in PY causes less Y to be bought. 
D) an increase in income causes more of both X and Y to be bought.

Question 2

If good X is a normal good and its price rises,then quantity demanded

Accepted Answer

A) may or may not fall. 
B) will always fall. 
C) will always rise. 
D) will remain unchanged. 
A) may or may not fall. 
B) will always fall. 
C) will always rise. 
D) will remain unchanged.

Question 3

In Homogenia everyone is the same.Demand for apples is $\mathrm { P } = \mathrm { A } - \mathrm { Bq }$ for each of its 1 million citizens.Market demand for apples in Homogenia is given by the equation

Accepted Answer

A)  $P = 1,000,000 A - 1,000,000 B Q$ 
B)  $P = 1,000,000 A - B Q / 1,000,000$ 
C)  $P = A - 1,000,000 B Q$ 
D)  $P = A - B Q / 1,000,000$ 
A)  $P = 1,000,000 A - 1,000,000 B Q$ 
B)  $P = 1,000,000 A - B Q / 1,000,000$ 
C)  $P = A - 1,000,000 B Q$ 
D)  $P = A - B Q / 1,000,000$

Question 4

Suppose there are two goods (X and Y).On a traditional graph of a budget line a tripling of all prices and incomes will

Accepted Answer

A) alter the slope of the budget line only. 
B) alter the slope of the budget line as well as the Y-intercept. 
C) alter the slope of the budget line as well as the X-intercept. 
D) leave the budget line unaltered. 
A) alter the slope of the budget line only. 
B) alter the slope of the budget line as well as the Y-intercept. 
C) alter the slope of the budget line as well as the X-intercept. 
D) leave the budget line unaltered.

Question 5

If a good is inferior and its price decreases,

Accepted Answer

A) the income effect will be positive and the substitution effect will be positive. 
B) the income effect will be negative and the substitution effect will be negative. 
C) the income effect will be positive and the substitution effect will be negative. 
D) the income effect will be negative and the substitution effect will be positive. 
A) the income effect will be positive and the substitution effect will be positive. 
B) the income effect will be negative and the substitution effect will be negative. 
C) the income effect will be positive and the substitution effect will be negative. 
D) the income effect will be negative and the substitution effect will be positive.

Question 6

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 7

If an individual's housing purchases are always a constant fraction of income,then the income elasticity of demand for housing is

Accepted Answer

A) greater than one. 
B) equal to one. 
C) less than one. 
D) Cannot be determined from the available information. 
A) greater than one. 
B) equal to one. 
C) less than one. 
D) Cannot be determined from the available information.

Question 8

An individual's demand curve

Accepted Answer

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. 
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.

Question 9

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 10

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

Accepted Answer

A) normal 
B) inferior but not Giffen 
C) Giffen 
D) There is not enough information to answer. 
A) normal 
B) inferior but not Giffen 
C) Giffen 
D) There is not enough information to answer.

Question 11

Suppose two goods coffee and creamer provide the consumer with utility but only if they are consumed in fixed proportions.An increase in the price of coffee will yield

Accepted Answer

A) a substitution effect and an income effect in opposite directions. 
B) a substitution effect and an income effect in the same direction. 
C) a substitution effect but no income effect. 
D) an income effect but no substitution effect. 
A) a substitution effect and an income effect in opposite directions. 
B) a substitution effect and an income effect in the same direction. 
C) a substitution effect but no income effect. 
D) an income effect but no substitution effect.

Question 12

The market demand curve for any good is

Accepted Answer

A) independent of individuals' demand curves for the good. 
B) the vertical summation of individuals' demand curves. 
C) the horizontal summation of individuals' demand curves. 
D) derived from the firm's marginal cost of production. 
A) independent of individuals' demand curves for the good. 
B) the vertical summation of individuals' demand curves. 
C) the horizontal summation of individuals' demand curves. 
D) derived from the firm's marginal cost of production.

Question 13

An increase in quantity demanded 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 in response to a decline in the good's price. 
D) a movement along the demand curve in a northwesterly direction in response to a decline in the good's price. 
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 in response to a decline in the good's price. 
D) a movement along the demand curve in a northwesterly direction in response to a decline in the good's price.

Question 14

An increase in the price of good X will be accompanied by

Accepted Answer

A) a shift in the market demand curve for good X. 
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 
A) a shift in the market demand curve for good X. 
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

Question 15

If a good is Giffen and its price increases,

Accepted Answer

A) the income effect will be positive and the substitution effect will be positive. 
B) the income effect will be negative and the substitution effect will be negative. 
C) the income effect will be positive and the substitution effect will be negative. 
D) the income effect will be negative and the substitution effect will be positive. 
A) the income effect will be positive and the substitution effect will be positive. 
B) the income effect will be negative and the substitution effect will be negative. 
C) the income effect will be positive and the substitution effect will be negative. 
D) the income effect will be negative and the substitution effect will be positive.

Question 16

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.

Question 17

?   ?In the picture above the point A2 is half way between the origin and the quantity intercept of the demand curve. The price elasticity at point "1" is

Accepted Answer

A) 0 
B) between -? and -1 
C) -1 
D) between -1 and 0 
A) 0 
B) between -? and -1 
C) -1 
D) between -1 and 0

Question 18

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 19

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.

Question 20

?  
In the picture above the point A2 is half way between the origin and the quantity intercept of the demand curve. The price elasticity at point "2" is

Accepted Answer

A) 0 
B) between -? and -1 
C) -1 
D) between -1 and 0 
A) 0 
B) between -? and -1 
C) -1 
D) between -1 and 0

Two goods,X and Y,are called substitutes if

If good X is a normal good and its price rises,then quantity demanded

In Homogenia everyone is the same.Demand for apples is $\mathrm { P } = \mathrm { A } - \mathrm { Bq }$ for each of its 1 million citizens.Market demand for apples in Homogenia is given by the equation

Suppose there are two goods (X and Y).On a traditional graph of a budget line a tripling of all prices and incomes will

If a good is inferior and its price decreases,

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

If an individual's housing purchases are always a constant fraction of income,then the income elasticity of demand for housing is

An individual's demand curve

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

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

Suppose two goods coffee and creamer provide the consumer with utility but only if they are consumed in fixed proportions.An increase in the price of coffee will yield

The market demand curve for any good is

An increase in quantity demanded is represented by

An increase in the price of good X will be accompanied by

If a good is Giffen and its price increases,

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

? ?In the picture above the point A2 is half way between the origin and the quantity intercept of the demand curve. The price elasticity at point "1" is

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

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

? In the picture above the point A2 is half way between the origin and the quantity intercept of the demand curve. The price elasticity at point "2" is

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Uncertainty

Game Theory

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Profit Maximization and Supply

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Exam 3: Demand Curves

Two goods,X and Y,are called substitutes if

If good X is a normal good and its price rises,then quantity demanded

In Homogenia everyone is the same.Demand for apples is P=A−Bq\mathrm { P } = \mathrm { A } - \mathrm { Bq }P=A−Bq for each of its 1 million citizens.Market demand for apples in Homogenia is given by the equation

Suppose there are two goods (X and Y).On a traditional graph of a budget line a tripling of all prices and incomes will

If a good is inferior and its price decreases,

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

If an individual's housing purchases are always a constant fraction of income,then the income elasticity of demand for housing is

An individual's demand curve

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

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

Suppose two goods coffee and creamer provide the consumer with utility but only if they are consumed in fixed proportions.An increase in the price of coffee will yield

The market demand curve for any good is

An increase in quantity demanded is represented by

An increase in the price of good X will be accompanied by

If a good is Giffen and its price increases,

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

? ?In the picture above the point A2 is half way between the origin and the quantity intercept of the demand curve. The price elasticity at point "1" is

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

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

? In the picture above the point A2 is half way between the origin and the quantity intercept of the demand curve. The price elasticity at point "2" is

Economic Models

Utility and Choice

Uncertainty

Game Theory

Production

Costs

Profit Maximization and Supply

Perfect Competition in a Single Market

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Pricing in Input Markets

Capital and Time

Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

In Homogenia everyone is the same.Demand for apples is $\mathrm { P } = \mathrm { A } - \mathrm { Bq }$ for each of its 1 million citizens.Market demand for apples in Homogenia is given by the equation