ECON 310 Lecture 2: p310x2
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1. Assume that beer is an inferior good for Wei. If the price of beer goes up, then the total effect results in Wei buying _______ beer and the substitution effect results in Wei buying ______ beer.
a. | more, more | |
b. | more, less | |
c. | less, more | |
d. | less, less | |
e. | not enough information to determine |
2. A consumer has preferences that are complete, transitive and satisfy the "more is better" property. Which of the following statements are necessarily true?
a. | Indifference curves are negatively sloped. | |
b. | Indifference curves do not cross. | |
c. | Indifference curves exhibit diminishing marginal rates of substitution. | |
d. | Both a) and b) are true. | |
e. | a), b), and c) are true. |
3. Suppose an individual has preferences over two goods - good X and good Y. In response to changes in the price of good X, the individual has a positively sloped price consumption curve, where good X is drawn on the horizontal axis. Which of the following statements is true?
a. | Good Y is a normal good. | |
b. | Good Y is a Giffen good. | |
c. | Good Y is a complement for good X. | |
d. | Good Y is an inferior good. | |
e. | Good Y is a substitute for good X. |