Question 1

Consider the two following statements: 
I.x is an inferior good.
II.x exhibits Giffen's Paradox.
Which of the following is true?

Accepted Answer

A)  I implies II,but II does not necessarily imply I.
B)  II implies I,but I does not necessarily imply II.
C)  I and II are statements of the same phenomenon.D) A) and B)
E) A) and C)

Question 2

Which of the following will not cause a demand curve to shift position?

Accepted Answer

A)  A doubling of the good's price.
B)  A doubling of the price of a closely substitutable good.
C)  A doubling of income.
D)  A shift in preferences.
E)  A doubling of both the price of X and the price of Y.F) C) and E)
G) None of the above

Question 3

The price elasticity of demand for good x is defined as

Accepted Answer

A)  percentage change in px / percentage change in x.
B)  percentage change in x /percentage change in px .
C)  percentage change in x/percentage change in income.
D)  percentage change in x /percentage change in py .E) B) and D)
F) B) and C)

Question 4

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.E) A) and B)
F) None of the above C

Question 5

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.E) None of the above
F) A) and B)

Question 6

An individual's demand curve

Accepted Answer

A)  represents the various quantities that a consumer is willing to purchase of a good at various price levels.
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 these answers are correct.E) A) and D)
F) All of the above D

Question 7

Consider the following three concepts: 
I. Marshallian Demand [x = x(px,,py ,I) ]
II. Indirect Utility [V = g (px,,py ,I) ]
III.Compensated Demand [x = xc (px,,py ,U) ]
Which of these functions is necessarily homogeneous of degree zero in all its argument?

Accepted Answer

A)  All of them.
B)  None of them.
C)  Only I.
D)  I and III,but not II.E) B) and D)
F) A) and B)

Question 8

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.E) A) and B)
F) B) and C)

Question 9

The price elasticity of demand for a vertical demand curve is

Accepted Answer

A)  0.
B)  1
C)  1.
D)  infinity.E) A) and B)
F) C) and D)

Question 10

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.E) B) and D)
F) All of the above A

Question 11

A decrease in demand 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.
D)  a movement along the demand curve in a northwesterly direction.E) A) and B)
F) C) and D)

Question 12

If the compensated and Marshallian demand curves for a good intersect,at that point the Marshallian curve will be

Accepted Answer

A)  flatter if this is a normal good.
B)  steeper if this is a normal good.
C)  flatter if this is an inferior good.
D)  horizontal.E) C) and D)
F) All of the above

Question 13

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.E) B) and C)
F) All of the above

Question 14

Assume x and y are the only two goods a person consumes.If after a rise in px the quantity demanded of y increases,one could say

Accepted Answer

A)  the income effect dominates the substitution effect.
B)  the substitution effect dominates the income effect.
C)  it is still impossible to determine whether the substitution or income effect dominates.
D)  none of these answers is correct.E) C) and D)
F) B) and D)

Question 15

Which of the following demand functions is not homogenous of degree zero in px ,py ,and I?

Accepted Answer

A)  x = I / (px,+ py ) .
B)   x=I.5px−03py−0.2x = I ^ { .5 } p _ { x } ^ { - 03 } p _ { y } ^ { - 0.2 }x=I.5px−03​py−0.2​  .
C)   x=Ipy/px2x = I p _ { y } / p _ { x } ^ { 2 }x=Ipy​/px2​  .
D)   x=Ipy/pxx = I p _ { y } / p _ { x }x=Ipy​/px​  . E) None of the above
F) A) and B)

Question 16

The price elasticity of demand for a horizontal demand curve is

Accepted Answer

A)  0.
B)  -1.
C)  1.
D)  -infinity.E) B) and D)
F) A) and C)

Question 17

If income doubles and the quantity demanded of good x more than doubles,then good x can be described as a

Accepted Answer

A)  substitute good.
B)  complement good.
C)  necessity.
D)  luxury.E) C) and D)
F) B) and D)

Question 18

If the demand for a product is elastic,then a rise in price will

Accepted Answer

A)  cause total spending on the good to increase.
B)  cause total spending on the good to decrease.
C)  keep total spending the same,but reduce the quantity demanded.
D)  keep total spending the same,but increase the quantity demandedE) B) and D)
F) All of the above

Question 19

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

Accepted Answer

A)  will cause total spending on good y to rise.
B)  will cause total spending on good y to fall.
C)  will cause total spending on good y to remain unchanged.
D)  will have an indeterminate effect on total spending on good y.E) None of the above
F) B) and C)

Exam 3: Income and Substitution Effects

Consider the two following statements: I.x is an inferior good. II.x exhibits Giffen's Paradox. Which of the following is true?

Correct Answer
verified

Which of the following will not cause a demand curve to shift position?

Correct Answer
verified

The price elasticity of demand for good x is defined as

Correct Answer
verified

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

Correct Answer
verified
C

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

Correct Answer
verified

An individual's demand curve

Correct Answer
verified
D

Consider the following three concepts: I. Marshallian Demand [x = x(p_x,,p_y,I) ] II. Indirect Utility [V = g (p_x,,p_y,I) ] III.Compensated Demand [x = x^c (p_x,,p_y,U) ] Which of these functions is necessarily homogeneous of degree zero in all its argument?

Correct Answer
verified

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

Correct Answer
verified

The price elasticity of demand for a vertical demand curve is

Correct Answer
verified

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

Correct Answer
verified
A

A decrease in demand is represented by

Correct Answer
verified

If the compensated and Marshallian demand curves for a good intersect,at that point the Marshallian curve will be

Correct Answer
verified

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

Correct Answer
verified

Assume x and y are the only two goods a person consumes.If after a rise in p_x the quantity demanded of y increases,one could say

Correct Answer
verified

Which of the following demand functions is not homogenous of degree zero in p_x,p_y,and I?

Correct Answer
verified

The price elasticity of demand for a horizontal demand curve is

Correct Answer
verified

If income doubles and the quantity demanded of good x more than doubles,then good x can be described as a

Correct Answer
verified

If the demand for a product is elastic,then a rise in price will

Correct Answer
verified

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

Correct Answer
verified

Exam 3: Income and Substitution Effects

Consider the two following statements: I.x is an inferior good. II.x exhibits Giffen's Paradox. Which of the following is true?

Correct AnswerverifiedShow Answer

Which of the following will not cause a demand curve to shift position?

Correct AnswerverifiedShow Answer

The price elasticity of demand for good x is defined as

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

An individual's demand curve

Correct AnswerverifiedD

Consider the following three concepts: I. Marshallian Demand [x = x(px,,py ,I) ] II. Indirect Utility [V = g (px,,py ,I) ] III.Compensated Demand [x = xc (px,,py ,U) ] Which of these functions is necessarily homogeneous of degree zero in all its argument?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The price elasticity of demand for a vertical demand curve is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

A decrease in demand is represented by

Correct AnswerverifiedShow Answer

If the compensated and Marshallian demand curves for a good intersect,at that point the Marshallian curve will be

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume x and y are the only two goods a person consumes.If after a rise in px the quantity demanded of y increases,one could say

Correct AnswerverifiedShow Answer

Which of the following demand functions is not homogenous of degree zero in px ,py ,and I?

Correct AnswerverifiedShow Answer

The price elasticity of demand for a horizontal demand curve is

Correct AnswerverifiedShow Answer

If income doubles and the quantity demanded of good x more than doubles,then good x can be described as a

Correct AnswerverifiedShow Answer

If the demand for a product is elastic,then a rise in price will

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified
D

Consider the following three concepts: I. Marshallian Demand [x = x(p_x,,p_y,I) ] II. Indirect Utility [V = g (p_x,,p_y,I) ] III.Compensated Demand [x = x^c (p_x,,p_y,U) ] Which of these functions is necessarily homogeneous of degree zero in all its argument?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Assume x and y are the only two goods a person consumes.If after a rise in p_x the quantity demanded of y increases,one could say

Correct Answer
verified

Which of the following demand functions is not homogenous of degree zero in p_x,p_y,and I?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified