ECO 301 TEST BANK FOR CHAPTER 3 Demand Curves Graded with all answers correct

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ECO 301 TEST BANK FOR CHAPTER 3 Demand Curves The quiz consists of 57 Question 1. Which of the following functional forms for utility suggests the greatest substitution effect when... starting at the point where PX = PY 2. With only two goods, if the income effect is in the same direction as the substitution effect then the good is 3. 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 4. With only two goods, if the income effect is in the opposite direction as the substitution effect but the income effect dominates then the good is 5. Suppose a person’s utility is only a function of their consumption of diet soda and they do not care which brand, Diet Coke (DC) or Diet Pepsi (DP) they consume. Suppose further that PDC < PDP. If PDC rises but it remains less than PDP thenthe consumption of DC 6. Suppose a person’s utility is only a function of their consumption of diet soda and they do not care which brand, Diet Coke (DC) or Diet Pepsi (DP) they consume. Suppose further that PDC < PDP. If PDC rises to a point where PDC > PDP then the consumption of DC 7. 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 8. Suppose you were to believe that “money illusion” exists that is as prices and incomes both rise proportionally, people buy more. Which of the following characteristics of demand does that cause you to doubt? 9. Suppose there are two goods (X and Y). On a traditional graph of a budget line a tripling of all prices and incomes will 10. The lump sum principle suggests that the tax that reduces utility the least is 11. If a good is normal and its price increases, 12. If a good is inferior and its price increases, 13. If a good is Giffen and its price increases, 14. If a good is normal and its price decreases, 15. If a good is inferior and its price decreases, 16. Suppose and the price of X is 1, the price of Y is 1 and income is $12. If the price of X increases to 2, the income effect (in terms of units of X bought) is 17. Suppose and the price of X is 1, the price of Y is 1 and income is $12. If the price of X increases to 2, the substitution effect is 18. If the prices of all goods increase by the same proportion as income, the quantity demanded of good X will 19. Demand functions are “homogeneous of degree zero in all prices and income.” This means 20. The relationship between changes in income and purchase of a good indicates 21. If income doubles and the quantity demanded of good X more than doubles, then good X can be described as a 22. If an individual’s housing purchases are always a constant fraction of income, then the income elasticity of demand for housing is 23. 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 24 . Consider the two statements: 25. Two goods, X and Y, are called substitutes if 26. Two goods, X and Y, are called complements if 27. If good X is a normal good and its price rises, then quantity demanded 28. Assume X and Y are the only two goods a person consumes. If after a rise in the quantity demanded of Y increases, one could say 29. An individual’s demand curve 30. An increase in quantity demanded is represented by 31. Which of the following will not cause a demand curve to shift position? ............. 57. If goods X and Y are complements, then the cross price elasticity of demand between them will be Add to Wish List Click the button below to add the ECO 301 TEST BANK FOR CHAPTER 3 Demand Curves to your wish list. [Show More]

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