Econ 302: Lesson 4
Terms in this set (12)
An individual demand curve can be derived from the __________ curve.
It always will lead to an increase in consumption.
Which of the following is true concerning the substitution effect of a decrease in price?
On-campus student housing and off-campus rental apartments
Which of the following pairs of goods are NOT complements?
One good is normal and the other good is inferior
If the income-consumption path slopes down, then
Suppose the price of rice increases and you view rice as an inferior good. The substitution effect results in a ________ change in rice consumption, and the income effect leads to a ________ change in rice consumption.
No good can be inferior at all levels of income
Which of the following statements is true?
Yes, the income effect associated with a price change is zero
As a group, U.S. consumers have no income response for their consumption of ice cream so that the income elasticity of demand for ice cream equals zero. Does this mean that the change in ice cream consumption that results from a price increase is entirely composed of the substitution effect?
falls, the income effect is in the opposite direction to the substitution effect, and consumption falls.
Which of the following describes the Giffen good case? When the price of the good
the marginal utility of apples decreases.
As we move downward along a demand curve for apples,
I is true, and II is false.
Use the following two statements in answering this question:
I. All Giffen goods are inferior goods.
II. All inferior goods are Giffen goods.
Good A is a normal good. The demand curve for good A:
both goods are normal.
When the income-consumption curve has a positive slope throughout its entire length, we can conclude that