Which of the following statements is correct? Select one: O a. TU is the rate of change of MU. O b. Economists use "utility" to only talk about how practically useful an item is to a person. O c. MU can never have a value of zero. O d. MU is a producer concept. O e. MU is the slope of the TU curve.
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- Refer to the figure at right. Starting from point A, after the price of food decreases, the quantity of food purchased Clothing (units per month) OA. increases from A to Bdue to the income effect, and then to C due to the substitution effect. B. increases due to the substitution effect, but decreases due to the income effect. O C. decreases. O D. increases due to the income effect, but decreases due to the substitution effect. U2 FZE Food (units per month) F1 0 000Suppose cauliflower and broccoli are substitutes in consumption. Suppose further that the price of cauliflower is increasing. Everything else held constant, consumer surplus in the broccoli market will and economic surplus in the broccoli market will, Select one: O A. increase; increase O B. increase; decrease Oc. decrease; decrease O D. be ambiguous; increase OE. decrease; increase OF. increase; be ambiguous O G. be ambiguous; decrease O H. be ambiguous; be ambiguous OL. decrease; be ambiguousQUESTION 11 Rayan went to his favorite hamburger restaurant with S3, expecting to buy a $2 hamburger and a $1 soda. When he arrived, he discovered that hamburgers were on sale for S1 each, so Rayan bought two hamburgers and a soda. Rayan's response to the decrease in the price of hamburgers is best explained by: O A. the substitution OC the price effect. B. the income O D. a rightward shift in the demand curve for hamburgers effect. effect.
- A Giffen good is one for which the quantity demanded rises as the price rises. What does the income effect do to cause this Select one: O a. It counteracts, but it is smaller than the substitution effect. O b. It counteracts, and it is greater than the substitution effect. c. It reinforces, and it is greater than the substitution effect. O d. It reinforces, but it is smaller than the substitution effect.It shows the different combinations that the consumers can purchase from good [X] and [Y), given the income and the prices of the two goods. O a. Demand Curve O b. Budget line O c. Indifference curve O d. Supply Curve e. No correct answerSuppose that an increase in the price of X goods, leads to a decrease in the demand of good Y This would mean that X and Y are: Select one: O a. substitute goods O b. complementary goods O c. None of the answers are correct O d. normal goods.
- If a consumer consumes two goods, A and B, and the price of A falls, then the income effect would cause the consumer to: O a buy more A and less B. O b. buy less A and more B Oc. buy less A and less B. O d. buy more A and more BWhen the price of a good falls, the income effect for a normal good implies that people buy Select one: O a. less of that good because they cannot afford to buy all the things they previously bought. O b. more of that good because they can afford to buy more of all the things they previously bought. Oc. less of that good because the relative price of the good has fallen. O d. more of that good because the relative price.of the good has risen. What would happen in the market for prescription drugs if people begin to view over-the-counter remedies as a good substitute for prescription medications? Select one:- O a. There is an upward movement along the demand curve for prescription medications. O b. The demand for prescription medications will decrease. O c. There is a downward movement along the demand curve for prescription medications. O d. Preschiption medications will become an inferior good.Which of the following must remain the same while defining the Law of Supply? O a. Price of other commodities O b. Technology c. Price of factors o d. All of these
- Principles of Economics 1 | S1 21/22 Time left 0:5) When the price of one good increases and the price of the other good and income are held constant, the budget line Select one: shifts parallel to the original budget line so that the new budget line is farther from the origin O b. shifts parallel to the original budget line so that the new budget line is closer to the origin rotates so that the intercept is farther from the origin on the axis representing the good that has experienced an increase in price O a. O c. O d. rotates so that the intercept is closer to the origin on the axis representing the good that has experienced an increase in price Next pageFIGURE 2-4 Production possibilites curve Food Refer to Figure 2-4. If the economy chooses to shift more of its resources into clothing, what will it have to give up? Select one: O a. larger and larger amounts of food per unit of added clothing as the quantity of clothing produced increases O b. nothing, since food and clothing are NOT substitutes O c. relatively equal amounts of food per unit of added clothing as the quantity of clothing produced increases ClohingFor which of the following goods is a price increase likely to lead to a substantial income (as well as substitution) effect? a. Salt b. Housing C. Theater tickets d. Food