1.An individual's demand curve

Select one:

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 the above.

2.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 P_DC < P_DP. If P_DC

rises but it remains less than P_DP thenthe consumption of DC

Select one:

a. Falls from a positive amount to zero

b. Falls from a positive amount to another positive amount.

c. rises.

d. stays at zero.

3.If a good is inferior and its price decreases,

Select one:

a. the income effect will be positive and the substitution effect will be positive.

b. the income effect will be negative and the substitution effect will be negative.

c. the income effect will be positive and the substitution effect will be negative.

d. the income effect will be negative and the substitution effect will be positive.

4.If a good is normal and its price decreases,

Select one:

a. the income effect will be positive and the substitution effect will be positive.

b. the income effect will be negative and the substitution effect will be negative.

c. the income effect will be positive and the substitution effect will be negative.

d. the income effect will be negative and the substitution effect will be positive.

5.If the prices of all goods increase by the same proportion as income, the quantity demanded of

good X will

Select one:

a. decrease.

b. increase.

c. remain unchanged.

d. change in a way that cannot be determined from the information given.

6.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

Select one:

a. the income effect dominates the substitution effect for Y.

b. the substitution effect dominates the income effect for Y.

c. it is impossible to determine whether the substitution or income effect dominates for Y.

d. None of the above.

7.If a good is Giffen and its price increases,

Select one:

a. the income effect will be positive and the substitution effect will be positive.

b. the income effect will be negative and the substitution effect will be negative.

c. the income effect will be positive and the substitution effect will be negative.

d. the income effect will be negative and the substitution effect will be positive.

8.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 P_DC < P_DP. If P_DC

rises to a point where P_DC > P_DP then the consumption of DC

Select one:

a. Falls from a positive amount to zero

b. Falls from a positive amount to another positive amount.

c. rises.

d. stays at zero.

9.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

Select one:

a. normal

b. inferior but not Giffen

c. Giffen

d. There is not enough information to answer.

10.If good X is a normal good and its price rises, then quantity demanded

Select one:

a. may or may not fall.

b. will always fall.

c. will always rise.

d. will remain unchanged.