The substitution effect can be measured holding ________ constant.

Select one:

a.income

b.utility

c.the price of one good

d.the price of all goods

To measure the substitution effect on a graph, we use the change along

Select one:

a.the old indifference curve.

b.the new indifference curve.

c.either the old or the new indifference curve.

d.the budget constraint.

What is the main difference between the substitution and the income effect of a price change?

Select one:

a.The substitution effect holds income constant and the income effect holds utility constant.

b.The substitution effect is always positive and the income effect is always negative.

c.The substitution effect holds utility constant and the income effect holds prices constant.

d.The substitution effect is always negative and the income effect is always positive.

If a good is a normal good, the demand curve will shift ________ when income increases because ________.

Select one:

a.right; the income and substitution effects move in the same direction.

b.right; the income and substitution effects move in the opposite direction.

c.left; the income and substitution effects move in the same direction.

d.left; the income and substitution effects move in the opposite direction.

It is possible for a good to be inferior at some income levels and normal at others.

Select one:

a.True.

b.False A consumer may demand more of the good at low income levels and less of the good at higher income levels. Hamburger or macaroni and cheese dinners may be examples of such goods.