Demand and Supply Analysis: Consumer Demand

6 questions

1. 1. A particular good can be classified as an inferior good if ______ in buyers' income causes _____________.
   increase; increase in demandincrease; increase in quantity demandedincrease; decrease in demand
2. 2. An indifference curve represents bundles of goods that a consumer:
   Views as equally desirableRanks from most preferred to least preferredPrefers to any other bundle of goods
3. 3. If the price of one good increases while the price of the other good and the consumer's income remain unchanged, what will happen to the budget line?
   The budget line rotates inward from the intercept on the axis of the good that did not change in price. The budget line rotates outward from the intercept on the axis of the good that did not change in price. The budget line shifts inward without a change in slope.
4. 4. If the consumer's income increases while the prices of both goods remain unchanged, what will happen to the budget line?
   The budget line rotates inward from the intercept on the horizontal axis.The budget line shifts inward without a change in slope.The budget line shifts outward without a change in slope.
5. 5. The price of a good as well as an individual's consumption of the good decreases. Which of the following is most likely TRUE?
   Income effect: negative; Substitution effect: negativeIncome effect: Positive; Substitution effect: negativeIncome effect: negative; Substitution effect: Positive
6. 6. If the demand curve for a good is upward sloping, then which of the following statements must be FALSE?
   The good is inferior.The substitution effect is in the opposite direction to the income effect.The substitution effect overwhelms the income effect.