Answer the following statement(s) true (T) or false (F)
1. The substitution effect insures that anytime there is a change in the price of a good, the quantity demanded along a compensated demand curve also changes.
2. The (ordinary) demand curve for a normal good must be downward sloping.
3. An inferior good is only Giffen when the substitution effect exceeds the income effect.
4. An ordinary demand curve contains both substitution and income effects, while a compensated demand curve contains only income effects.
5. The income elasticity of demand is equal to the slope of the Engel curve.
1. True
2. True
3. False
4. False
5. False
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Refer to the above figure. The supply curve is
A) elastic at high prices and inelastic at low prices. B) unitary for all prices. C) perfectly elastic. D) perfectly inelastic.
If workers received a 5 percent wage increase and the rate of inflation was 10 percent, then their real wage:
A. decreased. B. remained constant. C. increased. D. equaled the nominal wage.
If people expect the price of packaged coffee to rise next week, coffee demand will:
A. decrease now. B. increase now. C. stay the same now and increase next week. D. stay the same now and decrease next week.
Which of the following countries had the highest unemployment rate for workers under 25 in 2009?
A. Italy B. France C. Great Britain D. Spain