When the price of one good increases, the associated income effect is represented by a move from one indifference curve to a:
A. higher indifference curve since real income is now higher.
B. lower indifference curve since real income is now higher.
C. higher indifference curve since real income is now lower.
D. lower indifference curve since real income is now lower.
Answer: D
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Refer to Figure 3-1. A decrease in the price of a substitute good would be represented by a movement from
A) A to B. B) B to A. C) D1 to D2. D) D2 to D1.
Demand is said to be ____ when the quantity demanded is very responsive to changes in price
a. independent b. inelastic c. unit elastic d. elastic
The models of perfect competition and monopoly are the most realistic.
Answer the following statement true (T) or false (F)
If the income elasticity of demand for a good is negative, then the good must be an inferior good
a. True b. False Indicate whether the statement is true or false