Suppose that X and Y are substitute goods. If the price of good X increases, we can expect:
A. the demand for good X to shift to the left.
B. an upward movement along the demand curve for good Y.
C. the demand curve for good Y to shift to the right.
D. a downward movement along the demand curve for good Y.
Answer: C
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All points above the budget line are
A) inferior to every point on the budget line. B) preferred to every point on the budget line. C) unaffordable. D) Both answers B and C are correct.
If a good is considered a normal good, the demand curve will shift ________ when income increases because ________
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.
An industry is likely to be an increasing-cost industry when
a. all firms are identical. b. it represents a negligible fraction of the total demand for inputs. c. industry expansion permits the development of supporting subindustries. d. some firms are more efficient than others.
If the percentage change in price is less than the percentage change in quantity demanded, the price elasticity coefficient is greater than 1.
Answer the following statement true (T) or false (F)