Question : 61) The demand curve for a good with an income : 1384187

61) The demand curve for a good with an income elasticity of less than one

A) must be downward sloping.

B) must be upward sloping.

C) will be upward sloping only if the substitution effect outweighs the income effect.

D) will be upward sloping only if the income effect outweighs the substitution effect.

E) indicates a normal good.

62) The substitution effect is

A) the change in quantity demanded that occurs as a result of a change in absolute prices, with real income held constant.

B) the change in quantity demanded that occurs as a result of a change in relative prices with money income held constant.

C) the change in quantity demanded that occurs as a result of a change in relative prices with real income held constant.

D) the change in quantity demanded that occurs when one good is substituted for another.

E) the change in the relative prices of two or more goods.

63) In which of the following situations will an individual’s purchasing power be unaffected?

A) money income is cut in half and the prices of all goods and services fall by 50%

B) money income falls and the price of one good falls

C) money income doubles and the prices of all goods and services are cut in half

D) money income doubles and the prices of all goods and services remain constant

E) money income is cut in half and prices of all goods and services remain constant

64) Suppose a consumer can purchase only two goods, beef and chicken. If the price of beef falls (with all other variables held constant), and the consumption of chicken increases, we can conclude that the increased consumption of chicken is due to

A) neither the income effect nor the substitution effect.

B) both the income effect and the substitution effect.

C) the income effect only.

D) the substitution effect only.

E) a change in the consumer’s preference toward chicken.

65) Refer to Figure 6-4.  For both goods, the price falls from to . The substitution effect is illustrated by the change in quantity demanded from A to B; the income effect is illustrated by the change in quantity demanded from B to C. Good X is certainly a(n) ________ good.

A) normal

B) inferior

C) luxury

D) necessity

E) Giffen

66) Refer to Figure 6-4.  For both goods, the price falls from to . The substitution effect is illustrated by the change in quantity demanded from A to B; the income effect is illustrated by the change in quantity demanded from B to C. Good Y is certainly a(n) ________ good.

A) normal

B) inferior

C) luxury

D) necessity

E) Giffen

67) Refer to Figure 6-5. For both goods, the price increases from to . The substitution effect is illustrated by the change in quantity demanded from A to B; the income effect is illustrated by the change in quantity demanded from B to C. Good X is certainly a(n) ________ good.

A) normal

B) inferior

C) luxury

D) necessity

E) Giffen

68) Refer to Figure 6-5. For both goods, the price increases from to . The substitution effect is illustrated by the change in quantity demanded from A to B; the income effect is illustrated by the change in quantity demanded from B to C. Good Y is certainly a(n) ________ good.

A) inferior

B) normal

C) luxury

D) necessity

E) Giffen

69) Assume you are consuming two goods, X and Y. X and Y are both normal goods but they are not close complements. The price of good X increases but the price of Y remains unchanged. However, you are given enough additional income to ensure that your utility remains unchanged. What happens to your consumption of good X?

A) it increases

B) it stays the same

C) it increases or decreases

D) it decreases

E) it increases over the long run

70) Assume you are consuming two goods, X and Y. Suppose that the money prices for X and Y remain unchanged, but your income increases by 20%. What happens to your consumption of good X?

A) it increases

B) it stays the same

C) it increases or decreases, depending on whether it is normal or inferior

D) it decreases

E) it increases by 20%