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ECS2601 ASSIGNMENT 2 2024 SEMESTER 2 The income effect of a price decrease … a. refers to the influence of nominal income changes rather than real income changes on consumer purchases. b. measures the effect of both real and nominal income changes on cons$4.97
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ECS2601 ASSIGNMENT 2 2024 SEMESTER 2 The income effect of a price decrease … a. refers to the influence of nominal income changes rather than real income changes on consumer purchases. b. measures the effect of both real and nominal income changes on cons
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Course
Intermediate Microeconomics (ECS2601)
Institution
University Of South Africa (Unisa)
ECS2601 ASSIGNMENT 2 2024 SEMESTER 2
The income effect of a price decrease …
a. refers to the influence of nominal income changes rather than real income changes on consumer purchases.
b. measures the effect of both real and nominal income changes on consumer purchases.
c. refers to the influ...
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Education is the most powerful weapon which you can use to change the world
, ECS2601-24-S2 Welcome Message Assessment 2
QUIZ
Started on Friday, 30 August 2024, 2:16 PM
State Finished
Completed on Friday, 30 August 2024, 2:31 PM
Time taken 14 mins 43 secs
Marks 20.00/20.00
Grade 100.00 out of 100.00
Question 1
Correct
Mark 1.00 out of 1.00
The income effect of a price decrease …
a. refers to the influence of nominal income changes rather than real income changes on consumer purchases.
b. measures the effect of both real and nominal income changes on consumer purchases.
c. refers to the influence of real income changes rather than nominal income changes on consumer purchases.
d. does not relate to changes in real or nominal income, but rather to the perception of change in the mind of the
consumer.
, Question 2
Correct
Mark 1.00 out of 1.00
The substitution effect of a price decrease for a good with a normal difference curve pattern is graphed by …
a. doing none of the above because the substitution effect cannot be graphed.
b. drawing a new budget line tangent to the indifference curve attained at the new price.
c. drawing a new budget line tangent to the original indifference curve but at the slope of the new price of the
good.
d. drawing a new budget line parallel to the initial budget line but tangent to the indifferent curve attained at the new
price.
Question 3
Correct
Mark 1.00 out of 1.00
If good X consumes a large portion of the budget, a price increase of X…
a. has a large income effect, because the consumer budget is heavily affected by price increases in big-ticket
items.
b. has a very large substitution effect, because consumers cannot easily absorb the expense of the price increase and
so they substitute.
c. has a small substitution effect since large budget items have few substitutes.
d. has a small income effect because the income effect is measured with nominal income constant.
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