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Econ 323 TAMU Exam 1 - Anderson Questions and Answers
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Econ 323 TAMU Exam 1 - Anderson
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Econ 323 TAMU Exam 1 - AndersonElastic – answer x > 1
Inelastic – answer x < 1
Unit Elastic – answer x = 1
Price Elasticity of Demand - answer% Change in Quantity / % Change in Price
Total Spending Falls – answer Price Increases
AND
Demand is elastic
Total Spending Rises – answer Price Increases
AND
Demand is inelastic
If X and Y are perfect substitutes, which of the following assumptions about indifference
curves is NOT satisfied? - answer Diminishing MRS
Opportunity Cost of consuming one unit of X in terms of how much Y must be given up
is reflected in - answer The slope of the individual's budget constraint
If an individual's indifference curve map does not obey the assumption of a diminishing
MRS, then - answer tangencies of indifference curves to the budget constraint may not
be points of utility maximization
With two goods, if the income effect is in the same direction as the substitution effect,
then the good is - answer normal
X and Y are substitutes if - answer an increase in Px causes more Y to be bought
X and Y are compliments if - answer an increase in Px causes less Y to be bought
If good X is a normal good and it's price rises, then the quantity demanded - answer will
always fall
Which of the following will NOT cause a demand curve to shift position - answer A
doubling of a good's price
If the income elasticity of demand is 0.5, the good is - answer normal
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