A change in the relative prices of which of the following pair of goods would likely cause the smallest substitution effect ?

Related Mcqs:

1. In certain industries Japanese employers hesitate to lay off workers Therefore they sometimes have excess supplies of goods that they cannot sell on the home market without lowering prices. To hold down losses they sell goods in overseas markets at prices well beneath those in japan This practice is best referred to as ?

   A. Orderly marketing
   B. trigger pricing
   C. domestic content pricing
   D. dumping

2. Engineers for the All-Terrain Bike Company have determined that a 15% increase in all inputs will cause a 15% increase in output Assuming that input prices remain constant, you correctly deduce that such a change will cause ________ as output increases?

   A. average costs to remain constant
   B. average costs to decrease
   C. average costs to increase
   D. marginal costs to increase

3. The income effect of a price increase of a normal good is to ________ of that good and the substitution effect is to _________ of that good?

   A. increase quantity demanded, reduce quantity demanded
   B. increase quantity demanded, increases quantity demanded
   C. reduce quantity demanded, reduce quantity demanded
   D. reduce quantity demanded, increase quantity demanded

4. If the income effect is smaller than the substitution effect, higher net wages will ?

   A. reduce the supply of labour.
   B. increase the demand for labour
   C. increase the supply of labour
   D. have no effect on the supply of labour

5. Assuming leisure is a normal good, if the income effect is greater than the substitution effect a wage increase ?

   A. will have no effect on labour supply
   B. will decreases labour supply
   C. could cause either an increases or a decrease in labour supply
   D. will increase labour supply.

6. The substitution effect of a rise in the price of labour will ____ the quantity of labour and the output, effect will ____ it

   A. increase; increase
   B. increase; reduce
   C. reduce; reduce
   D. reduce; increase

7. Refer to Exhibit 4, Suppose that the consumer must choose between buying socks and belts Also suppose that the consumer’s income is €100 Suppose that the price of a pair of socks falls from €5 to €2 The substitution effect is represented by the movement from point ?

   A. Z to point X
   B. X to point X
   C. X to point Z
   D. Y to point X

8. If your income doubles and the prices of the goods you buy double then your demand for these goods will likely?

   A. increase
   B. not change
   C. decrease
   D. shift

9. When supply exceeds demand, sellers must lower prices to stimulate sales, when demand exceeds supply, prices increase as buyers compete to buy goods. What this theory is called in economics?

   A. Cost push theory
   B. Supply and Demand theory
   C. Fundamental theory
   D. Ricardo’s theory

10. The substitution effect of higher wages suggests that as the wage rate increases ?

    A. leisure becomes less expensive and households buy more of it
    B. leisure becomes more expensive and households buy more of it
    C. leisure becomes more expensive and households buy less of it
    D. leisure becomes less expensive and households buy less of it.