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 ?

Related Mcqs:

1. 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 income effect is represented by the movement from point ?

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

2. Refer to Exhibit 4. Suppose that the consumer must choose between buying socks and belts Also suppose that the consumer’s income is €100 If the price of a belt is €10 and the price of a pair of socks is €5, the consumer will choose to buy the commodity bundle represented b point ?

   A. Z
   B. X
   C. Y
   D. the optimal point cannot be determined from this graph

3. Refer to Exhibit 4, Suppose that the consumer must choose between buying socks and belts Also suppose that the consumer’s income is €100 A pair of socks is ?

   A. an inferior effect
   B. a Geffen good
   C. a normal good
   D. none of these answers

4. With free trade, suppose that the rest of the world can supply calculators to Canada at a price of $30. Canada’s imports would now equal _____ and its consumer surplus would ____ relative to what occurred in the absence of trade. What is the change in consumer surplus? Refer to the figure that you have plotted ?

   A. 20 calculators increase
   B. 25 calculators decrease
   C. 25 calculators increase
   D. 30 calculators increase

5. 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

6. Refer to Exhibit 6. Suppose the economy is operating at point (D) As people revise their price expectations ?

   A. The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 3 percent inflation
   B. The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 9 per cent inflation
   C. The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 6 percent inflation
   D. The long-run Phillips curve will shift to the left

7. Sana values a pair of blue jeans at Rs400. If the price is Rs350 Sana buys the jeans and generates consumer surplus of Rs50 Suppose a tax is placed on blue jeans that causes the price of blue jeans to rise to Rs450 Now sana chooses not to buy a pair of?

   A. the deadweight has demonstrated
   B. the ability-to-pay principle
   C. the benefits principle
   D. horizontal equity
   E. The administrative burden of a tax.

8. Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers allow the economy to adjust to the long run natural rate on its own, ?

   A. People will reduce their price expectations and the short run aggregate supply will shift right
   B. People will raise their price expectations and aggregate demand will shift left
   C. People will raise their price expectations and the short run aggregate supply will shift left
   D. People will reduce their price expectations and aggregate demand will shift right

9. Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers wished to move output to its long run natural rate they should attempt to ?

   A. Shift aggregate demand to the left
   B. Shift short run aggregate supply to the left
   C. shift aggregate demand to the right
   D. shift short-run aggregate supply to the right

10. Refer to Exhibit 4. Which of the following is true with regard to the burden of the tax in Exhibit 4 ?

    A. The buyers pay a larger portion of the tax because demand is more inelastic than supply
    B. The sellers pay a larger portion of the tax because supply is more elastic than demand
    C. The buyers pay a larger portion of the tax because demand is more elastic then supply
    D. The sellers pay a larger portion of the tax because supply is more inelastic than demand