Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 21, Problem 5QCMC
To determine
The reason behind increased demand , when price of the good rises.
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If the price pf pasta increases and a consumer buys more pasta, we can infer that
a. pasta is a normal good and the income effect is greater than the substitution effect.
b. pasta is a normal good and the substitution effect is greater than the income effect.
c. pasta is an an inferior good and the income effect is greater is greater than the substitution effect.
d. pasta is an inferior good and the substitution effect is greater than the income effect.
Solve it correctly please.I will rate accordingly
Bob consumes food and housing. Suppose his marginal utility from an additional unit of food is 20 and his marginal utility from an additional unit of housing is 180.
Furthermore, suppose the price of a unit of food is $1.00 and the price of a unit of housing is $2.00. Can Bob increase his utility without changing his total expenditures
on food and housing?
Holding expenditures constant,
A. Bob can increase utility by spending more on food and less on housing.
B. Bob can increase utility by spending more on food and the same amount on housing.
C. Bob can increase utility by spending less on food and more on housing.
D. Bob cannot increase his utility.
E. Bob can increase utility by spending more on food and more on housing.
Chapter 21 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
Ch. 21.1 - Prob. 1QQCh. 21.2 - Prob. 2QQCh. 21.3 - Prob. 3QQCh. 21.4 - Prob. 4QQCh. 21 - Prob. 1QRCh. 21 - Prob. 2QRCh. 21 - Prob. 3QRCh. 21 - Prob. 4QRCh. 21 - Prob. 5QRCh. 21 - Prob. 6QR
Ch. 21 - Prob. 7QRCh. 21 - Prob. 1QCMCCh. 21 - Prob. 2QCMCCh. 21 - Prob. 3QCMCCh. 21 - Prob. 4QCMCCh. 21 - Prob. 5QCMCCh. 21 - Prob. 6QCMCCh. 21 - Prob. 1PACh. 21 - Prob. 2PACh. 21 - Prob. 3PACh. 21 - Prob. 4PACh. 21 - Prob. 5PACh. 21 - Prob. 6PACh. 21 - Prob. 7PACh. 21 - Prob. 8PACh. 21 - Prob. 9PACh. 21 - Prob. 10PACh. 21 - Prob. 11PACh. 21 - Prob. 12PACh. 21 - Prob. 13PA
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- What is the difference between the income effect and the substitution effect of aprice increase for a normal good?arrow_forwardIf a good is an inferior good, then its A. Engel curve cannot be drawn. B. demand curve will be upward sloping. C. income effect reinforces the substitution effect. D. income elasticity is negativearrow_forwardWhich one of these goods is likely to have the largest substitution effect? Select one: a. Skittles candy b. Honda Accord c. Flour d. Electricity e. Gasolinearrow_forward
- Peanut butter and jam can be either substitutes or it can be compliments. Caitlin likes peanut butter and she likes jam, but you do not know if Caitlin regards these products as substitutes or as compliments. Which of the following is true? A. If the price of peanut butter decreases and the quantity of jam Caitlin demanded increases, then Caitlin regards it as substitutes. B. If the price of jam increases and the quantity of peanut butter Caitlin demanded increases, then Caitlin regards it as compliments. C. If the price of peanut butter increases and the quantity of jam Caitlin demanded increases, then Caitlin regards it as substitutes. D. If the price of jam decreases and the quantity of peanut butter Caitlin demanded decreases, then Caitlin regards it as compliments. E. If the price of peanut butter increases and the quantity of jam Caitlin demanded stays the same, Caitlin regards it as compliments.arrow_forwardNeed help with drawing the demand curvearrow_forwardIf the consumer is consuming exactly two goods, and she is always spending all of her money, can both of them be inferior goods?arrow_forward
- 3. Every Friday for two months, Shelley visits her favorite pizza place and buys a large pepperoni and olive pizza. After nine weeks, she decides that she has grown tired of pepperoni and olive pizza, so she no longer buys it. This is an example of what principle of demand? A. substitution effect B. law of demand C. diminishing marginal utility D. income effectarrow_forwardWhen Sam has an income of $1,000, he consumes 30 units of good A and 50 units of good B. After Samâs income increases to $1,500, he consumes 60 units of good A and 40 units of good B. Which of the following statements is correct? Both goods A and B are inferior goods Both goods A and B are normal goods Good A is a normal good, and good B is an inferior good Good A is an inferior good, and good B is a normal goodarrow_forwardWhat is “Compensating Variation”? What is “Consumer’s Surplus”? What is “Equivalent Variation”? What are they trying to measure?arrow_forward
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