Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 21, Problem 4PA
Subpart (a):
To determine
The inferior and normal goods of consumption by an individual.
Subpart (b):
To determine
The inferior and normal goods of consumption by an individual.
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Raphael consumes only cheese and crackers.
True or False: Cheese and crackers can both be inferior goods for Raphael.
True
or
False
Suppose that cheese is a normal good for Raphael while crackers are an inferior good.
If the price of cheese falls, Raphael's consumption of crackers
(decrese or increase) ? and his consumption of cheese
( decrese or increase) ? .
Yakov consumes only cheese and crackers.
Cheese and crackers both be inferior goods for Yakov.
Suppose that cheese is a normal good for Yakov while crackers are an inferior good.
If the price of cheese falls, Yakov's consumption of crackers and his consumption of cheese .
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.
Chapter 21 Solutions
Principles of Microeconomics
Ch. 21.1 - Prob. 1QQCh. 21.2 - Prob. 2QQCh. 21.3 - Prob. 3QQCh. 21.4 - Prob. 4QQCh. 21 - Prob. 1CQQCh. 21 - Prob. 2CQQCh. 21 - Prob. 3CQQCh. 21 - Prob. 4CQQCh. 21 - Prob. 5CQQCh. 21 - Prob. 6CQQ
Ch. 21 - Prob. 1QRCh. 21 - Prob. 2QRCh. 21 - Prob. 3QRCh. 21 - Prob. 4QRCh. 21 - Prob. 5QRCh. 21 - Prob. 6QRCh. 21 - Prob. 7QRCh. 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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- Suppose that tacos and pizza are substitutes, and that soda and pizza are complements. We would expect an increase in the price of pizza to: O reduce the demand for both soda and tacos. reduce the demand for soda and increase the demand for tacos. increase the demand for both soda and tacos. O reduce the demand for tacos and increase the demand for sodas.arrow_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_forwardWhen the price of raspberries increases, consumers may switch to strawberries or blueberries. What effect is responsible for this switch?arrow_forward
- Suppose that you discover that, ceteris paribus, when the price of tomatoes increases, the demand for bleu cheese decreases. From this you conclude that: tomatoes and blue cheese are substitutes. tomatoes are inferior goods and blue cheese is a normal good. tomatoes and blue cheese are complements. the demand curve for tomatoes has shifted to the left.arrow_forwardBob 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.arrow_forwardTwo students, Nick and Sofia, are discussing normal and inferior goods. Nick says that if Frodo buys more beer when the price of beer goes up, then beer must be an inferior good for Frodo. If, on the other hand, he buys less beer when the price of beer goes up, then beer must be a normal good for Frodo. Sofia disagrees: "Normal and inferior goods are about income changes, not price changes. Therefore, we do not have enough information: beer could be an inferior or normal good in either of these cases." Do you agree or disagree? Carefully explain your point of view. Support your argument with graphs of income, substitution and total effects (please put beer on the horizontal axis and the other goods on the vertical axis). Please assume that Frodo's preferences over beer and other goods are strictly convex and satisfy "more is better" assumption.arrow_forward
- Joseph, who consumes wine and cheese, gets a raise, so his income increases from {300 to 700. a. What happens if both wine and cheese are normal goods? b. What happens if cheese is an inferior good?arrow_forwardAccording to a recent study, "Stricter college alcohol policies, such as raising the price of alcohol, or banning alcohol on campus, decrease the number of students who use marijuana." On the basis of this information, how would you describe alcohol and marijuana? They are both luxury goods. There is no relationship between the two goods. The two goods are substitutes in consumption. The two goods are complements in consumption.arrow_forwardRaj consumes only cheese and crackers.a. Could cheese and crackers both be inferior goodsfor Raj? Explain.b. Suppose that cheese is a normal good for Rajwhile crackers are an inferior good. If the price ofcheese falls, what happens to Raj’s consumptionof crackers? What happens to his consumption ofcheese? Explainarrow_forward
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