4. Movements along versus shifts of demand curves Consider the market demand for cereal. Complete the following table by indicating whether an event will cause a movement along the demand curve for cereal or a shift of the demand curve for cereal, holding all else constant. Event Movement Along Shift A change in the expectations of consumers about their future income       A decrease in the number of consumers       An increase in the price of cereal

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05- Income and Substitution Effects Question 4

3. If the demand for a product is perfectly price inelastic, what does the corresponding price consumption curve look like? Draw a graph to show the price consumption curve.

The law of demand implies, holding everything else constant, that as the price of pizza Select one: A. decreases, the demand for pizza will increase. B. decreases, the quantity of pizza demanded will decrease. C. decreases, the demand for pizza remains unchanged. D. increases, the demand for pizza will increase. E. increases, the quantity of pizza demanded will decrease.

Questions 6 (Demand). When the price of x1 is $8 and the price of x2 is $5, Jenny consumes 20 units of x1 and 10 units of x2. Suppose that when the price of xX2 increases to $7, Jenny consumes 25 units of x1. a) What type of goods are x1 and x2? b) How many units of x2 does Jenny consume after its price increases? Hint: Calculate her income with the first allocation of goods. Questions 7 (Slutsky Equation and Consumer Surplus). Robert's utility function for x and xa is: