The law of diminishing marginal utility helps to explain the direct relationship between price and quantity supplied. a. True b. False

Which 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. Gasoline

Figure 4-6Refer to Figure 4-6.  The movement from D’ to D could be caused by   a. an increase in the price of a complement.   b. a decrease in income, assuming the good is inferior.   c. a decrease in price.   d. buyers expecting the price of the good to fall in the near future.

When the price of raspberries increases, consumers may switch to strawberries or blueberries. What effect is responsible for this switch?

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.

Question 3

1. Which of the following is NOT true of a demand curve? a. It has negative slope. b. It shows the amount consumers are willing and able to purchase at various prices, holding other factors constant. c. It relates the price of an item to the quantity demanded of that item. d. It shows how an increase in price leads to an increase in quantity demanded of a good.

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.

Suppose that a decrease in the price of X results in less of good Y sold. What are X and Y called?    A. substitute goods  B. complementary goods  C. normal goods  D. inferior goods

If two goods are substitutes, a decline in the price of one will cause an increase in the demand for the other.  A.True B.False