Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 9, Problem 6SPA
To determine
The indifference curves.
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Differentiate between normal goods and inferior goods
Draw figures that show your indifference curves for the following pairs of goods: ā Right gloves and left gloves ā Coca-Cola and Pepsi ā Tylenol and acetaminophen (the generic form of Tylenol) ā Desktop computers and laptop computers ā Strawberries and ice cream.
For each pair, are the goods perfect substitutes, perfect complements, substitutes, complements, or unrelated?
If the consumer is consuming exactly two goods, and she is always spending all of her money, can both of them be inferior goods?
Chapter 9 Solutions
Macroeconomics
Ch. 9.1 - Prob. 1RQCh. 9.1 - Prob. 2RQCh. 9.1 - Prob. 3RQCh. 9.1 - Prob. 4RQCh. 9.1 - Prob. 5RQCh. 9.2 - Prob. 1RQCh. 9.2 - Prob. 2RQCh. 9.2 - Prob. 3RQCh. 9.2 - Prob. 4RQCh. 9.3 - Prob. 1RQ
Ch. 9.3 - Prob. 2RQCh. 9.3 - Prob. 3RQCh. 9.3 - Prob. 4RQCh. 9.3 - Prob. 5RQCh. 9 - Prob. 1SPACh. 9 - Prob. 2SPACh. 9 - Prob. 3SPACh. 9 - Prob. 4SPACh. 9 - Prob. 5SPACh. 9 - Prob. 6SPACh. 9 - Prob. 7SPACh. 9 - Prob. 8SPACh. 9 - Prob. 9SPACh. 9 - Prob. 10SPACh. 9 - Prob. 11SPACh. 9 - Prob. 12APACh. 9 - Prob. 13APACh. 9 - Prob. 14APACh. 9 - Prob. 15APACh. 9 - Prob. 16APACh. 9 - Prob. 17APACh. 9 - Prob. 18APACh. 9 - Prob. 19APACh. 9 - Prob. 20APACh. 9 - Prob. 21APACh. 9 - Prob. 22APACh. 9 - Prob. 23APACh. 9 - Prob. 24APACh. 9 - Prob. 25APACh. 9 - Prob. 26APACh. 9 - Prob. 27APACh. 9 - Prob. 28APACh. 9 - Prob. 29APACh. 9 - Prob. 30APA
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- Compare the following two pairs of goods and answer the following questions about complements, substitutes and the income and substitution effects: (1) Coke and Pepsi(2) Shoes and socks In which case will a consumer respond more to a change in the relative price of the two goods?arrow_forwardCompare the following two pairs of goods and answer the following questions about complements, substitutes and the income and substitution effects: (1) Coke and Pepsi(2) Shoes and socks Which pair of goods most likely have fairly straight indifference curves?Ā Which pair of goods most likely have very bowed indifference curves?Ā Why?arrow_forwardConsider two different pairs of goods: a. Sunscreen and bug spray b. Hot dogs and hamburgers Which pair of goods are most likely complements? Which pair of goods are most likely substitutes? Which pair of goods most likely have fairly straight indifference curves? Which pair of goods most likely have very bowed indifference curves? Why? In which case will a consumer respond more to a change in the relative price of the two goods?arrow_forward
- Can Giffin goods also be normal goods?arrow_forwardJerry spends his entire budget on bread and gasoline. His preferences are complete, transitive, monotonic, and convex. For Jerry, bread is an inferior good that follows the law of demand. Moreover, his cross-price elasticity of demand for gasoline with respect to the price of bread is negative. Suppose the price of bread increases, all else constant. a. Create a chart to show the total, income, and substitution effects on bread and gasoline of the increase in the price of bread. b. Use budget lines and indifference curves to graphically illustrate the three effects. Be sure to label each effect on your graph (or through the chart from part a) and plot bread on the x-axis and gasoline on the y-axisarrow_forwardWhen there is a change in price, there is an income effect and a substitution effect. Which is larger? The substitution effect or the income effect? Explainarrow_forward
- If a good is a Normal Good and its price decreases, what are the directions of the Substitution Effect and the Income Effect? Both are increases Both are decreases The Substitution Effect is an increase while the Income Effect is a decrease The Substitution Effect is a decrease while the Income Effect is an increasearrow_forwardWhen Sam has an income of $1,000, he consumes 30 units of good A and 50 units of good B. After SamĆ¢s 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_forwardhow do I illustrate an increase in a price of an item resulting in consumers buying another itemarrow_forward
- According 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? Ā Ā They are both luxury goods. Ā Ā There is no relationship between the two goods. Ā Ā The two goods are substitutes in consumption. Ā Ā The two goods are complements in consumption.arrow_forwardYakov consumes only cheese and crackers. Cheese and crackersĀ Ā Ā both be inferior goods for Yakov. Ā 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 crackersĀ Ā Ā and his consumption of cheeseĀ Ā Ā .arrow_forwarda) JimĀ buys gingerbread and candy, both of which are normal goods. When the price of gingerbread rises, the income effect induces Jim to buy _______ gingerbread and Ā ________ candy. b) Jim buys candy and gingerbread, both of which are normal goods. When the price of gingerbread rises, the substitution effect induces Jim to buy_______gingerbread and________ candy.arrow_forward
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