1. Refer to the diagram above. The point with coordinates 0A and OD AND the poin

Question

1. Refer to the diagram above.

The point with coordinates 0A and OD AND the points with coordinates 0B and OE

Select one:

a. will have different dollar income levels

b. will have the same dollar income levels

c. are each associated with the same utility levels

d. are each NOT associated with optimal consumption levels

2. From the diagram above, if Good Q is an inferior good , then which of the following is true?

Select one:

a. Good Q is NOT a Giffen good

b. The demand curve is perfectly horizontal

c. The demand curve is positively sloped

d. All of the above are true

e. None of the above are true

3. From the diagram above, if Good Q is an inferior good , then which of the following is true?

Select one:

a. Good Q is NOT a Giffen good

b. The demand curve is perfectly horizontal

c. The demand curve is positively sloped

d. All of the above are true

e. None of the above are true

4. Refer to the graph above.

Between the point of tangency associated with point A and the point associated with B respectively,

Select one or more:

a. Demand is inelastic

b. Consumer income remains the same

c. Consumer income Is falling

d. Consumer income Is rising

Explanation / Answer

Q1
Answer
Option b
b. will have the same dollar income levels
the price of Q is changed so the intercept of the x axis is shifted but the income level is same
Q2
c. The demand curve is positively sloped
the increase in price increases demand and the decrease in price decreases demand so the inferior good has positively sloped demand curve
Q3
c. The demand curve is positively sloped
the increase in price increases demand and the decrease in price decreases demand so the inferior good has positively sloped demand curve
Q4
b. Consumer income remains the same

the price of Q is changed so the intercept of the x axis is shifted but the income level is same

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