4. Something is a normal good if the demand for that good: A. shifts right as th

Question

4. Something is a normal good if the demand for that good: A. shifts right as the consumer's income decreases B. shifts left as the consumer's income decreases. C. decreases if the price of a substitute good increases D. shifts left as the income of the consumer increases. E. increases if the price of a complement good increases. 5. As discussed in class and seen in the short video material presented, what was the most important idea/concept that economist George Akerlof, addressed in his 1970 paper The Market for "Lemons": Quality Uncertainty and the Market Mechanism"? A. fallacy of composition. B. opportunity cost. C. monopoly power. D. information asymmetry E. comparative advantage. 6. Suppose both buyers of a commodity and sellers of it expect the market price of the commodity to decrease in future. This will cause the equilibrium price of the commodity to and the equilibrium quantity transacted of it toTODAY, everything else held constant. A. decrease; be ambiguous B. increase; be ambiguous C. be ambiguous; decrease D. not change; not change E. be ambiguous; increase 7. Suppose you are studying a production possibilities frontier (PPF) that has a bowed-out shape relative to the origin (i.e. concave). What is the reason for this specific shape? A. absolute advantage. B. comparative advantage. C. resources that are not easily adaptable. D. constant marginal opportunity cost. E. Pareto inefficiency

Explanation / Answer

Question-4: B) shifts left as consumer income decreases.

Because normal goods are those goods which have direct relationship between income and demand i.e when income increases demand for goods also increases , if decreases demand also decreases. As we all know demand curve shifts left when demand decreases and shifts right when demand increases.

So in this case, it's clear that for normal goods when income decreases it shifts to left.

Law of demand ( demand increases when prices decreases and vice versa) is clearly applicable for normal goods

When consumer gets more income he intends to purchase more normal goods and when his income reduces he decreases the purchase of normal goods.

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.