Pindyck & Rubinfeld Quiz 4


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Note: There are 10 multiple choice questions below. Answer each question by clicking the appropriate button. When you have answered all of the questions, click the "Check Answers" button at the bottom of the page. Your score will be calculated, and you will see a list of the questions that you answered correctly, and those that you answered incorrectly. You may retake the quiz as often as you wish. Click the "Reset" button to clear all your answers before you retake the quiz.

  1. As we move downward along a demand curve for apples,

      consumer well-being decreases.
      the marginal utility of apples increases.
      the marginal utility of apples decreases.
      Both A and C are true.

  2. Which of the following pairs of goods are NOT complements?

      Hockey sticks and hockey pucks
      Computer CPUs and computer monitors
      On-campus student housing and off-campus rental apartments
      none of the above

  3. Which of the following goods has a low, but positive, income elasticity of demand?

      furniture.
      new cars.
      health insurance.
      all of the above

  4. Which of the following pairs of goods are substitutes?

      Baseball bats and baseballs
      Hot dogs and mustard
      Computer hardware and software
      Owner-occupied housing and rental housing

  5. According to a survey by the U.S. Bureau of Labor Statistics, which of the following statements about annual U.S. household consumer expenditures is false?

      The income elasticity of demand for entertainment is positive.
      The income elasticity of demand for owner-occupied housing is positive.
      The income elasticity of demand for rental housing is positive.
      The income elasticity of demand for health care is positive.

  6. Good A is a normal good. The demand curve for good A:

      slopes downward.
      usually slopes downward, but could slope upward.
      slopes upward.
      usually slopes upward, but could slope downward.

  7. The change in the quantity demanded of a good resulting from a change in relative price with the level of satisfaction held constant is called the __________ effect.

      Giffen
      real price
      income
      substitution

  8. For an inferior good, the income and substitution effects

      work together.
      work against each other.
      can work together or in opposition to each other depending upon their relative magnitudes.
      always exactly cancel each other.

  9. A Giffen good

      is always the same as an inferior good.
      is the special subset of inferior goods in which the substitution effect dominates the income effect.
      is the special subset of inferior goods in which the income effect dominates the substitution effect.
      must have a downward sloping demand curve.

  10. Which of the following is true concerning the income effect of a decrease in price?

      It will lead to an increase in consumption only for a normal good.
      It always will lead to an increase in consumption.
      It will lead to an increase in consumption only for an inferior good.
      It will lead to an increase in consumption only for a Giffen good.

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