Multiple Select QuestionSelect all that applyThe income effect:Multiple select question.only works in conjunction with the law of diminishing marginal utility.works in the same direction as the substitution effect for normal goods. refers to the change in the demand for a good caused by a change in a consumer's purchasing power.is the same as the substitution effect.works in the same direction as the substitution effect for inferior goods.

When the price of a normal good increases,Group of answer choicesboth the income and substitution effects encourage the consumer to purchase more of the good.both the income and substitution effects encourage the consumer to purchase less of the good.the income effect encourages the consumer to purchase less of the good, and the substitution effect encourages the consumer to purchase more of the good.the income effect encourages the consumer to purchase more of the good, and the substitution effect encourages the consumer to purchase less of the good.

Consider a consumer buying perfect complements. If there is a decrease in the price of good 1, the total change in consumption of good 1 is due toGroup of answer choicesthe pure substitution effectthe income effectthe pure substitution effect minus the income effectit depends on whether the good is inferior or normalnone of the above

Consider a consumer with a utility function U = x1 + x2. Initially, the consumer was only purchasing good 2, but after the price of good 1 was reduced, the consumer switched all of her consumption into good 1. The total change in consumption of good 1 is due to the pure substitution effect (and the income effect is zero).Group of answer choicesTrueFalse

Select the type of good where the negative income effect is strong to outweigh the substitution effect and where the law of demand fails to hold.   Inferior goods   Complements   Normal goods.   Giffen goods

. A Giffen good:Select correct option:Is always the same as an inferior good.For More Visit VUAnswer.comIs the special subset of inferior goods in which the substitution effect dominatesthe income effect.Is the special subset of inferior goods in which the income effect dominates thesubstitution effect.Must have a downward sloping demand curve69. The object of diversification is:Select correct option:To reduce risk and fluctuations in income.To reduce risk, but not to reduce fluctuations in income.To reduce fluctuations in income, but not to reduce risk.Neither to reduce risk, nor to reduce fluctuations in income.70. A price support may be pictured by:Select correct option:Shifting the demand curve to the right by the amount of the governmentpurchase.Shifting the demand curve to the left by the amount of the government purchase.Shifting the supply curve to the right by the amount of the government purchase.Shifting the supply curve to the left by the amount of the government purchase.71. Ali and Sarah decide to go into business together as economicconsultants. Ali believes they have a 50-50 chance of earning $200,000a year, and that if they don't, they'll earn $0. Sarah believes they have a75% chance of earning $100,000 and a 25% chance of earning $10,000.Refer to the scenario, the probabilities discussed in the informationabove are:Select correct option:Objective because they are single numbers rather than ranges.Objective because they have been explicitly articulated by the individualsinvolved.Subjective because the event hasn't happened yet.Subjective because they are estimates made by individuals based upon personaljudgment or experience.72. The law of diminishing returns refers to diminishing:Select correct option:Total returns.Marginal returns.