A consumer consumes two normal goods, popcorn and Pepsi. The price of Pepsi rises. The substitution effect, by itself, suggests that the consumer will consumeGroup of answer choicesless popcorn and less Pepsi.more popcorn and more Pepsi.less popcorn and more Pepsi.more popcorn and less Pepsi.

An increase in price of Pepsi will increase the demand for Coke.Group of answer choicesTrueFalse

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

The quantity demanded of Pepsi has decreased. The best explanation for this is thatA.Pepsi's advertising is not as effective as in the past.B.the price of Coca-Cola has increased.C.Pepsi consumers had an increase in income.D.the price of Pepsi has increased.