A good is called "inferior" if: i) There are other goods that consumers prefer to it. ii) Consumers buy more of it as the price falls. i) is the definition of an inferior good and ii) is irrelevant. ii) is the definition of an inferior good and i) is irrelevant. i) and ii) together define an inferior good. Neither i) nor ii) define an inferior good.

A good is called "inferior" if: i) There are other goods that consumers prefer to it. ii) Consumers buy more of it as the price falls. i) is the definition of an inferior good and ii) is irrelevant. ii) is the definition of an inferior good and i) is irrelevant. i) and ii) together define an inferior good. Neither i) nor ii) define an inferior good.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section: Chapter Questions

Problem 5CQQ

See similar textbooks

Similar questions

1. Explain what is meant by an Inferior Good. What information is required to establish whether a particular good is inferior?
Q.1.14 Utility from consuming a good is understood by economists to mean; (a) how often we consume the good.(b) how much satisfaction or benefit we get from consuming the good.(c) how much it costs to buy the good.(d) how we best use the good. Q.1.15 The marginal utility of a good or service declines as one more unit is consumed because:(a) supply slopes upwards.(b) consumers are constrained by income. (c) of the law of diminishing marginal utility. (d) prices move with demand.
12)Suppose a consumer has $100 to spend on two goods, shoes and shirts. If the price of a pair of shoes is $20 per pair and the price of a shirt is $15 each, which of the following combinations is unaffordable to the consumer? A) 0 pairs of shoes and 0 shirts B) 2 pairs of shoes and 4 shirts C) 5 pairs of shoes and 0 shirts D) 0 pairs of shoes and 7 shirts E) 2 pairs of shoes and 3 shirts
4. Describe what is meant by a normal good. Provide a real-life example in your own words. What is an inferior good? How does a change in income impact the demand for inferior goods?
7) By definition, an inferior good is aa) Good for which demand decreases when income increase. b) Want that is not expressed by demand.c) Normal substitute good.d) Good for which demand decreases when its price rises.8) The study of the decisions of individual units in the economy is known asa) Microeconomicsb) Macroeconomicsc) The Study of incentivesd) Ceteris Paribus Study 9) If a good has a price, then it is considered _______ ?
(b) If the consumer is consuming exactly two goods, and he is always spending all of his money, can both of them be inferior goods?
10. If supply changes from S2 to S1 and demand changes from D1 to D2 (a) equilibrium price falls to $ 14. (b) equilibrium quantity increases to 16. (c) equilibrium price increases to $19. (d) supply has increased. 11. if demand changed from D1 to D2 as a result of an increase in buyers' income this product is (a) a normal good. (b) a free good. (c) an inferior good. (d) a complementary good. 12. If demand for this product changed from D2 to D1 as a result of a increase in price of a related product, then these two products are (a) complements. (b) inferior goods. (c) economic goods. (d) substitutes. (e) public goods.
(a.) Consider a consumer who consumes two good- X and Y - where X is an inferior (but NOT Giffen good. Consider an initial equilibrium where with an income of 100 and individual consumes 10 units of X and 12 units of Y . Now, suppose the price of the good X increases, keeping everything else unchanged. Draw a clearly labelled diagram and indicate the range of the new equilibrium due to price change. [Note: only a clean graph is required and the information that are NOT given are NOT necessary.] (b.) A monopolist- who sells microprocessors in an entire Indian market- charges INR 1200 per unitand sells 1.213 million units in the country. The firm is a recent entry- so the economists are not sure about the demand curve for the Indian market, except that it is a linear curve. Can you comment anything about the elasticity at the equilibrium? Specifically, does the equilibrium lie in the elastic or the inelastic part of the demand curve? (c.) Consider a monopolist who serves a market given…
10) Figure 1 shows some indifference curves and budget lines for consumer Yusuf. Milk A B Cheese Figure 1 If Yusuf's income increases, his optimal consumption changes from point A to point B. Which of the following statements is true for Yusuf? (a) Cheese and milk are substitutes. (b) Cheese is an inferior good. (c) Milk is an inferior good . (d) Milk is a normal good. (e) None of the above.
04. Assuming this market is at equilibrium, the total benefit to the consumer is $ _______. a) 9 b) 12 c) 21 d) 54 e) 72 f) 102 g) 126 h) 144 i) 156 j) 228 k) 252
(9) What determines the utility an individual receives from consuming a good? Select one: a. The individual’s own preferences. b. The demand and supply curves for that good. c. The producers conducting customer feedback surveys of that good and the feedback provided. (10) Denzel bought headphones two months ago, Solo2 Beats by Dre, for $130. He gives them to his little brother and goes online to buy another for himself but they are now $160. What is the percentage change in the headphone’s price? Select one: a. 23% b. 30% c. 21%
5. The elasticity of substitution will be a lower number: (a) The less curved is the indifference curve (b) The more curved is the indifference curve (c) The greater the income elasticity of demand of the good on the horizontal axis (d) The greater the degree of substitutability between the two goods (e) If tastes are both homothetic and quasilinear