Ch 6 Demand

Question 1

Normal god

Answer 1

Demand for good increases as income increases

Question 2

Inferior good

Answer 2

Demand for good decreases as income decreases

Question 3

Income offer curve (income expansion path)

Answer 3

Connection of demanded bundles as budget line is shifted by income change

Question 4

Engel curve

Answer 4

Graph for the demand of one good as a function of income

Question 5

Luxury good

Answer 5

Demand for a good goes up more rapidly than income

Question 6

Necessary good

Answer 6

Demand for the good goes up less rapidly than income

Question 7

Homothetic preferences

Answer 7

Preferences depend only on the ratio of the 2 goods

Question 8

Quasilinear preferences

Answer 8

Engel curve becomes a vertical line (one good has zero income effect after a certain point)

Question 9

Ordinary good

Answer 9

Demand increases as price decreases

Question 10

Giffen good

Answer 10

Demand increases as price increases

Question 11

Price offer curve

Answer 11

Connecting optimal points as the price of 1 good changes while the other is fixed

Question 12

Inverse demand curve

Answer 12

Price as a function of quantity (x axis)