Modul 10

Question 1

What is the impact of a price change with no change in quantity demanded?

Answer 1

The quantity demanded remains the same

Question 2

Ms. Andrews increased her apple consumption to 9 pounds per month because of the ______ effect.

Answer 2

substitution

Question 3

What is the process of deriving the market demand curve from the demand curves of individuals?

Answer 3

Summing horizontally

Question 4

What is the process of deriving an individual demand curve from utility-maximizing adjustments to changes in price?

Answer 4

Identifying the substitution effect

Question 5

The _ effect of a price change refers to the change in quantity demanded due to the change in purchasing power.

Answer 5

income

Question 6

How is an individual demand curve derived from utility-maximizing adjustments to changes in price?

Answer 6

An individual demand curve is derived by observing the quantity of a good that an individual consumer purchases at different prices, based on their utility-maximizing choices.

Question 7

What are the two distinct effects of a price change on consumer demand?

Answer 7

Substitution effect and income effect

Question 8

How do normal and inferior goods differ in terms of the income effect?

Answer 8

For normal goods, the income effect reinforces the substitution effect, leading to an increase in quantity demanded when the price falls. For inferior goods, the income effect works in the opposite direction, resulting in a decrease in quantity demanded when the price falls.

Question 9

The _ effect and income effect are two distinct effects of a price change.

Answer 9

substitution

Question 10

How do changes in price affect consumer demand?

Answer 10

Changes in price can affect consumer demand by influencing the quantity demanded, which can be influenced by the substitution effect and income effect.

Question 11

How are market demand curves derived?

Answer 11

Market demand curves are found by summing horizontally the demand curves of all the consumers in the market.

Question 12

How can the market demand curve be derived from the demand curves of individuals?

Answer 12

The market demand curve can be derived by horizontally summing the individual demand curves of all consumers in the market.

Question 13

The ______ effect of a price change involves a change in consumption in a direction opposite that of the price change.

Answer 13

substitution