test 3- 2/27/2025

Question 1

define normal goods

Answer 1

a good for which an increase in income RAISES the quantity demanded.

Question 2

define inferior goods

Answer 2

a good for which an increase in income REDUCES the quantity demanded.

Question 3

price effect on CONSUMER CHOICE

Answer 3

As prices change in the market we buy more of a good or less of a good.

prices rise= buy less
prices decrease= buy more

Question 4

income EFFECT

Answer 4

The change in consumption that results when a price change moves the consumer to a higher or lower indifference curve.

Question 5

income rises= send _____
income less= send ______

Answer 5

more
less

Question 6

substitution effect

occurs when….

Answer 6

occurs when a price changes & consumers hv an incentive to:

consume LESS of the good with a relatively higher price

and MORE of the good with a relatively lower price

Question 7

the exceptions/ violation of income effect & substitution (2)

Answer 7

Giffen good
ostentatious good

Question 8

giffen good

___________ sloping demand curve

influenced by ________

Answer 8

a non-luxury good for which an increase in the price raises the Quantity demanded.

upward sloping

a LACK of close substitutes & income pressure

Question 9

ostentatious goods(2)

Answer 9

refer to goods that are rare, unique, exclusive, & very expensive

consumed to give status & enhance the social pride of their owners.