Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 21, Problem 4PA
Subpart (a):
To determine
The inferior and normal goods of consumption by an individual.
Subpart (b):
To determine
The inferior and normal goods of consumption by an individual.
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Raphael consumes only cheese and crackers.
True or False: Cheese and crackers can both be inferior goods for Raphael.
True
or
False
Suppose that cheese is a normal good for Raphael while crackers are an inferior good.
If the price of cheese falls, Raphael's consumption of crackers
(decrese or increase) ? and his consumption of cheese
( decrese or increase) ? .
Yakov consumes only cheese and crackers.
Cheese and crackers both be inferior goods for Yakov.
Suppose that cheese is a normal good for Yakov while crackers are an inferior good.
If the price of cheese falls, Yakov's consumption of crackers and his consumption of cheese .
If the consumer is consuming exactly two goods, and she is always spending all of her money, can both of them be inferior goods?
Chapter 21 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
Ch. 21.1 - Prob. 1QQCh. 21.2 - Prob. 2QQCh. 21.3 - Prob. 3QQCh. 21.4 - Prob. 4QQCh. 21 - Prob. 1QRCh. 21 - Prob. 2QRCh. 21 - Prob. 3QRCh. 21 - Prob. 4QRCh. 21 - Prob. 5QRCh. 21 - Prob. 6QR
Ch. 21 - Prob. 7QRCh. 21 - Prob. 1QCMCCh. 21 - Prob. 2QCMCCh. 21 - Prob. 3QCMCCh. 21 - Prob. 4QCMCCh. 21 - Prob. 5QCMCCh. 21 - Prob. 6QCMCCh. 21 - Prob. 1PACh. 21 - Prob. 2PACh. 21 - Prob. 3PACh. 21 - Prob. 4PACh. 21 - Prob. 5PACh. 21 - Prob. 6PACh. 21 - Prob. 7PACh. 21 - Prob. 8PACh. 21 - Prob. 9PACh. 21 - Prob. 10PACh. 21 - Prob. 11PACh. 21 - Prob. 12PACh. 21 - Prob. 13PA
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- Jerry spends his entire budget on bread and gasoline. His preferences are complete, transitive, monotonic, and convex. For Jerry, bread is an inferior good that follows the law of demand. Moreover, his cross-price elasticity of demand for gasoline with respect to the price of bread is negative. Suppose the price of bread increases, all else constant. a. Create a chart to show the total, income, and substitution effects on bread and gasoline of the increase in the price of bread. b. Use budget lines and indifference curves to graphically illustrate the three effects. Be sure to label each effect on your graph (or through the chart from part a) and plot bread on the x-axis and gasoline on the y-axisarrow_forwardJohn consumes 20 units of food and 24 units of clothing. If food is an inferior good, will John be indifferent between receiving a $24 gift certificate at a clothing store and receiving $24 in cash? Explain and show graphically.arrow_forwardSuppose that a consumer has $200 to spend on two goods: beer and pretzels. The price of beer is $6.00 and the price of pretzels is $3.00. The price of beer decreases to $3.00. Because beer is now cheaper relative to pretzels, the consumer will want to consumer more beer and fewer pretzels. This is an example of which of the following? The income effect A giffen good The substitution effect Bowed indifference curvearrow_forward
- Brayden receives some utility from consuming a bottle of store-brand soda, an inferior good. However, he would much rather purchase a name-brand soda, a normal good, if he could afford it. Since a bottle of store-brand soda is an inferior good, how would an increase in its price affect the quantity Brayden demands? The causes Brayden's quantity demanded of store-brand soda to decrease. causes Brayden's quantity demanded of store-brand soda to increase since his purchasing The power has changed. Because a bottle of store-brand soda is an inferior good but not a Giffen good, the price increases. is stronger than This causes quantity demanded for a bottle of store-brand soda to decrease when the In this example, how do the substitution effect and income effect interact with each other? They do not interact with each other. They work in opposite directions. There is no way to know. They work in the same direction.arrow_forwardWhen Sam has an income of 1.000 , he consumes 30 units of good A and 50 units of good B After Sam's income increases to $1,500 , he consumers 60 units of good A and 40 units of good B. Which of the following statements is correct ? a- Good A is a normal good and good B is an inferior good b- Both goods A and B are inferior goods c- Good A is an inferior good, and good B is a normal good d- Both goods A and B are normal goodsarrow_forwardThe following table shows the amounts of additional satisfaction (marginal utility) that Ross would get from consuming successive quantities of products A and B. a. Fill in the MU/P column for each product. Instructions: Enter your answers rounded to one decimal place. Price of Good A = $8 Price of Good B = $4 MU of Good B, Units of Good A MU of Good A, Units of Good B MU/P for A MU/P for B utils utils 1 56 1 32 2 48 28 3 32 3 24 4 24 4 20 5 20 12 6 16 10 7 12 7 8 If Ross has an income of $64, how many units of each good will he purchase to maximize his utility? Instructions: Enter your answers as a whole number. |units of good A |units of good Barrow_forward
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