ch of the graphs in Exhibit 3 depicts the effect of an increase in income on the

Question

ch of the graphs in Exhibit 3 depicts the effect of an increase in income on the demand for pork and beans (an inferior good)? a. Graph A. b. Graph B. c. Graph C d. Graph D. The negative slope of the demand curve reflects the: a. positive relationship between price and quantity b. proportional relationship between price and quantity. c. inverse relationship between price and quantity d. positive relationship between income and quantity. e. inverse relationship between income and price. 23. Which of the following best represents the effects of a decrease in the price of coffee, other things being equal? a. A leftward shift in the demand curve for coffee. b. A downward movement along the demand curve for coffee. c. A rightward shift in the demand curve for coffee. d. An upward movement along the demand curve for coffee. 24. 25. If the demand for a good increases when the price of another good increases, then these goods a. b. c. d. e. complementary in consumption. complementary in production. substitute in production. substitute in consumption. neither substitutes nor complementary.

Explanation / Answer

(22) Graph is missing.

(23) (c)

As price rises (falls), quantity demanded falls (rises).

(24) (b)

A decrease in coffee price will increase its quantity demanded, which reflects in a downward movement along its demand curve.

(25) (d)

In this case cross price elasticity of demand is positive.

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