4. As consumer incomes rise, the demand curve for good X shifts to the right. Gi

Question

4. As consumer incomes rise, the demand curve for good X shifts to the right. Given this, good X must be a _____________ produced by a competitive firm. b. a high quality product. c. a substitute good. d. a normal good. e. an inferior good.

5. If an increase in the wage rate from $6.00 per hour to $6.50 per hour causes a worker to decrease his hours worked from 40 to 35 hours per week, which effect dominates? a. Substitution b. Income c. Wage d. Wealth e. Leisure

6. Rent control laws may lead to which of the following unintended effects? a. Under-the-table payments b. Increased forced commuting c. Higher search costs d. Lost profit incentives to change the supply of rental housing e. All of the above

7. Which of the following individuals lose as a result of an effective minimum wage law? a. Those who remain employed after the minimum wage is instituted b. Teenagers who lose their jobs and valuable on-the-job training c. Skilled workers who earn wages above the minimum wage d. All of the above e. None of the above

Explanation / Answer

Ans:

4) Option D

a normal good.

Normal good is a product or service whose demand increases when consumer income increases.The increase in the demand will cause the demand curve to shift to the right.In this case as consumer income increased, the demand for good X increased. The increase in the demand will cause the demand curve for good X shifts to the right.

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