_____________ refers to the permanent effectsof a temporary change. Question No.

Question

_____________ refers to the permanent effectsof a temporary change.

Question No. 30

Marks : 1

A giffen good is one whose benefits are indivisibly spread amongthe entire community, whether

or not particular individuals desire to consume the good ornot.

1.   True

2.   False

Question No. 31

In microeconomics, what is the usual meaning of the wordinvestment?

1. Saving your money and using it to buy stocks andbonds.

2. Purchasing new physical capital to aid in the productionprocess.

3. Learning new skills in order to add to your stock ofhuman capital.

4. When your new chapter of a club is recognized by thenational association.

Question No. 32

Marks :1

Marks : 1

The sign of the cross elasticity of demand between twoproducts will be negative if:

1. They are substitutes in consumption.

2. They are both normal goods.

3. They are both inferior goods.

4. They are complements in consumption.

Explanation / Answer

*All of my answers will begin with a quote fromwikipedia* (30) "A Giffen good is that which people consume more ofas price rises, violating the law of demand." So the answer to this question is false, the concept mentionedin the question has nothing to do with giffen goods. (31) "Investment is the choice by the individual to risk hissavings with the hope of gain. Rather than store the good produced,or its money equivalent, the investor chooses to use that goodeither to create a durable consumer or producer good, or to lendthe original saved good to another in exchange for either interestor a share of the profits." So 1 is the correct response. The use of ones saving toinvest in the market or in secure capital in the hopes of futuregains. (32) "Where the two goods are complements the cross elasticityof demand will be negative, so that as the price of one goes up thequantity demanded of the other will decrease. For example, inresponse to an increase in the price of fuel, the demand for newcars will decrease." So the answer is 4. When the price of one goes up the demandfor its compliment decreases. Note: I would highly recommend looking into these subjectsfurther on your own to truly understand the concepts stated inthese three problems. Also try not to put more than one question ina post. Thank you, hope i helped.

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