Question

Place the correct answer for each of the folng N h The Budget Constraint: What the Consumer Can Afford 1. According to economists, people consume less than they desire because the supply is limited. a. True b. False Preferences: What the Consumer Wants 2. According to economists, people usually prefer to consume more than less. a. True b. False Optimization: What the Consumer Chooses 3. At the consumer's optimum, the consumer's valuation of two goods equals the market's valuation. a. True b. False 4, when consumers want more of a good when their income rises, economists say the good is which of the following? a. inferior good b. popular good c. normal good d. perfect good c 5. which of the following would be an example of an inferior good? a. Pepsi b. pizza c. newest Apple iPhone d. bus ride nge 1 of 4 691 words Focus

Answer 1

1)According to economists,people consume less than they desire because the supply is limited

False

(People consume less than they desire because the means (income)to full fill their desires is limited.So consumption is limited as spending is constrained by their income.Wants are unlimited but the means to satisfy wants are limited so consumers has to make a trade off between commodities and thus consumes less)

2)According to economists people usually wish to consume more than less

True

(Consumers objective is maximize his total utility,so the consumers wish to consume more than less in respect to the amount of their income spent by them)

3)At the consumers optimum the consumers valuation of two goods equals the market's value

True

(Consumers optimum is the point at which the indiference curve and the budget constraint are tangent to each other and at this point the consumers valuation of two goods equals markets's valuation)

4)When the consumer wants more of a good when income rises,economists say the good is which of the following?

Normal Good

(normal goods are those goods whose demand increases when income increases.Normal goods have positive income elasticity of demand)

5)Which of the following would be an example of an inferior quality good?

Bus ride

(Inferior goods are goods whose demand decreases as income increases.Bus ride is an inferior good because when consumer income is low people use bus rides,but when the income increases people stop bus rides and buy cars)