Question

1.) In tracing out a price consumption curve for a good x, which of the following variables are held constant? Select all that apply

a.) consumer income

b.) consumption of y.

c.) the price of good x

d.) utility

e.) the price of good y

2.) The demand curve maps out

a.) the optimal quantities of x and y change as income changes, ceteris paribus.

b.) the optimal quantity of one good and the price of that good, ceteris paribus.

c.) the optimal quantities of x and y change as the price of both goods change, ceteris paribus.

d.) the optimal quantities of x and y change as the price of one of the goods changes, ceteris paribus.

Answer 1

1.) In tracing out a price consumption curve for a good x, which of the following variables are held constant? Select all that apply

a.) consumer income

e.) the price of good
Explanation: In PCC, we trace out the market baskets which maximise consumer's utility when price of good x changes, holding all else constant.

2.) The demand curve maps out

b.) the optimal quantity of one good and the price of that good, ceteris paribus.

Explanation: Demand curve shows the relation between teh price of a goood and the quantity demanded of that good.