Question

8. If the price consumption curve (as the price of x changes) is horizontal, then good y must be a normal good. a. True b. False

9. If the income consumption curve is upward sloping, then the price consumption curve (as the price of x changes) must be upward sloping too. a. True b. False

10. If the income consumption curve is a horizontal line, then cross-price elasticity of demand for good y with respect to the price of good x must be positive. a. True b. False

11. If the Engel curve for good x is vertical, then the law of demand must hold for good x. a. True b. False

12. A tax cut that raises the after-tax wage rate will most likely result in more hours worked if the substitution effect outweighs the income effect. a. True b. False

Answer 1

Answer for 8)

Good X is free good and Good Y is normal good

Hence Trus

Answer for 9)

Upward sloping Price consumption curve inndicates goods X & Y are complements Hence in this context it is false

Answer for 10)

Cross Price elasticity for substitute goods is always negative in this case we have income consumption curve as a horizontal line and it is possible when both goods are substitutues therefore False

Answer for 11)

False. The Engel curve tells the relationship between the quantity demanded and income. As Engle Curve is vertical then law of demand may not hold for good X