Question

If we use "ceteris paribus" when plotting a demand curve for the price of canned beans, what is assumed to be constant?

Select the two correct answers below.

Select all that apply:

• The price of a can of beans.

• The price of a can of tomatoes.

• The number of cans of beans supplied.

• The costs of production of a can of beans.

The demand curve for a normal good is sloped _______________. The demand curve for an inferior good is sloped _______________.

Select the correct answer below:

upwards, downwards

upwards, upwards

downwards, upwards

downwards, downwards

For normal goods, there is a _________________ relationship between income and demand levels, and there is an ______________ relationship for inferior goods.

Select the correct answer below:

positive, positive

positive, inverse

inverse, inverse

Answer 1

1) If we use "ceteris paribus" then here we will keep constant the price of a can of tomatoes and the costs of production of a can of beans as all the other factor are kept constant except the price. The quantity supplied changes with a change in own price of the good.

2) The demand curve for a normal good is sloped upward. The demand curve for an inferior good is sloped downward. When we plot demand and income on the two axis.  

3) For normal goods, there is a positive relationship between income and demand levels, and there is an inverse relationship for inferior goods. Demand increase as income increases for normal goods and demand decrease as income increases for inferior goods.