QUESTION 17 When the prices of all goods and the income level triple, the income

Question

QUESTION 17 When the prices of all goods and the income level triple, the income offect results in the consumer buying more of both goods O True O False QUESTION 18 When the assumption "the more, the better" is imposed on consumer behaviors, the income effect can never be negative. True O False QUESTION 19 The Engel curve bends backward impliets that the good s a normal good at a low income level and is an inferior good at a high income level. True False QUESTION 20 In a utility function Uk)-x0.5 y0.5, Good X and Good Y are substitutes instead of complements. True False

Explanation / Answer

17) False

When prices and income triple budget line remains unchanged and so does the equilibrium.

18) True

More is better for normal goods and income effect is positive for normal goods.

19) True

Engel curve is upward sloping for normal goods and downward sloping for inferior goods, and is backward bending when the good is normal at low levels of income and inferior for high levels of income.

20) False

The utility function is neither of substitutes or complements.

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