A Downward-Sloping Demand Curve Can Be Derived for a Normal

question 34

Multiple Choice

A downward-sloping demand curve can be derived for a normal product by increasing its price in the consumer-behavior model and noting

• A)the increase in the utility-maximizing quantity of that product demanded.
• B)the decrease in the utility-maximizing quantity of that product demanded.
• C)a substitution effect that encourages more consumption of that product.
• D)an income effect that encourages more consumption of that product.

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Definitions:

Family Resemblance Test

A legal test applied to determine whether a new financial instrument should be classified as a security under U.S. law.

Reves v. Ernst & Young

A significant court case that established a test for determining whether a transaction qualifies as a security under the securities laws.

Promissory Notes

Written promises to pay a specified sum of money to a certain entity or person at a specified time or on demand.

Howey Test

A test derived from SEC v. W.J. Howey Co. to determine if a transaction qualifies as an "investment contract" and thus is considered a security subject to certain regulatory requirements.