Consider the Indifference Curve Map and Budget Constraint for Two

question 10

Multiple Choice

Consider the indifference curve map and budget constraint for two goods, beef and potatoes. Suppose the good measured on the horizontal axis, potatoes, is a Giffen good. Beef is measured on the vertical axis and is a normal good. When the price of potatoes increases, the substitution effect causes

• A)an increase in the consumption of potatoes, and the income effect causes a decrease in the consumption of potatoes.The substitution effect is less than the income effect.
• B)a decrease in the consumption of potatoes, and the income effect causes an increase in the consumption of potatoes.The substitution effect is greater than the income effect.
• C)an increase in the consumption of potatoes, and the income effect causes a decrease in the consumption of potatoes.The substitution effect is greater than the income effect.
• D)a decrease in the consumption of potatoes, and the income effect causes an increase in the consumption of potatoes.The substitution effect is less than the income effect.

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Definitions:

In-Group

A social group to which a person psychologically identifies as being a member.

Out-Group

A social group to which an individual does not identify or belong, often viewed with prejudice or disdain.

Ethnicity

A category of people who identify with each other based on common ancestral, social, cultural, or national experiences.

What-Is-Beautiful-Is-Good Stereotype

The assumption that physically attractive individuals possess more desirable personality traits and are more successful than those who are less attractive.