Dave Consumes Two Normal Goods, X and Y, and Is

question 505

Multiple Choice

Dave consumes two normal goods, X and Y, and is currently at an optimum. If the price of good X falls, we can predict with certainty that

• A)Dave will consume more of both goods because his real income has risen.
• B)the substitution effect will be positive for good X and negative for good Y.
• C)Dave may consume more or less of good X, but he will consume less of good Y.
• D)the substitution effect will offset the income effect for good X.

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Definitions:

Information Technology

The study or use of systems (especially computers and telecommunications) for storing, retrieving, and sending information.

Unemployment Insurance

A government program that provides financial assistance to unemployed workers who have lost their jobs through no fault of their own.

Frictional Unemployment

Frictional unemployment occurs when there is a temporary mismatch between workers and jobs, such as when individuals are transitioning between jobs or entering the workforce for the first time.

Structurally Unemployed

Unemployment that occurs due to shifts in the economy that create a mismatch between the skills of the workforce and the needs of the employers.