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:

External Validity

The extent to which the results of a study can be generalized to other situations and to other people.

Construct Validity

The extent to which a test measures what it claims to be measuring; it's about the accuracy of the operationalization of the variables.

Qualitative Research

A research strategy focusing on understanding concepts, thoughts, or experiences through in-depth collection and analysis of non-numerical data like text, audio, or video.

Ethnographic Study

A qualitative research method that involves the systematic study of people and cultures from within, through observation and participation.