Question

2. An ordinary demand curve contains both substitution and income effects, while a compensated demand curve contains only income effects. True or False

5. The substitution and income effects are in opposition when the price of an inferior good changes. True or False

7. Since the quantity of good X is measured along the horizontal axis when drawing indifference curves and demand curves, both can be drawn in the same diagram. True or False

8. When the price of a good rises, the income effect always reduces the quantity demanded of the good. True or False

12. Parallel shifts in the budget line are considered when deriving the demand curve for a good. True or False

14. A parallel shift in the budget line is caused by changes in the relative prices of the two goods. True or False

21. An inferior good is one for which the substitution effect is relatively large. True or False

Thank you in advance to whomever gets stuck helping me! True and false questions are my weakest point of test taking. It's the "never, sometimes, always" language that really messes me up. It's also 3am and my brain is starting to not work. Thank you again!

Answer 1