ECONOMICS 203 Quiz 3_ECON 203 PRINCIPLES OF ECONOMETHICS Questions and Answers

Question 1 1 / 1 point The ________________ arises when a price changes because consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price. a)  preferences effect b)  substitution effect c)  income effect d)  backward-bending supply curve Question 2 1 / 1 point Marginal utility can: a)  increase positively, but not negatively b)  be positive or negative, but not zero c)  be positive, negative, or zero d)  decrease, but not become negative Chapter 6 American households Question 3 0 / 1 point Approximately what portion of annual consumption is typically spent by American households on shelter?   a)  one-fourth b)  one-quarter c)  one-half d)  one-third Chapter 6 maximizing utility