Answer to Question #288830 in Microeconomics for Ali

Question

Assume that beer is a normal good. If the price of beer rises, then the substitution effect

results in the person buying ________ of the good and the income effect results in the

person buying ________ of the good.

A. more, more

B. more, less

C. less, more

D. less, less

6. Which of the following is true regarding income along a price-consumption curve?

A. Income is increasing.

B. Income is decreasing.

C. Income is constant.

D. The level of income depends on the level of utility.

7. Joe’s coffee house produces coffee drinks under the production function q = 5KL where q

is the number of cups generated per hour, K is the number of coffee machines (capital), and

L is the number of employees hired per hour (labor). What is the average product of

labor(APL)?

A. APL = 5

B. APL = 5K

C. APL = 5L

D. APL = 5K/L

Answer 1

5.C

6.C

7.B