# Indifference Curve Analysis and Exceptions to the Law of Demand Quiz

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## 18 Questions

All of the above

### Why does the demand curve slope downward to the right?

Both income and substitution effects

### If any change occurs in consumer income, what will happen to the demand schedule or curve?

It will need to be redrawn

### Which analysis will be used to prove why the demand curve slopes downward according to the text?

Marginal utility analysis

### In drawing a demand curve, what is assumed about the buyer's influence on commodity prices?

The buyer takes prices as constant

### What effect causes an increase in quantity demanded when the price of a commodity falls?

Both income and substitution effects

### What does the coefficient 'b' in a demand function indicate?

The change in quantity demanded resulting from a unit change in price

### If the coefficient b1 is -5, what does this indicate?

An increase of 5 units in quantity demanded with a decrease in price

### What is described by the law of demand?

The relationship between price and quantity demanded

### According to the law of demand, what happens when the price of a commodity falls?

Quantity demanded rises

### Which statement correctly describes the relationship between price and quantity demanded according to the law of demand?

Inverse relationship

### What can accurately predict the demand for a commodity in future years?

Values of coefficients of various variables of the demand function

By its price

Decreases

Demand increases

Thorstein Veblen

Giffen goods

### How does Thorstein Veblen suggest some consumers view the utility of a commodity based on its price?

Higher price, higher utility

Test your knowledge on Hicks and Allen's indifference curve theory and exceptions to the law of demand, including the Veblen Effect. Explore the concepts of income and substitution effects along with goods that have Prestige Value.

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