10 Questions
Which of the following is true about comparative statics analysis of ordinary demand functions?
It studies how ordinary demands change as prices and income change
What is the focus of own-price changes in demand analysis?
How one demand changes as its own price changes, holding other factors constant
In the equation p1x1 + p2x2 = y, what does p1 represent?
The price of good 1
What happens to x1* as p1 increases, holding p2 and y constant?
x1* decreases
What happens to x1* as p1 changes from p1' to p1'' to p1''', holding p2 and y constant?
x1* remains constant
What is the purpose of comparative statics analysis of ordinary demand functions?
To study how ordinary demands change as prices and income change, while holding other factors constant
What does the equation p1x1 + p2x2 = y represent?
The relationship between prices and quantities demanded
What happens to x1* as p1 increases, holding p2 and y constant?
x1* increases
What happens to x1* as p1 changes from p1' to p1'' to p1''', holding p2 and y constant?
x1* decreases from p1' to p1'' and then increases from p1'' to p1'''
What happens to x2 as p1 changes from p1' to p1'' to p1''', holding p2 and y constant?
x2 increases from p1' to p1'' and then decreases from p1'' to p1'''
This quiz tests your understanding of the properties of demand functions and comparative statics analysis. It focuses specifically on the effects of own-price changes on demand, using the example of how x1*(p1,p2,y) changes as p1 increases while holding p2 and y constant. Put your knowledge to the test and see how well you grasp this concept!
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