Question : Statement 1: A consumer's demand curve for normal goods slopes downward.
Statement 2: As the price of a normal good decrease, the consumer's quantity demanded of the good increases.
Option 1: Statement 1 is true, and statement 2 is false.
Option 2: Statement 1 is false, and statement 2 is true.
Option 3: Both statement 1 and statement 2 are true.
Option 4: Both statement 1 and statement 2 are false.
Correct Answer: Both statement 1 and statement 2 are true.
Solution : For a normal good, the demand curve slopes downward, indicating that as the price of the good decreases, the quantity demanded by consumers increases. This is in line with the law of demand. Therefore, statement 1 is true.
Statement 2 is also true as it aligns with the behavior of consumers for normal goods. When the price of a normal good decreases, consumers tend to buy more of it, resulting in an increase in the quantity demanded.
Question : Statement 1: A consumer's demand for a luxury good is income elastic.
Statement 2: As the consumer's income increases, their demand for luxury goods increases at a proportionately higher rate.
Question : Statement 1: The price elasticity of demand for a normal good is always negative.
Statement 2: Normal goods exhibit an inverse relationship between price and quantity demanded.
Option 1: Both statements are true.
Option 2: Both statements are false.
Option 3: Statement 1 is true, and statement 2 is false.
Option 4: Statement 1 is false, and statement 2 is true.
Question : Statement 1: The consumer's equilibrium is achieved when the budget line is steeper than the highest attainable indifference curve.
Statement 2: The consumer's equilibrium is determined by the intersection of the budget line and the highest attainable indifference curve.
Question : Statement 1: A consumer's demand for a good is income inelastic.
Statement 2: A change in the consumer's income does not significantly affect their demand for the good.
Question : Assertion: A consumer's demand curve for a complement good slopes downward.
Reason: As the price of a complementary good decrease, the consumer is more likely to buy both goods together, leading to an increase in the quantity demanded.
Option 1: Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
Option 2: Both the assertion and reason are true, but the reason is not a correct explanation of the assertion.
Option 3: The assertion is true, but the reason is false.
Option 4: The assertion is false, but the reason is true.
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