1. An inferior good is characterized by:

Select one:

a. a negative price elasticity of demand.

b. a positive price elasticity of demand.

c. a positive income elasticity of demand.

d. a negative income elasticity of demand.

2. If an increase in the price of one good causes buyers to demand less of another good, then the two goods are:

Select one:

a. substitutes.

b. inferior goods.

c. normal goods.

d. complements.

3. If an increase in the price of one good causes buyers to demand less of another good, then the two goods are:

Select one:

a. inferior goods.

b. normal goods.

c. complements.

d. substitutes.

4. Intuitively, the marginal rate of substitution for X with Y tells us:

Select one:

a. how much more Y the consumer will buy if the price of Y increases by $1.

b. how much X a consumer needs to compensate them for a one-unit decrease in Y.

c. how much Y a consumer needs to compensate them for a one-unit decrease in X.

d. how much X must be taken away from a consumer to compensate them for a one-unit increase in Y.