1. Suppose the demand function for cable TV service is given by QCTV = 15 - 0.25 PCTV + 0.0005 M + 0.3 PSTV, where QCTV is the quantity of cable TV demanded (thousands of households), PCTV is the price of cable TV, M is income and PSTV is the price of satellite TV service. We can see that:

Select one:

a. cable TV service is a normal good.

b. cable TV service and satellite TV service are complements.

c. cable TV service is an inferior good.

d. cable TV service and satellite TV service are unrelated to one another.

2. The marginal rate of substitution between two goods is given by:

Select one:

a. the slope of a line tangent to an indifference curve.

b. the inverse of the slope of an indifference curve.

c. negative one times the slope of a line tangent to an indifference curve.

d. negative one times the inverse of the slope of an indifference curve.

3. The rate at which a consumer will exchange one good for another is called:

Select one:

a. the marginal rate of transformation.

b. the marginal rate of substitution.

c. the rate of substitutability.

d. marginal utility.

4. Two products are substitutes if:

Select one:

a. a decrease in the price of one causes buyers to demand more of the other.

b. an increase in the price of one causes buyers to demand less of the other.

c. individuals consume the goods together.

d. an increase in the price of one causes buyers to demand more of the other.