4) An increase in consumer income, other things being equal, will shift the demand curve for an inferior good to the left. Explain whether this statement is correct.

5) If a 5 percent reduction in the price of a good produces a 3 percent increase in the quantity demanded, what is the price elasticity of demand over this range of the demand curve? Explain how that affects the pricing decision of this good.

6) As an individual consumes more of a given good, what happens to the marginal utility of that good to the consumer? Explain and provide an example to illustrate.

7) Assuming coffee and tea are substitutes, what is the result of a decrease in the price of coffee, other things being equal? Explain.

8) Suppose the quantity of steak purchased by the Jones family is 110 pounds per year when the price is $2.10 per pound and 90 pounds per year when the price is $3.90 per pound. Calculate the price elasticity of demand for this family.