Consider a downward-sloping demand curve. When the price of an inferior good decreases, the income and substitution effects

A) work in the same direction to increase quantity demanded.
B) work in the same direction to decrease quantity demanded.
C) work in opposite directions and quantity demanded increases.
D) work in opposite directions and quantity demanded decreases.

C

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If the utility function (U) between bananas (B) and jam (J) can be represented as U = 3ln(B)+4ln(J) the marginal utility of jam equals

A) 4B. B) 3B/J. C) 4/J. D) B/J.

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Carefully distinguish between an economic theory and economic model

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