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Exam 21: The Theory of Consumer Choice

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Question 211

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Suppose the price of good X falls and the consumption of good X increases. From this we can infer that X is a(n) (i) Normal good.(ii) Inferior good.(iii) Giffen good.

A) (i) only
B) (i) or (ii) only
C) (iii) only
D) (ii) or (iii) only

E) B) and D)
F) B) and C)

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Question 212

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"Left" gloves and "right" gloves provide a good example of

A) perfect substitutes.
B) perfect complements.
C) negatively sloped indifference curves.
D) positively sloped indifference curves.

E) A) and C)
F) All of the above

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Question 213

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Higher indifference curves are preferred to lower ones as long as the

Figure 21-2 The downward-sloping line on the figure represents a consumer's budget constraint. -Refer to Figure 21-2. If the consumer's income is $100, then what is the price of an apple?

Figure 21-14 -Refer to Figure 21-14. Which of the graphs shown represent indifference curves for perfect complements?

Consider two goods: peanuts and crackers. The slope of the consumer's budget constraint is measured by the

The bowed shape of the indifference curve reflects the consumer's

Figure 21-7 -Refer to Figure 21-7. Suppose a consumer has $200 in income, the price of a book is $5, and the price of a DVD is $10. What is the value of B?

If income decreases and prices are unchanged, the consumer's budget constraint

Figure 21-22 -Refer to Figure 21-22. If the consumer is currently at point A in the figure, a movement to point B as a result of a decrease in the price of potato chips represents the

A good is an inferior good if the consumer buys more of it when

What is an individual's marginal rate of substitution between nickels and dollar bills? Assume the individual only cares about the monetary value of each bundle.​

Consumers face tradeoffs except at the point where the indifference curve is tangent to the budget line.

A consumer's indifference curves are right angles when, for the consumer, the goods in question are __________.

Thomas faces prices of $6 for a unit of good X and $30 for a unit of good Y. At his optimum, Thomas is willing to give up 1 unit of good Y for __________ units of good X.

Bundle L contains 10 units of good X and 20 units of good Y. Bundle M contains 8 units of good X and 21 units of good Y. The consumer is indifferent between bundle L and bundle M. Assume that the consumer's preferences satisfy the four properties of indifference curves. Which of the following correctly expresses the marginal rate of substitution of good X for good Y between these two points?

If we observe that Jamie's budget constraint has moved outward, then we know for certain that

Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure reflects an increase in the price of good Y only?

Figure 21-18 -Refer to Figure 21-18. Bundle B represents a point where

Figure 21-32 The figure shows three indifference curves and a budget constraint for a consumer named Hannah. When young, Hannah works and earns income. When old, she is retired and earns no income. -Refer to Figure 21-32. At two of the four labeled points, Hannah is equally happy. Identify those two points.