Exam 6: Appendix: Indifference Curves and Utility Maximization

Suppose Norm really loves coffee and Diane really loves books. If we drew their indifference curves on a graph with books on the horizontal axis and coffee on the vertical axis, Diane's indifference curves would be

Exhibit 6-22 -If a consumer moves from point a to point b on the indifference curve shown in Exhibit 6-22,

A consumer's indifference map is a depiction of

According to the law of diminishing marginal rate of substitution,

If clams and mussels are normal goods, then when the amount the consumer can spend increases,

Chris budgets $30 this week for spending on his two favorite things, pizza and movies. The price of a movie is $5. Moreover, he could buy 3 pizzas if he doesn't go to the movies. If pizza is on the horizontal axis, what is the slope of the budget line?

Economists assume that, within a given budget, consumers will

A family on a trip budgets $200 for restaurant meals and fast food. If the price of a fast-food meal for the whole family is $20, what is the horizontal intercept of the budget line when fast food is measured on the horizontal axis?

-Which of the following points in Exhibit 6-25 represent combinations of goods that cost the consumer the same amount of money to purchase?

A family on a trip budgets $800 for restaurant meals and fast food. The family can buy 16 restaurant meals if they buy no fast-food meals. What is the price of a restaurant meal for the family?

A family on a trip budgets $200 for restaurant meals and fast food. If the price of a fast-food meal for the whole family is $20, what is the vertical intercept of the budget line when fast food is measured on the horizontal axis?

-Point b in Exhibit 6-25 is better than which other point(s)?

An increase in income is represented by a shift of the budget line outward to a parallel position.

Imagine a budget line between two goods, A and B. If both prices triple while income doubles,

Exhibit 6-31 -Assume that a consumer is initially in equilibrium at point a in Exhibit 6-31. Then the price of good B falls. The movement from point a to point c represents

Exhibit 6-29 -Which graph in Exhibit 6-29 shows the effect of a decrease in the price of clothing, other things constant?

Exhibit 6-24 -Which point on curve I₁ in Exhibit 6-24 yields the most utility?

Which of the following would not cause the budget line between books and food to shift?

Exhibit 6-29 -Which graph in Exhibit 6-29 shows a decrease in the price of food?

If a candy bar sells for 50 cents and video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12 and the vertical (video game) intercept of Ann's budget line is 24. Giving up one video game makes it possible for Ann to afford