Exam 22: Consumer Preferences and Consumer Choice

(Scenario: Music Downloads and Streamed Movies)Read the scenario Music Downloads and Streamed Movies.Suppose Phillip's income falls by half,and the prices for both music downloads and streamed movies also fall by half.As a result of this,Phillip: Scenario: Music Downloads and Streamed Movies Phillip has an income of $300 per month,which he uses to purchase music downloads (MD)and streamed movies (SM).Each music download costs $1 and each streamed movie costs $5.

Diminishing marginal utility occurs with increasing total utility.

Henry and Anne have identical incomes.Both buy only sardines and ice cream.Since they face the same prices for the two goods,their optimal consumption bundles must be identical.

Use the following to answer question: -(Figure: Oreos and Apples)Use Figure Oreos and Apples,which provides an indifference curve map for Diego.Diego prefers:

Use the following to answer question: -(Figure: Consumer Equilibrium III)Use Figure Consumer Equilibrium III.A level of total utility NOT attainable is at point:

Use the following to answer question: -(Figure: Kristin's Budget Line)Use Figure Kristin's Budget Line.The price of a cup of cappuccino is $3,and the price of an apple is $1.Kristin's income is:

If a consumer moves upward along an indifference curve,his or her total utility:

Use the following to answer question: -(Table: Bundles of X and Y)Use Table Bundles of X and Y.Bundle(s):

Use the following to answer question: -(Figure: The Consumption of Video Games and E-Books)Use Figure The Consumption of Video Games and E-Books.Which chart shows the effects of a decrease in income when video games are an inferior good and e-books are a normal good?

One point on a standard indifference curve is 8 cookies and 2 brownies;another is 6 cookies and 4 brownies.Which of the following combinations of cookies and brownies could lie on this indifference curve?

When we graphically isolate the substitution effect of a change in the price of one good,utility is held constant.

Shirley knows her marginal rate of substitution of mangoes for bananas is equal to 3.The price of bananas is $0.50 and the price of mangoes is $1.00.Shirley should buy more mangoes.

(Figure and Table: Indifference Curve Map)Use Figure and Table An Indifference Curve Map.Combination _____ is preferred to combination _____.

Use the following to answer question: -(Figure: Harold's Indifference Curves)Use Figure Harold's Indifference Curves.If the price of bread is $0.50 per loaf,the price of cheese is $1 per pound,and Harold has $7 to spend on bread and cheese,Harold's optimal consumption bundle is _____ loaves of bread and _____ pounds of cheese.

Use the following to answer question: -(Figure: Oreos and Apples)Use Figure Oreos and Apples,which provides an indifference curve map for Diego.The consumption bundle that provides the highest level of utility is bundle:

If a consumer moves downward along an indifference curve,his or her total utility:

One point on an indifference curve drawn between mangoes and vegetable broth is the consumption bundle consisting of five mangoes and three boxes of vegetable broth.This means that Sharri is indifferent between five mangoes and three boxes of vegetable broth.

Use the following to answer question: -(Figure: Consumer Equilibrium II)Use Figure Consumer Equilibrium II.Which of the following statements is TRUE?

If combination A lies on a higher indifference curve than combination B and combination B lies on a higher indifference curve than combination C,it must be that the total utility associated with combination A is _____ the total utility associated with combination C.

Consumers buy both alcoholic and nonalcoholic beverages.If the government tries to discourage people from drinking alcoholic beverages by imposing an excise tax on them but gives consumers an income subsidy to keep the consumers on their original indifference curves: