Exam 3: The Behavior of Consumers

If the marginal value of 1 bottle of shampoo is 4 soap bars,then

Suppose that an indifference curve for Jack is drawn measuring quantities of pencils along the horizontal axis and quantities of pens along the vertical axis. If the marginal value of an additional pencil is 3 pens for Jack, the slope of his indifference curve in this range is

At a corner solution,which of the following is know to be true?

A doubling of all prices has the same effect on the budget line as reducing income by half.

In comparing one market basket,A,to others to the northwest or southeast,we can say that a typical consumer will

Suppose a price index is formed to measure changes in the price level between 1999 to 2005.A price index based on changes in the cost of the basket of goods purchased by the typical consumer in 2005 is called a

If the consumer has the same tax bill under a head tax as under an income tax,then less leisure will be consumed under the head tax than under the income tax.

In using the composite-good convention in an indifference curve diagram,economists

Goods X and Y For the following questions, assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions. -Refer to Goods X and Y.The relative price of good X in terms of good Y is always equal to

Goods X and Y For the following questions, assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions. -Refer to Goods X and Y.Which of the following can cause a parallel,outward shift in the budget line?

If the consumer has the same tax bill under a head tax as under an income tax,then the consumer will be indifferent between the two taxes.

In order to identify differences in preferences among various countries,one would look for evidence that

Mathew has the utility function U = (where Y represents apples and X represents hot dogs),income of $20,and is deciding how to allocate that income between apples and hot dogs.Both hot dogs and apples cost $1.00 each.

The slope of the budget line always equals the consumer's marginal value.

The cardinal utility approach has exactly the same implications as the indifference curve approach.

Budget Lines The following questions refer to the following diagram, which shows the budget lines faced by a consumer last year and this year. -Refer to Budget Lines.If the consumer purchased basket B last year and purchases basket C this year,we can conclude that

The budget line is steep when X in inexpensive relative to Y.

Goods X and Y For the following questions, assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions. -Refer to Goods X and Y.Suppose the consumer is spending all of his income buying some of both goods.If the marginal value of X is greater than the relative price of X,how can the consumer improve his level of satisfaction?

A utility maximizing person gets marginal utility from consuming their last pencil and pen of 4 and 10 respectively.If pencils cost 10 cents a piece,the pens must cost 25 cents a piece.

When Homer has 5 doughnuts,his marginal value is 15¢ per doughnut.We can conclude that Homer