Exam 5: Theory of Consumer Behavior

Alexandra consumes only caviar and champagne,but she does have a limited income of $400.Her current consumption choice is 5 ounces of caviar,at a price of $50 per ounce,and 6 bottles of champagne,at $25 each.The last ounce of caviar added 100 units to Alexandra's total utility,while the last bottle of champagne added 75 units.If Alexandra chooses 4 ounces of caviar and 8 bottles of champagne instead her total utility will:

The consumer chooses the bundle of goods that maximizes his utility and spends all his income.Which of the following statements is correct?

-According to the above figure,which of the following are points on the consumer's demand curve for X?

Along an indifference curve

In the following graph the consumer's income is $1,200.At what price of Y are Y₂ units demanded?

The price of X is $20 and the price of Y is $40. -Based on the above graph,if U₁ is the highest level of utility the consumer can achieve,what is the consumer's income?

Suppose a consumer who purchases only two goods is making a utility-maximizing choice and then the price of one of the goods decreases.What will happen?

rate at which a consumer is ABLE to substitute one good for another is determined by

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $14.When the price of X increases from point M to point N along the demand curve,$___________ of income must be temporarily given to the consumer to isolate the substitution effect.

Which of the following assumptions is(are)NOT made in consumer behavior theory?

In a world with only two goods X and Y,which of the following statements is NOT true when a consumer faces a corner solution and spends all of her income on good X?

In the following graph the price of Y is $15.What is $Y _ { 1 }$ ?

If the marginal rate of substitution of X for Y is 2,the price of X is $3,and the price of Y is $1,a utility-maximizing consumer should

Based on the following graph,at point C, The consumer's income is $600.

A consumer has the indifference map shown below.The market prices of X and Y are $20 and $50,respectively.The consumer has $500 to spend on goods X and Y.The utility-maximizing bundle is

The following figure shows a portion of a consumer's indifference map and budget lines.The price of good Y is $7 and the consumer's income is $700.Let the consumer begin in utility-maximizing equilibrium at point A on indifference curve I.Next the price of good X changes so that the consumer moves to a new utility-maximizing equilibrium at point B on indifference curve II.The total effect of the change in the price of X is

In the figure below,a consumer faces a market price of X equal to $3,a market price of Y equal to $3,and the consumer's budget is $90.In order for this consumer to choose the corner solution at point E,which of the following must occur?

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $4.50.When the price of X increases from point S to point R along the demand curve,$___________ of income must be temporarily given to the consumer to isolate the substitution effect.

In the following graph the price of Y is $15.What does the curve in the lower graph show?

In the following graph the price of Y is $50.At point A,