Exam 6: Consumer Behaviour

Consider the income and substitution effects of price changes. For a product with an income elasticity greater than one, a price increase will cause the consumerʹs real income to

FIGURE 6-9 -Refer to Figure 6-9. In part ii), the consumerʹs move from point X to point Z is caused by

FIGURE 6-1 -Refer to Figure 6-1. This figure illustrates the law of

FIGURE 6-11 -Refer to Figure 6-11. Suppose the consumer begins at E 1. The income and substitution effects of the reduction in the price of X are represented as follows:

The marginal rate of substitution

Consider the income and substitution effects of price changes. The income effect refers to the change in quantity demanded that occurs as a result of a change in

If a consumer is faced with a choice of products A, B, C, ..., and has a given money income, the consumerʹs utility will be maximized when

Consider the pizza market, with a downward-sloping demand curve and an upward-sloping supply curve. Suppose 100 pizzas are purchased at the free -market equilibrium price. The consumer surplus on the 100th pizza is

The marginal rate of substitution measures the tradeoff between the

The table below shows the total value in dollars) that Andrew gets from playing 9-hole rounds of golf. TABLE 6-3 -Since there is a relatively plentiful supply of water in Canada this is not true in many parts of the world), the consumption of water in Canada

Suppose a consumer can purchase only two goods, soap and apples. If the price of soap falls and the consumption of apples increases, we can conclude that the increased consumption of apples is due to

FIGURE 6-7 -Refer to Figure 6-7. Suppose that price is P0. The total value placed on all units of the commodity consumed is given by the area

Suppose Arun consumes only 2 goods books and CDs and has a set of downward sloping indifference curves. As Arun moves from one point to another on a particular indifference curve,

A demand curve for a normal good is downward sloping due to

The table below shows the total value in dollars) that Andrew gets from playing 9-hole rounds of golf. TABLE 6-3 -Refer to Table 6-3. If the price of a 9-hole round of golf is $16, and Andrew is maximizing his utility, then his consumer surplus will be

FIGURE 6-2 -Bjorn is a student with a monthly budget of $500, which he allocates between transportation services and ʺall other goods.ʺ Suppose the price of transportation is $5 per unit, and the price of ʺall other goodsʺ is $20 per unit. The marginal utility he currently receives from his consumption of transportation services is 60. How many units of ʺall other goodsʺ is he consuming if he is maximizing his utility?

The table below shows output, marginal cost, and average variable cost for the production of pairs of shoes. All costs are in dollars. TABLE 7-6 -Economists usually assume that consumers

The idea that the utility a consumer derives from successive units of a good diminishes as total consumption of the good increases is known as

When a consumerʹs marginal rate of substitution between X and Y is equal to the ratio of prices for X and Y, and when the consumer is spending all available income, then

FIGURE 6-1 -Refer to Figure 6-1. Total utility is at its maximum when marginal utility is