Exam 12: Consumer Choices and Constraints

Suppose that Dave has $200 to spend per week and he buys only magazines and pizza. The price of a pizza is $10 and the price of a magazine is $5. What is Dave's real income in terms of magazines?

-The figure above illustrates Sally's budget line and her preferences. Point _______ is Sally's best affordable point, and Sally prefers point _______ to point _______.

The magnitude of the slope of the budget line is determined by

-In the above figure, income is $8, the price of a soft drink is $1, and the initial price of a milkshake is $2) If the price of a milkshake decreases to $1, milkshakes are revealed to be

-The indifference curve in the above figure

-In the above figure, if the budget line shifts from RT to RS, the income effect is illustrated by the move from

If two goods are perfect complements, the shapes of the indifference curves are

-The above figure gives your budget line between CDs and magazines. Which combination of CDs and magazines is not affordable?

Inga's graph of her budget line has apples per week on the vertical axis and loaves of bread per week on the horizontal. A fall in the price of an apple shifts the

Consider the budget line in the above figure. If the price of a magazine is $4, then the price of a hamburger is

The combinations of petrol and coffee along one of Sam's indifference curves are combinations

-In the above figure, Brendan originally consumes at point A. If his income rises and both compact discs and haircuts are normal goods then he could begin consuming at point

Which of the following statements is FALSE?

In order to determine a household's budget line, you must know the

-Lizzie's preferences are shown in the figure above. Lizzie is just as happy to have _______ as she is to have _______.

-In the figure above, suppose the original budget line is BD. A rise in the price of a compact disc will

The substitution effect

-In the above figure, Mark's monthly budget line for movies and plays changed, as shown by the arrow. The change was caused by

Petrol is a normal good. If the price of petrol falls, a consumer buys more petrol because of

The price of one good changes and Sue is now at a point on her indifference curve where the marginal rate of substitution exceeds the relative price. Sue will now choose to buy _______ of the good that is measured on the _______.