Exam 12: Consumer Choices and Constraints

Sharmila has a budget line for DVDs and books. DVDs are on the vertical axis and books on the horizontal. Her budget line becomes steeper as

Suppose that initially the price of a bag of jellybeans is $6, and the price of a bottle of Jolt cola is $2. If the price of a bottle of Jolt cola increases, then the relative price of jellybeans

The assumption that the magnitude of the slope of an indifference curve decreases moving to the right along the indifference curve is known as the assumption of

Tonya, who is rich, and Jerome, who is poorer, both buy orange juice and croissants for lunch at the student cafeteria. Their budget constraints on a diagram with orange juice on the vertical axis and croissants on the horizontal have the same

-In the above figure, which of the following statements is true? I. The consumer maximises utility by consuming at point A. II. The marginal rate of substitution at point B and point A are equal because they are on the same budget line.

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. If Dave buys 15 pizzas each week, what is the maximum number of magazines can he buy?

Shaniq consumes only magazines and CDs. Her income equals $60 per month. CDs are $12 each and magazines are $5 each. What is the equation for her budget line?

-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, the income effect is the movement from point _______ To point _______.

-In the above figure, as Brendan's income falls his consumption bundle moves from point A to point E. This implies that, for Brendan, compact discs are _______ good and haircuts are _______ good.

-The above figure shows Katie's consumption possibilities. The relative price of a movie ticket is

The rate at which a person is willing to give up a litre of petrol to get one more kilogram of coffee and remain on the same indifference curve is called his or her

Jodie has indifference curves for CDs and colas, with CDs on the vertical axis. The flatter her indifference curves are, the

Along an indifference curve,

Consumers' preferences are described by

When the price of a normal good decreases, people buy _______ of the good due to _______.

For a consumer, a budget line shows the boundary between

All points above the budget line are

When your income increases,

If an indifference map for a consumer is made up of straight, negatively- sloped lines, the marginal rate of substitution _______ as more of the good on the horizontal axis is consumed.

The price of one good divided by the price of another good is a