Exam 5: Theory of Consumer Behavior

The following figure shows a portion of a consumer's indifference map and budget lines. The price of good Y is $17 and the consumer's income is $7,650. Let the consumer begin in utility-maximizing equilibrium at point A on indifference curve II. Next the price of good X changes so that the consumer moves to a new utility-maximizing equilibrium at point B on indifference curve I. -The substitution effect of the change in the price of X is _________; the income effect is _________; the total effect is _________.

The following questions refer to the following graph of a consumer's indifference curve. -At point C the consumer's marginal rate of substitution at point is approximately ______. This means that the consumer is willing to substitute at a rate of ______ units of Y for one more X or ______ X for one Y.

Fill-in-the-Blank -Along an indifference curve ____________ is constant.

If the price of a good decreases, the substitution effect

refer to the following: The price of Y is $10. -The marginal rate of substitution of X for Y at point C is:

refer to the following figure: The consumer's income is $2,600. -Two points on this consumer's demand for good X are

Use the following graph showing a consumer's budget line and some indifference curves to answer the following questions. The consumer's income is $600. -If the consumer is buying the combination at point A, the MRS is ________________ (greater, less) than the price _________, so the consumer should buy more ______ and less ______ in order to increase utility. The consumer would buy no combination on indifference curve III because _______________.

refer to the following figure: The consumer's income is $2,600. -In order to isolate the income and substitution effects what must have happened, temporarily, to the consumer's income (approximately)?

refer to the following figure that shows the effect of an INCREASE in the price of X. -The total effect of the price change is the change in the consumption of X from

refer to the following figure: The consumer's income is $800. -What are the prices of goods X and Y?

The following figure shows a portion of a consumer's indifference map and budget lines. The price of good Y is $17 and the consumer's income is $7,650. Let the consumer begin in utility-maximizing equilibrium at point A on indifference curve II. Next the price of good X changes so that the consumer moves to a new utility-maximizing equilibrium at point B on indifference curve I. -Two points on this consumer's demand for good X are P_X= $_________ and X = _________; and P_X = $_________ and X = _________.

refer to the following figure: The consumer's income is $800. -Why doesn't the consumer choose the combination of 30X and 56Y at point A?

The marginal rate of substitution of X for Y is 3, the price of X is $4, and the price of Y is $2. -The consumer must give up ______ units of Y to obtain another X. The consumer must give up ______ units of X to obtain another Y. At what rate is the consumer able to substitute X for Y in the market? ______.

If a demand curve slopes upward, then

refer to the following graphs: The price of Y is $15 per unit. -What is

Use the following graph showing a consumer's budget line and some indifference curves to answer the following questions. The consumer's income is $600. -If the consumer is buying the combination at point B, the MRS is ______ than the price ____________, so the consumer should buy more ______ and less ______ to increase utility. At point B, is ____________ than the .

refer to the following graph: ‪ -What is the price of Y?

refer to the following figure: The consumer's income is $2,600. -The income effect of the increase in the price of X is (approximately)

When the price of a good changes,

The following figure shows a portion of a consumer's indifference map and budget lines. The price of good Y is $17 and the consumer's income is $7,650. Let the consumer begin in utility-maximizing equilibrium at point A on indifference curve II. Next the price of good X changes so that the consumer moves to a new utility-maximizing equilibrium at point B on indifference curve I. -Good X is a(an) ____________ good.