Exam 9: Possibilities, Preferences, and Choices

A consumer considers Coke and Pepsi to be perfect substitutes for each other. What would the consumer's indifference curves for these two goods look like?

The substitution effect

The number of pizza slices is plotted on the horizontal axis and number of hot dogs is plotted on the vertical axis. If the price of a hot dog rises, the

If two goods are perfect substitutes, then their

Good X is measured on the horizontal axis and good Y is measured on the vertical axis. The marginal rate of substitution is

Use the figure below to answer the following questions. Figure 9.2.3 -Refer to Figure 9.2.3. When Rashid chooses the consumption point of 2 books and 6 albums, his marginal rate of substitution is

Use the figure below to answer the following questions. Figure 9.3.3 -Consider an initial budget line labelled RT in Figure 9.3.3. If the budget line becomes RS, the substitution effect is illustrated by the move from point

Use the information below to answer the following questions. Fact 9.3.2 Boom Time for "Gently Used" Clothes Most retailers are blaming the economy for their poor sales, but one store chain that sells used name-brand children's clothes, toys, and furniture is boldly declaring that an economic downturn can actually be a boon for its business. Last year, the company took in $20 million in sales, up 5% from the previous year. Sales are already up 5% this year. Source: CNN, April 17, 2008 -Refer to Fact 9.3.2. If the price of used clothing falls and income remains the same, the substitution effect ________ the quantity of used clothing bought and the income effect ________ the quantity of used clothing bought.

A consumer always has a cup of coffee with a tablespoon of sugar. What would the consumer's indifference curves for these two goods look like?

If the price of a normal good rises, the income effect

Use the figure below to answer the following questions. Figure 9.1.2 -Refer to Figure 9.1.2. Which budget line has the lowest relative price for carrots?

Use the figure below to answer the following questions. Figure 9.1.2 -Refer to Figure 9.1.2. Which budget line has the lowest relative price for compact discs?

Sam buys gasoline and coffee each week. To draw his budget line for gasoline and coffee, Sam needs to know

What is a distinguishing characteristic of an inferior good?

Sara's income is $12 a week. The price of popcorn is $3 a bag, and the price of a smoothie is $3. The opportunity cost of a smoothie is

Which one of the following statements is true about the indifference curves for two goods that are close but not perfect substitutes?

Albert is consuming at a point where his budget line is not as steep as indifference curve. To reach consumer equilibrium, Albert

Use the figure below to answer the following questions. Figure 9.3.1 -Consider the budget line and indifference curve in Figure 9.3.1. If the price of good X is $1 a unit, then the price of good Y is

Use the figure below to answer the following questions. Figure 9.3.3 -Consider an initial budget line labelled RT in Figure 9.3.3. What would rotate the budget line to RS?

Leah consumes at a point on her budget line where her marginal rate of substitution is less than the magnitude of the slope of her budget line. As Leah moves towards her best affordable point, she will move to