Exam 4: Consumer Choice

Robinson Crusoe is stranded on an island.He finds that coconuts are freely available (zero harvest cost),but fish are difficult to harvest and require a lot of energy.As a result,harvesting fish has a high price.If coconuts and fish are imperfect substitutes,what is Robinson Crusoe likely to consume?

Lisa views pizzas and burritos as goods.If she prefers a bundle of 4 burritos and 4 pizzas to a bundle of 4 burritos and 5 pizzas,which property of consumer preference is violated? What change in the assumptions could lead a rational consumer to prefer the first bundle?

The absolute value of the slope of an indifference curve equals the ratio of the marginal utilities of the two goods involved.

Suppose Joe's utility for lobster (L)and soda (S)can be represented as U = L^0.5 S^0.5.Draw the indifference curve that yields a utility level of 9.Calculate the MUL,MUS,and MRS of L for S on that indifference curve when S = 3.

Lisa has an income of $100.She spends all of her income on pizza and burritos.A pizza costs $10 and a burrito costs $5.However,the store where Lisa buys her burritos has a special deal.After you've bought 6 burritos,then you can buy each burrito for $2.50.Draw Lisa's opportunity set.

Quotas,such as limiting the amount of residential water use during a drought,restricts an individual's preference set and

If the food stamp program in the United States moved from coupons redeemable for food to cash payments,

With respect to consuming food and shelter,two consumers face the same prices and both claim to be in equilibrium.We therefore know that

Convexity of indifference curves implies that consumers are willing to

Suppose that left shoes and right shoes must be purchased separately.Ingrid needs an equal number of each type of shoe and has a budget of $100 for shoes.Left shoes always cost $1.If right shoes cost $19 each,how many of each will Ingrid buy? If the price of right shoes increases to $49 each,how will Ingrid react? Explain your answer by drawing the indifference curves-budget lines.

Lisa eats both pizzas and burritos.If the price of a pizza increases,Lisa's opportunity set

If two indifference curves were to intersect at a point,this would violate the assumption of

In Spain,people are considered organ donors unless the explicitly indicate they do not want to be.In the United States,people are only considered organ donors if they explicitly indicate they wish to be.Behavioral economics would suggest that

People view alcohol and marijuana as perfect substitutes.This means that

Johnny has allocated $30 toward coffee and tea and feels that coffee and tea are perfect substitutes.Due to differences in caffeine levels,his MRS of tea for coffee equals 2.If coffee and tea sell for the same price,Johnny will

Clifford lives by the motto "Eat,drink and be merry today,for tomorrow doesn't matter." If today's consumption is measured on the horizontal axis and tomorrow's consumption is measured on the vertical axis,Clifford's indifference curves

If Fred's marginal utility of pizza equals 10 and his marginal utility of salad equals 2,then

Adrian's total utilities of two consumption bundles are 50 and 100.This implies that

An optimum that occurs as a corner solution

The consumer is in equilibrium when