Exam 9: Possibilities, Preferences, and Choices

Some parents struggling with back-to-school buys. "A couple of years ago, I was able to buy everything practically new," said Charles Lane-Bey, a U.S. Postal Service worker who's struggling to make ends meet. Suppose Charles has $10 to spend on back-to-school clothing for his son, and pants cost 50 cents and shirts cost $1. What is the slope of Charles's budget line if it is drawn with pants on the x-axis?

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

-The figure above shows Sam's budget line. Which of the following would result in Sam's budget line rotating outward and not changing its horizontal intercept?

When oranges increase in price, the income effect

-In the above figure, the indifference curves indicate that the two goods are

-In the above figure if money income increases, the budget line

If the newspaper reported that wearing plaid clothing was a sure way to obtain good grades, students'

Janelle spends all of her income on songs from iTunes ($1 each) and applications ($5 each) for her iTouch. If she makes her best affordable choice, she purchases 20 songs and 4 applications, what is her real income in terms of applications?

-Nadya spends $200 a year to buy computer games and Barbie dolls. The price of a computer game is $40 and the price of a Barbie doll is $10. The figure above illustrates Nadya's preferences. What combination of computer games and Barbie dolls does Nadya buy?

The effect of a change in price on the quantity bought while keeping the consumer on the same indifference curve, is called the

-Lizzie's budget line is shown in the figure above. If Lizzie's income is $20, which of the following formulas represents her budget equation?

-The figure above gives your budget line for magazine and CDs per month. Given that your income equals $60 per month, what is the price of a magazine and the price of a CD?

The larger the marginal rate of substitution, the larger is the amount of one good that the consumer is willing to give up in exchange for another good and still remain at the same level of satisfaction.

-Consider the budget line in the above figure. If the consumer's income is $240, then the price of a book is

-A budget line is drawn with automobiles on the vertical axis and boats on the horizontal. Imposing a tax on boats that boosts the price of a boat makes the

-Kristen has an income of $450 per year to spend on music CDs and movies on DVDs. The price of a CD is $15 and the price of a DVD is $22.50. The indifference curves in the figure above (I₁, I₂, and I₃) reflect Kristen's preferences. What is Kristen's best affordable combination of DVDs and CDs?

-In the figure above, Sam originally selects his consumption bundle at point A with 3 pounds of olives and 4 pounds of pickles a year. Then the price of pickles rises and the price of olives falls so that his budget line rotates but it still goes through point A. Sam's consumption of pickles

An indifference curve shows

Suppose the price of coffee is $3 each, the price of bagels is $2 each and a person's budget is $40. The person's real income is

Real income can be measured by