Exam 4: The Theory of Individual Behavior

The affordable bundle that yields the greatest satisfaction to the consumer is:

If the price of good X increases, what will happen to the budget line?

If widgets and gidgets are complements and both are normal goods, then an increase in the demand for widgets will result from

Joe consumes 10 units of food and 12 units of clothing.Since food is an inferior good, a gift to Joe of a $12 gift certificate at a clothing store will

An economics professor went out to dinner one night and observed one of her students drinking heavily.The next day was a final exam.When the professor's husband found out the student was in her class, he said the student's behavior was irrational.The professor disagreed.Under what condition is behavior irrational according to the properties of consumer behavior discussed in the chapter? What situations could make the student's behavior rational?

Which of the following cases violates the property of transitivity?

If you wish to open a store and you do not like risk, it would be wise to sell:

Given that income is $750 and P_X = $32 and P_Y = $8, what is the market rate of substitution between goods X and Y?

If income increases, then the

Over the past decade medical costs have increased more rapidly than other prices.In order to illustrate how rising medical costs have affected consumer alternatives, let X represent the quantity of medical services, and let Y represent the quantity of other goods.Furthermore, let income (M) be measured in hundreds of dollars, the price of medical services and other goods in terms of dollars per minute, with

At any point on an indifference curve, the slope indicates

Suppose a worker is offered a wage of $8 per hour, plus a fixed payment of $100 per day, and he can use 24 hours per day.What is the equation for the worker's opportunity set? (E is total earnings and L is leisure)

Suppose you are the manager of a firm that produces Ultrasweet, a sugar substitute.Show graphically the effect of a reduction in the price of Sweet and Healthy, a competitor's product, on a typical consumer's consumption of Ultrasweet.

If an increase in the price of good X leads to a decrease in the consumption of good Y, then goods X and Y are called

The marginal rate of substitution (MRS) determines the rate at which a consumer is willing to substitute between two goods in order to achieve

An in-kind gift causes the budget line to

Sam Voter prefers Ronald to Joe, Joe to Gary, and Gary to Ronald.Sam's preferences

Which combination of the properties given below rules out indifference curves that intersect one another?

Consider a two good world, with commodities X and Y.If X is an inferior good, then an increase in consumer income cannot

If an increase in income causes a decrease in the consumption of good Y we know that good Y is: