Exam 3: A Consumers Constrained Choice

The marginal rate of transformation of y for x represents

Explain why most indifference curves are convex.

The fact that consumers often react more to changes in the posted price of a good as compared to changes in the sales tax that is not posted is an example of

By selecting a bundle where MRS = MRT,the consumer is

Which of the following utility functions has the same MRS as U(q₁,q₂)= q₁ q₂?

Ed has the utility function U(F,M)= ,where C = number of comic books per month and M=number of movies per month.Gloria has the utility function V(F,M)= 15 + .Do Ed and Gloria have the same preference ordering of comics and movies? How can you tell?

If the price of one good increases while the price of the other good and the consumer's income remain unchanged,what will happen to the budget line?

Betty consumes good x and good y.If the price of x = $3 and the price of y = $4,then

If the prices of both goods and income increase by the same percentage,what will happen to the budget line?

Indifference curves that are thick violate

Economists assume consumers select a bundle of goods that maximizes their well-being subject to

Consider a consumer with the Cobb-Douglas utility function U(q₁,q₂)= ,where q₁ and q₂ are the quantities of goods 1 and 2 consumed,respectively.This consumer derives a level of utility denoted by U₀.The prices of goods 1 and 2 are denoted p₁ and p₂. a.Write out the Lagrangian for the consumer's expenditure minimization problem. b.Using the Lagrangian method,derive the consumer's (expenditure-minimizing)quantity of good 1 as functions of the variables p₁,p₂,and U₀. c.Derive the consumer's expenditure function,E(p₁,p₂,U₀).

If a consumer's budget line for food (F)and shelter (S)is represented as F = 250 - 5S,we know that

Joe's income is $500,the price of food (F)is $2 per unit,and the price of shelter (S)is $100.Which of the following represents his marginal rate of transformation of food for shelter?

If the utility function (U)between food (F)and clothing (C)can be represented as U = ,the marginal rate of substitution of clothing for food equals

By selecting a bundle where MRS = MRT,the consumer is saying

Diminishing marginal rate of substitution can be seen when indifference curves

Blutarsky is throwing a party at his Fraternity and is trying to choose what booze to buy.A bottle of vodka has four times the alcohol as a six-pack of beer.If Blutarsky only cares about the total amount of alcohol in his basket,what is his marginal rate of substitution of bottles of vodka for six-packs of beer? Devise a utility function to represent these preferences.

-Max has allocated $100 toward meats for his barbecue.His budget line and indifference map are shown in the above figure.If the price of burger increases,which of the following bundles are in Max's opportunity set?

Joe subscribes to an Internet provider that charges $2 per hour.He has $100 per month to spend and is at equilibrium by buying 10 hours of Internet access and $80 worth of other goods.Draw the indifference curve and budget line.If the company switches to a $20 monthly fee for unlimited Internet access,is Joe better off?