Exam 5: Constraints, Choices, and Demand

-Refer to Figure 5.1.Which graph represents an increase in the price of DVDs?

A curve that shows how the best available consumption bundle changes as income changes (holding the consumer's preferences and all other prices fixed)is called

Suppose a consumer purchases pizza and soft drinks.If pizza is measured on the vertical axis and soft drinks are measured on the horizontal axis,then the slope of the budget line is equal to

Choices that do not exhaust the consumer's budget line to the ______ of the budget line.

An increase in a consumer's income will cause the budget line to

Stewie spends all of his income on movie rentals (R)and noodles (N).His marginal rate of substitution for rentals with noodles is given by MRS_RN = 20/ÖR.Suppose that movies rent for $2 and noodles cost $1.Plot his income-consumption curve,his Engle curve for movie rentals and his Engel curve for noodles.

An increase in the price of the good measured along the vertical axis will cause the budget line to

A consumer's budget constraint is determined by

An increase in the price of the good measured on the vertical axis will cause the budget line to

At a boundary choice,

The revealed preference approach refers to

Hailey's income is $40 per week.She spends all of it on coffee (C)and doughnuts (D).Coffee costs $2 per cup and doughnuts cost $1 each.Her marginal rate of substitution for coffee with doughnuts is D/C.How many cups of coffee and how many doughnuts will she purchase each week?

The price of CDs is $15 and the price of pizzas is $10.Derek spends all of his income buying 2 CDs and 6 pizzas per week (and nothing else).Determine Derek's income,draw his budget line and represent his utility-maximizing point using an indifference curve.

-Refer to Figure 5.1.Which graph most likely represents a doubling of the prices of both Books and DVDs?

-Refer to Figure 5.3.Which of the following statements is false?

When indifference curves have ________ marginal rates of substitution,any interior choice that satisfies the tangency condition is the best affordable choice.

If a change in the price of one good does not cause a shift in the demand curve of another good,then the two goods are

Consumption bundles that lie above the boundary established by the budget line

If prices and income all change by the same proportion

-Refer to Figure 5.6.Which diagram shows an increase in income with bread being inferior and soup being normal?