Exam 4: The Theory of Individual Behavior

Kate's money income is $350, the price of X is $4, and the price of Y is $6. Given these prices and income, Kate buys 50 units of X and 25 units of Y. Call this combination of X and Y bundle J. At bundle J, Kate's MRS is 3. At bundle J, if Kate increases consumption of Y by 1 unit, how many units of X can she give up and still reach the same level of utility?

If you were running an advertising campaign for designer men's suits, you should target families with:

The combinations of goods X and Y that are affordable to the consumer are defined by the:

Joe prefers a three-pack of soda to a six-pack. What properties does this preference violate?

The rate at which a consumer is willing to substitute one good for another, while still maintaining a given level of satisfaction, is called the

If income decreases, then:

At the point of consumer equilibrium, the slope of the budget line is equal to the:

The budget set defines the combinations of good X and Y that:

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

Suppose a consumer derives satisfaction from consuming two types of hamburgers, X and Y. a. Graph the budget line of the consumer under the assumption that he is offered a "buy two, get one free" deal for burger X (limit one free burger). b. Graph the budget constraint under the assumption that the producer of burger Y also offers a "buy two, get one free" deal (limit one free burger). c. Explain in words why each of the preceding budget constraints looks as it does.

Suppose that three consumers are in the market for good X. Consumer 1's (inverse) demand is P_X = 40 - Q_X; Consumer 2's (inverse) demand is P_X = 50 - 2Q_X; and Consumer 3's (inverse) demand is P_X = 70 - 4Q_X. When P_X = $20, the market will demand:

Kate's money income is $250, the price of X is $3, and the price of Y is $2. Given these prices and income, Kate buys 60 units of X and 35 units of Y. Call this combination of X and Y bundle J. At bundle J, Kate's MRS is 3. At bundle J, if Kate increases consumption of Y by 1 unit, how many units of X must she give up in order to satisfy her budget constraint?

Which of the following is true?

If shoes and socks are complements and both are normal goods, show graphically what would happen to the consumption of shoes and socks if: a. the price of shoes decreased. b. consumer incomes increased.

A worker's total earnings for one day is $100. He received a $20 fixed payment and consumes 14 hours of leisure. What is the hourly wage rate?

If money income doubles and the prices of all goods triples, then the:

Consider a two-good world, with commodities X and Y. Which of the following statements is correct?

An increase in the price of good X will have what effect on the budget line on a normal X-Y graph?

If sugar and Nutrasweet are substitutes, then we can be certain that a decrease in the price of sugar will lead to an increase in the consumption of:

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?