Exam 22: Consumer Preferences

Ellen consumes goods X and Y.As she consumes less X,she must be compensated with additional units of Y,and her marginal rate of substitution of X for Y decreases as she consumes more Y.This means that goods X and Y are:

Use the following to answer questions : -(Figure: Income and Substitution Effects)Use Figure Income and Substitution Effects.Carlos is originally consuming his optimal consumption bundle at point A when the price of gasoline falls.The movement from K₁ to K₂ reflects the _____ the decrease in the price of gasoline.

Use the following to answer questions : -(Figure: Consumer Equilibrium IV)Use Figure Consumer Equilibrium IV.An unattainable level of utility,given budget constraint FL,is at point:

Use the following to answer questions : Figure: Harold's Indifference Curves The figure shows three of Harold's indifference curves for bread and cheese. -(Figure: Harold's Indifference Curves)Use Figure Harold's Indifference Curves.Given that the price of bread is $1 per loaf and the price of cheese is $2 per kilogram,as Harold's income increases from $10 to $14,we can determine that bread is a(n)_____ good and cheese is a(n)_____ good.

The ratio of the prices of two goods is equal to the ratio of the marginal utilities of the two goods at:

Use the following to answer questions : Figure: Harold's Indifference Curves The figure shows three of Harold's indifference curves for bread and cheese. -(Figure: Harold's Indifference Curves)Use Figure Harold's Indifference Curves.If the price of bread is $2 per loaf,the price of cheese is $4 per kilogram,and Harold has $28 to spend on bread and cheese,Harold's optimal consumption bundle is _____ loaves of bread and _____ kilograms of cheese.

Decreases in the price of the good measured on the horizontal axis will make the horizontal intercept _____ and make the budget line _____.

The slope of a(n)_____ curve shows the rate at which two goods can be exchanged _____ the consumer's _____.

Use the following to answer questions : Figure: Harold's Indifference Curves The figure shows three of Harold's indifference curves for bread and cheese. -(Figure: Harold's Indifference Curves)Use Figure Harold's Indifference Curves.If the price of bread is $0.50 per loaf,the price of cheese is $1 per kilogram,and Harold has $7 to spend on bread and cheese,Harold's optimal consumption bundle is _____ loaves of bread and _____ kilograms of cheese.

Diminishing marginal utility occurs with increasing total utility.

Use the following to answer questions : -(Figure: Kristin's Budget Line)Use Figure Kristin's Budget Line.The price of a cup of cappuccino is $3,and the price of an apple is $1.Suppose Kristin initially consumes 10 cups of cappuccino and 30 apples.Then the price of apples increases to $3 each and the price of a cappuccino remains unchanged.As a result of this price change,Kristin's optimal consumption bundle changes,reflected by a decrease in the consumption of both apples and cappuccinos.This suggests that:

One point on a standard indifference curve is eight cookies and two brownies;another is six cookies and four brownies.Which of the following combinations of cookies and brownies could lie on this indifference curve?

Use the following to answer questions : Figure: The Optimal Consumption Bundle -(Figure: The Optimal Consumption Bundle)Use Figure The Optimal Consumption Bundle.Which of the following could lead to an optimal consumption bundle on indifference curve I₃?

Use the following to answer questions : -(Figure: Kristin's Budget Line)Use Figure Kristin's Budget Line.The price of a cup of cappuccino is $3,and the price of an apple is $1.Suppose Kristin initially consumes 10 cups of cappuccino and 30 apples.Then the price of apples increases to $3 each and the price of cappuccino remains unchanged.As a result of this price change,Kristin's optimal consumption bundle is now nine cups of cappuccino and 11 apples.If Kristin's income could be adjusted so that she could maintain her initial level of utility after the price change,she would consume more cappuccino and more apples.This reflects:

Use the following to answer questions : Scenario: Music Downloads and Streamed Movies Phillip has an income of $300 per month,which he uses to purchase music downloads (MD)and streamed movies (SM).Each music download costs $1 and each streamed movie costs $5. -For some people,coffee and milk are perfect complements.Their indifference curves are:

Use the following to answer questions : Scenario: E-Books and Sports Tickets Phillip has an income of $300 per month,which he uses to purchase two goods,e-books and sports tickets.Each e-book costs $10,and each sports ticket costs $15. -(Scenario: E-Books and Sports Tickets)Read the scenario E-Books and Sports Tickets.Suppose Phillip discovers that if he spends all of his money on sports tickets,he can buy more sports tickets than he could previously because something changed.This is a result of a(n)_____ in the price of _____.

Use the following to answer questions : -In terms of indifference curves,a demand curve is generated by changes in:

Use the following to answer questions : Scenario: Music Downloads and Streamed Movies Phillip has an income of $300 per month,which he uses to purchase music downloads (MD)and streamed movies (SM).Each music download costs $1 and each streamed movie costs $5. -(Scenario: Music Downloads and Streamed Movies)Read the scenario Music Downloads and Streamed Movies.Which of the following equations expresses Phillip's budget line?

Use the following to answer questions : -(Figure: Indifference Curves and Consumption Bundles)Use Figure Indifference Curves and Consumption Bundles.For this consumer,pizza is a(n)_____ good and hot dogs are a(n)_____ good.

At the video store,Lucian narrows his selection to either a $2 videocassette of The Evil Dead or a $4 DVD of Finding Nemo.Lucian finally flips a coin to decide which movie to rent.This must mean that Lucian's marginal rate of substitution of The Evil Dead for Finding Nemo is 0.5.