Exam 22: Consumer Preferences

Use the following to answer questions : -(Figure: Consumer Equilibrium II)Use Figure Consumer Equilibrium II.The HIGHEST level of total utility is associated with point _____ on 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?

When an individual's consumption of an additional unit of a good generates a smaller increase in total utility than the previous unit consumed,this person's indifference curve will be:

Use the following to answer questions : Figure: The Optimal Consumption Bundle -(Figure: The Optimal Consumption Bundle)Use Figure The Optimal Consumption Bundle.If the price of restaurant meals _____,then the optimal consumption bundle will be on _____ indifference curve.

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. -Paola gets 50 units of utility when she consumes four cupcakes and two glasses of milk.She also gets 50 units of utility when she consumes three cupcakes and two glasses of milk.This means that:

An indifference curve shows combinations of two goods that yield:

Use the following to answer questions : -(Figure: Income and Substitution Effects)Use Figure Income and Substitution Effects.Carlos is consuming his optimal consumption bundle at point A when the price of gasoline falls.The dashed line tangent to I₁ shows a hypothetical budget line reflecting:

Greater levels of utility are represented by:

Max consumes only yoghurt and almonds,and he is on his highest possible indifference curve.Bundle A (four yoghurts and two almonds)and bundle B (three yoghurts and three almonds)are on this indifference curve.Between points A and B,what is Max's marginal rate of substitution of yoghurt for almonds?

Use the following to answer questions : -(Figure: Oreos and Apples)Use Figure Oreos and Apples,which provides an indifference curve map for Diego.Diego prefers:

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. -Two goods in an individual's consumption bundle are perfect substitutes.For a given amount of income,the individual's optimal consumption bundle will contain:

Suppose the government decides to help poor families with kids by subsidizing the purchase of milk.The subsidy takes the form of a 50% discount on the price of milk.Suppose also that poor families buy only milk and soda,which are substitutes,although not perfect substitutes.What happens to the amount of milk poor families buy?

As an individual moves down his or her indifference curve,total utility remains constant.