Exam 9: Possibilities, preferences, and Choices

The initial budget equation for pop (p)and movies (m)is Q_p = 20 - 4Q_m,and the price of a pop is $5.If the price of a pop falls to $4,what is the new budget equation?

Which statement is true for an inferior good?

Moving down along a given budget line,real income

Use the information below to answer the following questions. Fact 9.2.1 You May Be Paid More (or Less)Than You Think It's so hard to put a price on happiness,isn't it? But if you've ever had to choose between a job you like and a better-paying one that you like less,you probably wished some economist would tell you how much job satisfaction is worth.Trust in management is by far the biggest component to consider.Say you get a new boss and your trust in management goes up a bit (say,up 1 point on a 10-point scale).That's like getting a 36 percent pay raise.In other words,that increased level of trust will boost your level of overall satisfaction in life by about the same amount as a 36 percent raise would. Source: CNN,March 29,2006 -Refer to Fact 9.2.1.The news clip implies that the marginal rate of substitution is ________,which is likely ________ implication.

An indifference curve slopes downward because

Which one of the following statements is always true of the substitution effect?

Use the figure below to answer the following question. Figure 9.2.2 -Figure 9.2.2 shows three indifference curves for Brenda.Which one of the following is not true?

The price of a cup of coffee is $2.00.The price of a cup of tea is $1.20.The relative price of a cup of tea with respect to a cup of coffee is

At the best affordable point,what is the relationship between the indifference curve and the budget line?

If the price of the good measured on the horizontal axis falls,the substitution effect is indicated by movement to a

Leah consumes at a point on her budget line where her marginal rate of substitution is less than the magnitude of the slope of her budget line.As Leah moves towards her best affordable point,she will move to

Use the figure below to answer the following questions. Figure 9.3.3 -Consider an initial budget line labelled RT in Figure 9.3.3.What would rotate the budget line to RS?

Which of the following statements is false?

Let Y = $100,Q_X = quantity of good X,and Q_W = quantity of good W,P_X = $4 and P_W = $5.The budget equation is

Use the figure below to answer the following questions. Figure 9.3.3 -Consider an initial budget line labelled RT in Figure 9.3.3.If the budget line becomes RS,the substitution effect is illustrated by the move from point

When the iPhone10 was introduced,the demand for iPhone10 protective cases increased.This information tells us that the iPhone10 and iPhone10 protective cases are

Use the figure below to answer the following questions. Figure 9.3.1 -Consider the budget line and indifference curve in Figure 9.3.1.If the price of good X is $2 a unit,what is the price of good Y?

Use the figure below to answer the following questions. Figure 9.2.3 -Refer to Figure 9.2.3.Rashid buys only books and CDs.The figure shows his preferences.When Rashid chooses the consumption point of 3 books and 2 CDs,his marginal rate of substitution is

David has an income of $60 to buy movie tickets and bus tickets.The price of a movie ticket is $12 and the price of a bus ticket is $4.What is the relative price of a bus ticket in terms of movie tickets?

Use the figure below to answer the following questions. Figure 9.3.3 -Consider an initial budget line labelled RS in Figure 9.3.3.If the budget line becomes RT,the substitution effect is illustrated by the move from point