Exam 9: Possibilities, Preferences, and Choices

Janelle spends all of her income on songs from iTunes ($1 each) and applications ($5 each) for her iTouch. If she makes her best affordable choice, she purchases 20 songs and 4 applications, what is her real income in terms of applications?

-The magnitude of the slope of an indifference curve

-If two goods are complements, then their

-Jordan has two goods that he consumes this week. He can choose to go to the arcade and play video games or he can purchase baseball cards. The price of each video game is $.50 and each pack of baseball cards is $1. Jordan will spend all his allowance this week on these two goods. Jordan's consumption possibilities are listed in the table above. What is the amount of Jordan's allowance?

-Consider the budget line in the above figure. If the consumer's income is $120, then the price of a book is

You are studying with a friend and your friend says "A budget line shows the various combinations of two goods that can be purchased with the buyer's income at current prices." Is your friend's assessment correct or not?

-In the figure above, the marginal rate of substitution (MRS) at point A is

You consume only steak and lobster. Your income effect from a drop in the price of lobster is measured by a movement along your indifference curve between steak and lobster.

In order to determine a household's budget line, you must know the

-The above figure shows Jane's budget line and two of her indifference curves. Jane's marginal rate of substitution is

-For a person who consumes only steak and lobster, a fall in either the price of a steak or the price of a lobster shifts the budget line for the two leftward and does not change its slope.

-The marginal rate of substitution is equal to the

"The marginal rate of substitution of the good measured along the x-axis increases as a consumer moves downward along an indifference curve." Is the previous statement correct or not?

-In the above figure, Brendan originally consumes at point A. If his income rises and compact discs are a normal good but haircuts are an inferior good then he will begin consuming at a point such as

Suppose that the price of a bag of jellybeans is $6, and the price of a bottle of Jolt cola is $2. The relative price of Jolt cola is

-In the figure above, a decrease in the price of a bag of potato chips would result in the budget line

-In the above figure, Brendan originally consumes at point A. If his income falls and compact discs are a normal good but haircuts are an inferior good then he will begin consuming at a point such as

-Your weekly budget for gasoline and movie rentals is $45.00. Referring to the figure above, what is the price per gallon of gasoline?

Suppose that Dave has $200 to spend per week and he buys only magazines and pizza. The price of a pizza is $10 and the price of a magazine is $5. If Dave buys 20 magazines per week, which of the following amount of pizza is not affordable to him?

-The figure above shows Sally's budget line and one of her indifference curves. At point a, Sally's marginal rate of substitution is ________.