Exam 9: Possibilities, Preferences, and Choices

-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. For Jordan, what is the opportunity cost of moving from consumption possibility D to E?

-Lizzie's preferences are shown in the figure above. Which of the following combinations of goods does Lizzie prefer the most?

-In the table above, which case has the lowest relative price for a hamburger?

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

What will an indifference curve look like between two commodities that are perfect complements, such as right shoes and left shoes?

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

-Hilda buys only cauliflower, Q_c, and geraniums, Q_g. The equation for Hilda's initial budget line is $40 = $2 × Q_c + $4 × Q_g. If Hilda's income increases by $20, the price of cauliflower decreases by $1, and the price of geraniums increases by $1, the equation of her new budget line is ________.

Junkfood Jill spends all of her income on jellybeans and Jolt cola. Suppose that Jill's income is $30, the price of a bag of jellybeans is $6, and the price of a bottle of Jolt cola is $2. If bags of jellybeans are graphed along the vertical axis and bottles of Jolt cola are graphed along the horizontal axis, what is the slope of the budget line?

-The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if there were an increase in her monthly dining-out budget?

-The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if the price of a steak dinner fell?

-An increase in income shift a person's budget line rightward and does not change its slope.

The substitution effect

If your income increases, what is the effect on your budget line?

-If units of pizza are plotted on the horizontal axis, and units of hot dogs plotted on the vertical axis, and the price of a hot dog increases the

-Lizzie's preferences are shown in the figure above. Lizzie is just as happy to have ________ as she is to have ________.

An indifference curve will become ________ the origin the more that the consumer considers the two goods as complements.

If consumers spend their money only on beef and vegetables, then the substitution effect of an increase in the price of beef would result in consuming ________ beef and ________ vegetables.

-Lizzie's preferences are shown in the figure above. Lizzie definitely prefers consuming ________ to consuming ________.

An indifference curve shows

-Which of the following statements best describes a consumer's budget line?