Exam 6: Household Behavior and Consumer Choice

Refer to the information provided in Figure 6.5 below to answer the question(s) that follow. Figure 6.5 -Refer to Figure 6.5. Molly's budget constraint is BD. Molly's income is $375, the price of a DVD is $15 and the price of a CD is $25. At point D she is buying ________ DVDs and ________ CDs.

Refer to the information provided in Figure 6.6 below to answer the question(s) that follow. Figure 6.6 -Refer to Figure 6.6. Bill's budget constraint was originally EF. If his new budget constraint is AD, then his income

Related to the Economics in Practice on page 125: A reduction in the salience of prices should ________ consumer responses to price increases.

The diamond/water paradox helps to illustrate the concept of marginal value.

Refer to the information provided in Figure 6.3 below to answer the question(s) that follow. Figure 6.3 -Refer to Figure 6.3. Molly's budget constraint is AC. It would swivel to AB if the price of

If a household's income doubles, its budget constraint will

Refer to the information provided in Figure 6.15 below to answer the question that follows. Figure 6.15 -Refer to Figure 6.15. Why is Jason not maximizing his utility at point C?

Refer to the information provided in Figure 6.6 below to answer the question(s) that follow. Figure 6.6 -Refer to Figure 6.6. Bill's budget constraint was originally CD. If his new budget constraint is EF, then his income

Income increases cause no change in a household's choice set.

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. Along budget constraint AC, the opportunity cost of one beer is

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. Mr. Lingle's budget constraint is AC. Point C is

Refer to the information provided in Figure 6.6 below to answer the question(s) that follow. Figure 6.6 -Refer to Figure 6.6. Bill's budget constraint was originally AD. If his new budget constraint is EF, then his income

When the price of a good decreases, the budget constraint does not change.

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. Mr. Lingle's budget constraint is AC. Point E is

Refer to the information provided in Figure 6.15 below to answer the question that follows. Figure 6.15 -Refer to Figure 6.15. The highest indifference curve depicted is the one on which point D lies. Why is Jason not maximizing his utility at point D?

Ricardo eats 20 pieces of sushi on a Friday night. When he eats the 21st piece, he starts to feel nauseous and realizes he probably should not have eaten the last piece. This suggests that for Ricardo the

Hector has $2,000 a month to spend on clothing and food. The price of clothing is $50 and the price of food is $20. Hector spends his entire income when he purchases ________ units of clothing and ________ units of food.

Kathy eats five slices of pizza on a Saturday night but admits each slice of pizza doesn't taste as good as the previous one. This suggests that for Kathy the

Geneva is spending her entire income on goods X and Y. Her marginal utility from the last units of X and Y that she consumes is 36. Geneva's utility is only maximized if

Assume leisure is an inferior good instead of a normal good. The income effect of a wage decrease will lead to a ________ demand for leisure and a ________ labor supply.