Exam 6: Household Behavior and Consumer Choice

Refer to the information provided in Figure 6.1 below to answer the question(s) that follow. Figure 6.1 -Refer to Figure 6.1. Tom's budget constraint is AC. His choice set includes all points

If the price of a normal good falls, the income effect will result in households buying ________ of the good and the substitution effect will result in households buying ________ of the good.

Refer to the information provided in Figure 6.7 below to answer the question(s) that follow. Figure 6.7 -Refer to Figure 6.7. Along budget constraint AB, the price of good X is $10 and the price of good Y is $12. If the price of X increases to $15, the budget constraint will

Juanita is spending her entire income on goods X and Y. Her marginal utility from the last unit of X is 50 and the marginal utility from the last unit of Y that she consumes is 100. Juanita's utility is only maximized if

An indifference curve is a set of points, each point representing a combination of two goods, all of which represent the same total utility.

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 $400, the price of a DVD is $15 and the price of a CD is $20. At point B she is buying ________ DVDs and ________ CDs.

If a household's income rises by 30%, its budget constraint will

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 AD. If her income decreases, her new budget constraint is

Refer to the information provided in Figure 6.1 below to answer the question(s) that follow. Figure 6.1 -Refer to Figure 6.1. Along budget constraint AC, the opportunity cost of one hamburger

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. Mollyʹs budget constraint is AD. It would swivel to AB if the price of

Assuming that charitable giving is a normal good, the income effect of a decrease in personal tax rates would lead to

Refer to the information provided in Figure 6.14 below to answer the question(s) that follow. Figure 6.14 -Refer to Figure 6.14. Jason maximizes utility at point

Related to the Economics in Practice on page 125: A reduction in the salience of prices should make demand for those products

Refer to the information provided in Figure 6.13 below to answer the question(s) that follow. Figure 6.13 -Refer to Figure 6.13. Assume Megan has two products available, pizza and hamburgers. Megan must be compensated with more hamburgers as she gives up more pizzas. The curve in Panel ________ represents her indifference curve.

When the price of a good decreases, the budget constraint shifts out parallel to the original budget constraint.

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. Assume Mr. Lingle is on budget constraint AC. If the price of a gardenburger is $5, Mr. Lingleʹs monthly income is

Harry tells you that he prefers Pepsi to Coke, Coke to 7-UP, and 7-UP to Pepsi. This violates what assumption made when analyzing consumer preferences?

Refer to the information provided in Table 6.4 below to answer the question(s) that follow. Table 6.4 Number of Donuts per Day Total Utility Marginal Utility 1 80 2 150 3 200 4 230 5 10 Number of Burritos per Day Total Utility Marginal Utility 1 60 2 108 3 144 4 168 5 12 -Refer to Table 6.4. The total utility of five donuts per day is

Adriana is maximizing her utility. Her MU_x/P_x = 10 and MU_y = 60. Then the price of Y must be

A consumer satisfies the condition MU_x/P_x = MU_y/P_y when his indifference curve ________ his budget constraint.