Exam 21: The Theory of Consumer Choice

Figure 21-1 The downward-sloping line on the figure represents a consumer's budget constraint. -Refer to Figure 21-1. If the price of a CD is $12, then the consumer's income amounts to

Giffen goods have positively-sloped demand curves because they are

The change in consumption that results when a price change moves the consumer along a given indifference curve to a point illustrating the new marginal rate of substitution is called the

Assume that goods X and Y are not Giffen goods. ​If the price of good X falls, a consumer will definitely

Figure 21-32 The figure shows three indifference curves and a budget constraint for a consumer named Hannah. When young, Hannah works and earns income. When old, she is retired and earns no income. -Refer to Figure 21-32. Of the four labeled points, which is (are) affordable to Hannah?

Consumer theory provides the foundation for understanding demand curves because

Figure 21-10 -Refer to Figure 21-10. When comparing bundle B to bundle C, the consumer

When we derive the demand curve for a good, we should remember that the

On a graph we draw indifference curves to illustrate Steven's preferences for steak and broccoli. If two of Steven's indifference curves cross, then it cannot be the case that Steven

A consumer's preferences for $1 bills and $20 bills can be represented by indifference curves that are

Figure 21-31 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. -Refer to Figure 21-31. For Kevin, are sweaters and shirts substitutes, complements, or neither?

When indifference curves are bowed in toward the origin,

A worker with a backward-bending labor supply curve responds to an increase in wages by working more hours.

The marginal rate of substitution is the slope of the indifference curve.

A set of indifference curves that are only slightly bowed inward represent goods that could best be described as

Alicia is a vegetarian, so she does not eat beef. That is, beef provides no additional utility to Alicia. She loves potatoes, however. If we illustrate Alicia's indifference curves by drawing beef on the horizontal axis and potatoes on the vertical axis, her indifference curves will

Consider the indifference curve map for nickels and quarters. Assume nickels are on the horizontal axis and quarters are on the vertical axis. The indifference curves for nickels and quarters are

Indifference curves graphically represent

A consumer's optimal choice occurs when the

If a consumer consumes two goods, X and Y, and has indifference curves that are bowed inward, the consumer's optional choice occurs when