Exam 21: The Theory of Consumer Choice

Evaluate the following statement, "Warren Buffet is the second richest person in the world. He doesn't face any constraint on his ability to purchase commodities he wants."

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. Which of the four labeled points is Hannah's optimum?

Jake experiences an increase in his wages. The hours of labor that he supplies to the market would decrease if

Figure 21-12 -Refer to Figure 21-12. If the consumer moves from bundle V to bundle X, the

If leisure were an inferior good, then labor supply curves

Assume Victoria's indifference curves are bowed outward but her indifference curves satisfy the other three properties of indifference curves. As Victoria moves from right to left along the horizontal axis, her marginal rate of substitution

For Antonio, the income effect of an interest-rate increase is stronger than the substitution effect. In response to a higher interest rate, will Antonio save more or will he save less?

The slope of the budget constraint reveals the relative price of good X compared to good Y.

Figure 21-10 -Refer to Figure 21-10. Which of the following statements is not correct?

Giffen goods have positively-sloped demand curves because they are

A consumer consumes two normal goods, sandwiches and milk. When the price of milk is $0.50 per glass, the consumer purchases 40 glasses. When the price rises to $0.65 per glass, the consumer purchases 30 glasses. We can use the information provided by the consumer's optimum choices to derive the

Figure 21-21 -Refer to Figure 21-21. Suppose that a consumer is originally at point R. Then the price of good X decreases. Which of the following represents the substitution effect of the price decrease?

A consumer

Figure 21-14 -Refer to Figure 21-14. Which of the following statements is correct?

Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure reflects an increase in the price of good Y only?

A consumer consumes two normal goods, coffee and chocolate. The price of coffee rises. The income effect, by itself, suggests that the consumer will consume

For a typical consumer, most indifference curves are bowed inward.

Two economists found empirical evidence that when the price of rice decreased in the Hunan province of China, local residents consumed less rice than before the price decrease. The study provides a real-world example of a(n)

We can use the theory of consumer choice to analyze

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. What is the value of the interest rate that Hannah earns on her saving?