Exam 21: The Theory of Consumer Choice

Assume that a college student purchases only Ramen noodles and textbooks. If Ramen noodles are an inferior good and textbooks are a normal good, then the income effect associated with an increase in the price of a textbook will result in

The substitution effect in the work-leisure model induces a person to work less in response to higher wages, which tends to make the labor-supply curve slope upward.

As long as a consumer remains on the same indifference curve,

The theory of consumer choice illustrates that people face tradeoffs, which is one of the Ten Principles of Economics.

Suppose Caroline will only drink a cup of coffee if she can add two packets of sugar to it. Which graph would illustrate a representative indifference curve?

The theory of consumer choice is to demand as the theory of

The slope of an indifference curve is

Figure 21-10 -Refer to Figure 21-10. Which of the following statements is not true for a consumer who moves from bundle B to bundle C?

Figure 21-25 The figure pertains to a particular consumer. On the axes, X represents the quantity of good X and Y represents the quantity of good Y. -Refer to Figure 21-25. Suppose the price of good X is $8, the price of good Y is $10, and the consumer's income is $360. Then the consumer's optimal choice is represented by a point on which curve?

A family on a trip budgets $800 for meals and hotel accommodations. Suppose the price of a meal is $40. In addition, suppose the family could afford a total of 8 nights in a hotel if they don't buy any meals. How many meals could the family afford if they gave up two nights in the hotel?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (b), if income is equal to $420, then the price of good X is

Bundle A contains 10 units of good X and 5 units of good Y. Bundle B contains 5 units of good X and 10 units of good Y. Bundle C contains 10 units of good X and 10 units of good Y. The consumer is indifferent between bundle A and bundle B. Assume that the consumer's preferences satisfy the four properties of indifference curves. Which of the following statements is correct?

A Giffen good is a good for which

When Matt has an income of $2,000, he consumes 30 units of good A and 50 units of good B. After Matt's income increases to $3,000, he consumes 25 units of good A and 95 units of good B. Which of the following statements is correct?

Figure 21-28 The figure below illustrates the preferences for a representative consumer, Christopher. -Refer to Figure 21-28. Interest rates increase by 3 percent. Christopher's optimal choice point moves from A to B. Christopher consumes

Assume that consumption when young and consumption when old are both normal goods. The income effect of an increase in the interest rate will result in

Figure 21-30 The graph shows two budget constraints for a consumer. -Refer to Figure 21-30. Suppose the consumer's income is $90 and Budget Constraint A applies. What is the price of a light bulb?

An indifference curve illustrates the

Figure 21-11 -Refer to Figure 21-11. As the consumer moves from point A to B to C to D, the consumer's total utility

Indifference curves illustrate