Exam 5: Consumer Choice: Individual and Market Demand

Given a typical demand curve and a decline in price, the consumer who wishes to maximize total utility must increase the quantity purchased of a good to arrive at an optimal MU = P point.

The theory of consumer choice is based on the hypothesis that each consumer wants to

Consumer's surplus is a measure of how much

If the marginal utility to Juan of sleeping an extra hour (from 8 a.m.to 9 a.m.) is negative,

Use consumer indifference curves and budget lines to illustrate the effects of an increase in income for a normal good and an inferior good (use two graphs).Be sure your diagrams are fully and correctly labeled.

Figure 5-5 -Figure 5-5 shows a consumer budget line for french fries and hamburgers.The price of an order fries is $2.The price of a burger is

A change in the price of one good results in a rotation of the budget line, so that it is steeper or flatter.

Figure 5-13 -In Figure 5-13, the slope of the budget line (dropping all minus signs) equals

Vicki consumes meatloaf and pizza.To keep her utility constant, you must give her more of one good if you take some of the other away.This information implies that

The law of diminishing marginal utility guarantees that demand curves will have positive slopes.

Marginal utility is measured by the maximum amount of money a consumer is willing to pay for one more unit of a commodity.

The marginal utility of a unit of good Y to Jane is

Elaine values the utility of her first cup of coffee at $1; a second cup, $.75; and a third cup, $.50.If Elaine drinks three cups of coffee for breakfast, her marginal utility is equal to

An indifference curve is a line showing

A consumer will consume the combination of goods at the point of tangency between the budget line and the indifference curve.

An increase in a family's income will cause its budget line to

Figure 5-8 -In Figure 5-8, the consumer is indifferent between the combinations of beer and wine coolers indicated by points

What would happen to the budget line if income as well as prices of both goods increase by the same percentage?

Which of the following is characteristic of indifference curves?

A change in the price of a good will shift the indifference curves.