Exam 5: Consumer Choice: Individual and Market Demand

Voluntary exchange requires that there must be mutual gain.

The slope of the budget line

Figure 5-10 -In the indifference curve pictured in Figure 5-10, which of the following is clearly true?

When the price of a commodity rises, we can expect

If point A on an indifference curve lies higher (measured vertically) than point B on the same curve, Point A automatically represents higher total utility than point B.

A consumer has maximized her total utility (as measured in money) when, at the quantity of each good chosen

All of the points on a budget line result in combination of goods that expend all of her income.

Figure 5-17 -In Figure 5-17, which of the marked points would an economist use to help him construct a single demand curve for X?

Market demand curves are found by

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

Figure 5-13 -If the slope of an indifference curve between two goods decreases as we move from left to right (dropping all minus signs), we infer that the consumer

A change in consumer preferences will shift the budget line.

The optimal combination of goods for a consumer to purchase is shown by

As a rule, the more of a commodity a consumer acquires, the smaller will be her total utility from that good.

Are there ever exceptions to the law of demand?

If income rises, most consumers will increase the quantity demanded of an inferior good.

All inferior goods have upward-sloping demand curves.

Scarcity raises both price and marginal utility but generally reduces total utility.

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

The consumer maximizes his total utility (measured in money terms) when, at his chosen quantity of every good he buys, marginal utility