Exam 21: The Theory of Consumer Choice.

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 X only?

Scenario 21-3 Zach knows that he will ultimately face retirement. Assume that Zach will experience two periods in his life, one in which he works and earns income, and one in which he is retired and earns no income. Zach can earn $250,000 during his working period and nothing in his retirement period. He must both save and consume in his work period with an interest rate of 10 percent on savings. -Refer to Scenario 21-3.Assume that Zach decides to consume $100,000 in the work period.How much money will he have available for consumption in his retirement period?

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

A consumer's preferences for right shoes and left shoes can be represented by indifference curves that are

Figure 21-21 -Refer to Figure 21-21.If the consumer were initially at point A in the figure,a movement from point B to point C as a result of a decrease in the price of potato chips represents the

Figure 21-9 -Refer to Figure 21-9.If the price of good X is $15,what is the price of good Y?

Figure 21-12 -Refer to Figure 21-12.Which of the following statements is not correct?

Bill consumes two goods,iced tea and spaghetti.The price of iced tea is $4 per bottle,and the price of spaghetti is $6 per serving.His income is $1,000 per month.He spends all his income each month.He purchases 100 bottles of iced tea.How many servings of spaghetti can he purchase?

Figure 21-5 -Refer to Figure 21-5.In graph (a),what is the price of good X relative to good Y (i.e.,PX/PY)?

Suppose a consumer has an income of $800 per month and that she spends her entire income each month on beer and bratwurst.The price of a pint of beer is $5,and the price of a bratwurst is $4.Which of the following combinations of beers and bratwursts represents a point that would lie to the interior of the consumer's budget constraint?

Angie is maximizing total utility while consuming food and clothing.Her marginal utility from food is 50,and her marginal utility from clothing is 25.If clothing is priced at $10 per unit,the price of food per unit must be

If the price of a good increases,all else equal,consumers perceive

The marginal rate of substitution between two goods always equals the

If we observe that Jamie's budget constraint has moved outward,then we know for certain that

Assume that a consumer faces the following budget constraints. a.Assuming that income is the same on both occasions,describe the difference in relative prices between Panel A and Panel B. b.If income in Panel B is $126,what is the price of good X? c.If income in Panel A is $84,what is the price of good Y? d.Assuming that the price of good X is the same on both occasions,describe the difference in income and price of good Y between Panel A and Panel B.

Figure 21-17 -Refer to Figure 21-17.Bundle D represents a point where

Economists have found evidence of a Giffen good when studying the consumption of rice in the Chinese province of Hunan.

Figure 21-2 -Refer to Figure 21-2.A consumer who chooses to spend all of her income could be at which point(s)on the budget constraint?

Which of the following does not represent a tradeoff facing a consumer?

As more units of an item are purchased,everything else equal,marginal satisfaction from consuming additional units will tend to