Exam 5: Consumers and Incentives

Scenario: Maylin is shopping at the sporting goods store for socks and running shoes. She has determined the following total benefit derived from each quantity of socks and running shoe -Now suppose the price of running shorts doubles to $20,socks remain priced at $10 per pair,and Maylin has $150 of income.What consumption bundle maximizes Maylin's total benefit at the new,higher price of running shorts?

Maylin goes to her local sporting goods store to buy socks and jogging shorts.Socks cost $10 per pair and jogging shorts cost $15 each.At her current consumption bundle pair of 4 pairs of socks and 2 jogging shorts,her marginal benefit from the last pair of socks is 20 and the marginal benefit of the last jogging short is 30.Maylin should ________.

The following table shows the benefit that Evan derives from consuming pizza. The price of a slice of pizza is $4. -Refer to the table above.If Evan eats 2 slices of pizza,how much consumer surplus does get?

A decrease in the price of either good purchased by a consumer will cause the consumer's budget constraint to ________.

Scenario: The following table shows the marginal benefit that a consumer derives by consuming different quantities of juice and milk. -Refer to the table above.What is the total benefit that the consumer derives when he consumes 4 quarts of milk?

The weekly quantity demanded of frozen pizzas in Decorah,IA as a function of price is shown in the graph below.The market price of frozen pizzas is $10,and at that price 600 pizzas are sold.Consumer surplus in this market is ________.

Anne has chosen how many bagels and how many units of cream cheese she would buy this month.She has $20 to spend on these two goods.Suppose that her chosen combination,the marginal benefit per dollar for bagels is $6,and her marginal benefit per dollar for cream cheese is $10.If she decides to buy more bagels and less cream cheese,________.

Which of the following goods is likely to have an income elasticity of demand greater than one?

Define the following terms: a)Indifference curve b)Utility

If the price of the good measured along the vertical axis increases without a change in the price of the good measured along the horizontal axis,a consumer's budget constraint ________.

Willingness to pay ________.

Which of the following statements best describes a normal good?

A(n)________ shows the bundles of two goods that provide an equal level of satisfaction to the consumer.

Now suppose the demand curve remains constant but the market price of frozen pizzas in Decorah,IA increases to $14 per pizza.The loss in consumer surplus in this market due to the $4 increase in the price of frozen pizza is ________.

The following figure shows the market demand curve for calculators. -Refer to the figure above.What is the market-wide consumer surplus when the market price of calculators is $6 per unit?

The cross-price elasticity of demand for a good is the ________.

An optimizing consumer makes her purchase decisions based on ________.

Which of the following statements correctly identifies the difference between the cross-price elasticity of demand and the income elasticity of demand?

The following figure shows a consumer's budget constraint for jeans and sweaters. -Refer to the figure above.Suppose B₁ is the original budget constraint of a consumer.A change in the budget constraint from B₁ to B₂ indicates ________.

The following table shows the total benefit that Jenny derives from consuming different quantities of chocolate. -Refer to the table above.What is the marginal benefit that Jenny derives from the fifth unit of chocolate?