Exam 5: Consumer Choice: Individual and Market Demand

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

Draw the point of consumer equilibrium from an indifference map and budget line.Explain why this is the point of optimization.Be sure your diagram is fully and correctly labeled.

Figure 5-3 -In Figure 5-3, a decline in price from 3 to 1 will increase market quantity demanded by

The budget line facing a household includes information on

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

Total utility

The law of demand ensures that a demand curve has a positive slope.

All decisions involve opportunity cost.

A normal good is a good whose quantity demanded

What is the marginal rate of substitution, and what role does it play in determining the consumer's optimum choice?

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

​If marginal utility is a positive number:

A decrease in the price of one good results in a parallel shift in the budget line.

For a consumer to maximize utility, he will choose the

Figure 5-13 -In Figure 5-13, the line AB is

An indifference curve is a line showing

If the prices of both goods increase by 10 percent, the budget line

Figure 5-5 -In Figure 5-5, if the household is spending enough of its budget to purchase 4 orders of fries and the price of an order of fries is $2, the remainder of the budget available for hamburgers is

Market demand curves are found by

Total utility decreases when diminishing marginal utility is present.