Exam 9: Possibilities, Preferences, and Choices

In an indifference curve diagram, the quantities of good Y are measured along the vertical axis and the quantities of good X are measured along the horizontal axis. The marginal rate of substitution is defined as

The combinations of gasoline and coffee along one of Sam's indifference curves are combinations

-The figure above shows Ronald's budget line. He has a weekly income of $20 and he spends it on hot dogs and hamburgers. The relative price of a hamburger is ________.

Which of the following statements is FALSE?

In order for you to consider steak and lobster to be perfect substitutes, their prices per pound must be identical.

-The indifference curve in the above figure

-In the above figure, income is $8, the price of a soft drink is $1, and the initial price of a milkshake is $2. If the price of a milkshake decreases to $1, the substitution effect is the movement from point ________ to point ________.

When your budget line is just tangent to your indifference curve, you are at your best affordable point.

-In the above figure, the rise in the price of a gallon of gasoline that created the movement from point C to point A would be shown as a movement ________ along the demand curve for ________.

Joe has $50 to spend on pizza and movies. If movies are $5 each and a pizza is $10 then, assuming he spends all his money, he can buy which of the following bundle of goods?

Suppose the price of coffee is $3 each, the price of bagels is $2 each and a person's budget is $40. The relative price of coffee is

Beta Alpha Psi is an accounting student professional organization with chapters on 279 campuses nationwide. Suppose each meeting the local chapter has $30 to spend on pizza and soda. If pizza costs $8 and the chapter buys 3, how much money can be spent on soda?

-The figure above shows Sam's budget line. Which of the following would result in Sam's budget line rotating inward and not changing its vertical intercept?

The substitution effect from a rise in the price of pizza

-Consider the budget line in the above figure. If the consumer's income is $240, then the price of a movie is

-In the above figure, the movement from point C to point A is the result of

The magnitude of the slope of the budget line is the ratio of

-The curve in the above figure shows alternative combinations of gasoline and coffee that Sam likes equally well. This curve is called

-In the above figure, Brendan originally consumes at point A. If his income rises and both compact discs and haircuts are normal goods then he will begin consuming at a point such as

The income effect for an inferior good