Exam 9: Possibilities, Preferences, and Choices

-John likes to spend Thursday nights playing pool and drinking soda. John's budget for Thursday nights is $10, a soda costs $2, and one game of pool costs $1. a) Draw a graph of John's budget line in the figure above. b) In your graph, label the affordable and unaffordable areas.

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

Consumers' preferences are represented by

-The indifference curve in the above figure

-In the above figure, what is the magnitude of the marginal rate of substitution (MRS) at point a?

-As Judy moves down along her budget line, ________.

-If money income increases, a consumer's budget line

-The figure above shows Sam's budget line. Which of the following equals the slope of Sam's budget line?

Real income measures the

-Sharmila has a budget line for DVDs and books. DVDs are on the vertical axis and books on the horizontal. Her budget line becomes steeper as

Suppose that Dave has $200 to spend per week and he buys only magazines and pizza. The price of a pizza is $10 and the price of a magazine is $5. What is the maximum amount of pizza Dave can buy each week?

-The above figure shows Jane's budget line and two of her indifference curves. Jane's marginal rate of substitution is

-In an indifference curve/budget line diagram, generally when the price of a good increases, the consumer purchases ________ of the good and moves to a ________ indifference curve.

For a person who consumes only steak and lobster, the slope of the budget line is called the marginal rate of substitution between steak and lobster.

-The above figure shows Jane's budget line and two of her indifference curves. How many lobster dinners will Jane purchase each month?

-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 could begin consuming at point

-In the figure above, a decrease in the price of a bag of potato chips would result in the budget line

A recent article suggests that the introduction of the new iPhone 6 increased the demand for iPhone protective cases. The article suggests that these two goods are

-Melissa has an income of $240 a month to spend on tennis lessons and concert tickets. The price of a tennis lesson is $20, and the price of a concert ticket is $40. The slope of Melissa's budget line, with tennis lessons on the horizontal axis, is

Preferences depend on