Exam 9: Possibilities, Preferences, and Choices

-Consider the change in the price of a book depicted in the above figure. The original budget line is BC. The new budget line is BD. As a result of this price change, the substitution effect can be represented by a movement from

(Multiple Choice)

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Question 121

An indifference curve will become ________ the origin the more that the consumer considers the two goods as complements.

(Multiple Choice)

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Question 122

If your marginal rate of substitution between two goods diminishes continuously as you give up one good for the other, that means the

(Multiple Choice)

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Question 123

The substitution effect

(Multiple Choice)

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Question 124

Your weekly budget for gasoline and movie rentals is $45.00. Referring to the figure above, what is the price per movie rental?

(Multiple Choice)

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Question 125

-The above figure gives your budget line between CDs and magazines. Which combination of CDs and magazines are affordable?

(Multiple Choice)

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Question 126

Margo spends $108 a year on music CDs and movies on DVDs. Initially the price of a music CD is $18 and the price of a movie on DVD is $18. Then record companies, faced with the growing competitions from digital music download services, lower the price of a music CD to $13.50. a) Draw graphs showing Margo's consumption possibilities before and after the price of a CD fell. b) How has the relative price of a CD changed? If Margo bought 4 CDs per year, how many DVDs could she buy before and after the price of a CD fell?

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Question 127

On a big weekend of college football in 2010, the Associated Press found fans… who said they are making concessions yet determined to indulge their passion. "We basically let the wife and children not eat for a week so we can do this," joked Neil Plotkin, who was attending his first Penn State game. If Neil views eating and football games as perfect substitutes, how would his indifference curve be shaped?

(Multiple Choice)

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Question 128

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

(Multiple Choice)

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Question 129

-Lizzie's budget line is shown in the figure above. If the price of a cookie falls, the budget line

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Question 130

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

(Multiple Choice)

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Question 131

-In the above figure, at the best affordable point, the marginal rate of substitution is

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Question 132

Sue consumes apples and bananas. Suppose Sue's income doubles and the prices of apples and bananas do not change. Sue's budget line will

(Multiple Choice)

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Question 133

-The figure above shows Sam's budget line. The vertical intercept of Sam's budget line is equal to

(Multiple Choice)

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Question 134

Olivia's income is $216 a year and she spends all of it on music CDs and movies on DVDs. The price of a music CD is $18 and the price of a DVD is $18. a) What is Olivia's real income in terms of CDs? What is her real income in terms of DVDs? b) What is the relative price of a CD in terms of DVDs? What is the opportunity cost of a DVD? c) Calculate the equation for Olivia's budget line. Place the quantity of DVDs on the left side of the equation. d) Draw a graph of Olivia's budget line (with CDs on the horizontal axis). What is the slope of Olivia's budget line? What determines its magnitude?

(Essay)

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Question 135

-In the above figure, as Brendan's income falls his consumption bundle moves from point A to point E. This implies that for Brendan, compact discs are good and haircuts are good.

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Question 136

Suppose that Dell computers and Gateway computers are very close substitutes. Then the indifference curves between Dell computers and Gateway computers are almost straight lines. Is this analysis correct or incorrect? Explain.

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Question 137

-Record companies, faced with the growing competitions from digital music download services, lower the price of a music CD from $18.00 to $13.50. The price of a DVD is $18. Olivia's income is $216 a year and she spends all of it on music CDs and movies on DVDs. a) What is Olivia's real income in terms of CDs? What is her real income in terms of DVDs? b) What is the relative price of a CD in terms of DVDs? What is the opportunity cost of a DVD? c) Calculate the equation for Olivia's budget line. Place the quantity of DVDs on the left side of the equation. d) Draw a graph of Olivia's budget line (with CDs on the horizontal axis). What is the slope of Olivia's budget line? What determines its magnitude? The figure above illustrates Olivia's preferences. e) Given the price of a CD, the price of a DVD, and Olivia's income, what quantities of CDs and DVDs does Olivia buy? Explain your solution. f) What is Olivia's marginal rate of substitution at the point at which she consumes? Explain. g) Determine how many CDs Olivia buys if the price of a CD is $18 and there is no change in the price of DVD nor in Olivia's income. Derive Olivia's demand curve for CDs for the price change from $18 to $13.50 per CD.

(Essay)

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Question 138

-Suppose Sam plans to buy only popcorn and soda. He has $40 to spend per week. A change in which of the following variables will change Sam's consumption possibilities? I. price of popcorn II) income III) preferences IV) utility

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Question 139

What information do you need to draw your budget line? What is your budget line? What does it show for any pair of goods?

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Question 140

Showing 121 - 140 of 459

-Consider the change in the price of a book depicted in the above figure. The original budget line is BC. The new budget line is BD. As a result of this price change, the substitution effect can be represented by a movement from

An indifference curve will become ________ the origin the more that the consumer considers the two goods as complements.

If your marginal rate of substitution between two goods diminishes continuously as you give up one good for the other, that means the

The substitution effect

Your weekly budget for gasoline and movie rentals is $45.00. Referring to the figure above, what is the price per movie rental?

-The above figure gives your budget line between CDs and magazines. Which combination of CDs and magazines are affordable?

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

-Lizzie's budget line is shown in the figure above. If the price of a cookie falls, the budget line

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

-In the above figure, at the best affordable point, the marginal rate of substitution is

Sue consumes apples and bananas. Suppose Sue's income doubles and the prices of apples and bananas do not change. Sue's budget line will

-The figure above shows Sam's budget line. The vertical intercept of Sam's budget line is equal to

-In the above figure, as Brendan's income falls his consumption bundle moves from point A to point E. This implies that for Brendan, compact discs are good and haircuts are good.

Suppose that Dell computers and Gateway computers are very close substitutes. Then the indifference curves between Dell computers and Gateway computers are almost straight lines. Is this analysis correct or incorrect? Explain.

-Suppose Sam plans to buy only popcorn and soda. He has $40 to spend per week. A change in which of the following variables will change Sam's consumption possibilities? I. price of popcorn II) income III) preferences IV) utility

What information do you need to draw your budget line? What is your budget line? What does it show for any pair of goods?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 9: Possibilities, Preferences, and Choices

-Consider the change in the price of a book depicted in the above figure. The original budget line is BC. The new budget line is BD. As a result of this price change, the substitution effect can be represented by a movement from

An indifference curve will become ________ the origin the more that the consumer considers the two goods as complements.

If your marginal rate of substitution between two goods diminishes continuously as you give up one good for the other, that means the

The substitution effect

Your weekly budget for gasoline and movie rentals is $45.00. Referring to the figure above, what is the price per movie rental?

-The above figure gives your budget line between CDs and magazines. Which combination of CDs and magazines are affordable?

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

-Lizzie's budget line is shown in the figure above. If the price of a cookie falls, the budget line

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

-In the above figure, at the best affordable point, the marginal rate of substitution is

Sue consumes apples and bananas. Suppose Sue's income doubles and the prices of apples and bananas do not change. Sue's budget line will

-The figure above shows Sam's budget line. The vertical intercept of Sam's budget line is equal to

-In the above figure, as Brendan's income falls his consumption bundle moves from point A to point E. This implies that for Brendan, compact discs are ________ good and haircuts are ________ good.

Suppose that Dell computers and Gateway computers are very close substitutes. Then the indifference curves between Dell computers and Gateway computers are almost straight lines. Is this analysis correct or incorrect? Explain.

-Suppose Sam plans to buy only popcorn and soda. He has $40 to spend per week. A change in which of the following variables will change Sam's consumption possibilities? I. price of popcorn II) income III) preferences IV) utility

What information do you need to draw your budget line? What is your budget line? What does it show for any pair of goods?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

-In the above figure, as Brendan's income falls his consumption bundle moves from point A to point E. This implies that for Brendan, compact discs are good and haircuts are good.