Exam 3: The Theory of Consumer Choice

A set of indifference curves showing that the consumer is indifferent between market baskets A and B,and market baskets A and C,but that market basket C is preferred to B must be _____.

Which one of the following assumptions about indifference curves is incorrect?

Indifference curves consistent with one good being an economic "neuter" are:

Jen does not care one way or another about blue jeans.In other words,blue jeans are a(n)_____ for Jen.

Define a normal good and an inferior good and give an example of each.

Marginal utility is _____.

An indifference map shows the optimal consumption bundle of a consumer for two goods A and B.Which of the following factors would lead to a parallel shift of the budget line allowing the consumer to reach a higher indifference curve?

Candies are on the vertical axis and pretzels are on the horizontal axis.Both goods command a positive price in the market place.The indifference curves are shaped such that the marginal rate of substitution increases rather than decreases.At equilibrium,the consumer will:

Suppose food is on the horizontal axis and all other goods on the vertical axis.Your budget allowance is $200,the market price of food is $5,and the market price of all other goods is $20.You are expending your total budget and the marginal rate of substitution at your present consumption bundle is 0.1 so to maximize utility you should consume:

In deriving an income-consumption curve,it is assumed that:

If the vertical axis measures yams which cost $20 per unit and the horizontal axis measures xylophones which cost $5 a unit,the slope of the budget line is _____.

When a consumer's optimal consumption choice is a corner equilibrium it implies:

How do inferior goods differ from economic "bads"?

Convexity of indifference curves implies that _____.

The diminishing marginal rate of substitution along an indifference curve is reflected by its _____.

When the income-consumption curve is backward-bending to the left,the good represented on the X-axis must be _____.

Consider a graph with Yvonne's income on the Y-axis and Xavier's income on the X-axis.Yvonne has twice as much income as Xavier.If Yvonne cares about the material well-being of Oscar,and considers the latter's income as an economic good,the slope of Yvonne's budget line relating her income to Xavier's income would be _____.

The consumer's optimal consumption bundle is at the point where:

An economic "bad" is a commodity for which _____.

Figure 3-2 shows the preferences of a consumer for two goods,guns and butter.Refer to Figure 3-2.Which of the following is true?