FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 21: The Theory of Consumer Choice

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

Both Diana and Sarah like Classical music and music by Beyoncé. Diana likes music by Beyoncé much better than Classical music, whereas Sarah prefers Classical music to music by Beyoncé. If we were to graph an indifference curve with CDs by Beyoncé on the horizontal axis and Classical music CDs on the vertical axis, then

A) Diana and Sarah would have identical indifference curves.
B) Diana's indifference curve would be steeper than Sarah's indifference curve.
C) Sarah's indifference curve would be steeper than Diana's indifference curve.
D) We do not have enough information to compare their indifference curves.

E) A) and D)
F) None of the above

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

Figure 21-11 -Refer to Figure 21-11. Assume that the consumer depicted in the figure faces prices and income such that she optimizes at point B. According to the graph, which of the following would cause the consumer to move to point A?

A) A decrease in the price of Twizzlers
B) A decrease in the price of M&M's
C) An increase in the price of Twizzlers
D) An increase in the price of M&M's

E) A) and D)
F) A) and B)

Correct Answer

verified

Show Answer

Question 43

Multiple Choice

Review LaterAdd Note

Figure 21-5 -Refer to Figure 21-5. If the price of good X is $5, and your budget constraint is DE, what is the price of good Y?

A rational person can have a negatively-sloped labor supply curve.

Figure 21-1 -Refer to Figure 21-1. If the price of a book is $14, then the consumer's income amounts to

Figure 21-3 In each case, the budget constraint moves from BC₁ to BC₂. ​ Graph (a) Graph (b) Graph (c) Graph (d) -Refer to Figure 21-3. Which of the graphs in the figure could reflect a simultaneous increase in the price of good X and decrease in the price of good Y?

All points on a demand curve are optimal consumption points.

A consumer's budget constraint for goods X and Y is determined by how much the consumer likes good X relative to good Y.

All of the following are properties of typical indifference curves except

Figure 21-14 -Refer to Figure 21-14. Suppose the price of good X is $8, the price of good Y is $10, and the consumer's income is $360. Then the consumer's optimal choice is represented by a point on which curve?

Alicia is a vegetarian, so she does not eat beef. That is, beef provides no additional utility to Alicia. She loves potatoes, however. If we illustrate Alicia's indifference curves by drawing beef on the horizontal axis and potatoes on the vertical axis, her indifference curves will

Figure 21-4 -Refer to Figure 21-4. Suppose a consumer has $600 in income, the price of pretzels is $2, and the price of lemonade is $3. What is the value of B?

Figure 21-19 The figure shows three indifference curves and a budget constraint for a consumer named Hannah. When young, Hannah works and earns income. When old, she is retired and earns no income. ​ -Refer to Figure 21-19. How much income does Hannah earn when she is young?

Giffen goods are inferior goods for which the income effect dominates the substitution effect.

If the market is offering consumers the trade-off of 3 pints of Pepsi for 1 pizza, and if the price of a pizza is $9, then what is the price of a pint of Pepsi?

Figure 21-2 In each case, the budget constraint moves from BC₁ to BC₂. Graph (a) Graph (b) Graph (c) Graph (d) -Refer to Figure 21-2. Which of the graphs in the figure could reflect a simultaneous decrease in the prices of both goods?

What is significant about a point on a graph at which an indifference curve is tangent to a budget constraint?

Is it possible for a normal good to be a Giffen good? Briefly explain.

A consumer's optimal choice is affected by income, prices of goods, and preferences.

A worker with a backward-bending labor supply curve responds to an increase in wages by working more hours.