Question 1

If Ian's indifference curve between guitars and Cadillacs is shaped like a right angle,then he considers the two goods perfect complements.

Accepted Answer

A right-angle indifference curve indicates that the consumer only derives satisfaction from consuming the two goods in fixed proportions, characteristic of perfect complements.

Question 2

Use the following to answer question: 
-(Table: Madeline's Preferences for T-Shirts and Coffee)Use Table Madeline's Preferences for T-Shirts and Coffee.Assume each consumption bundle provides the same level of utility.Suppose Madeline is consuming bundle A but then changes her consumption and slowly moves along her indifference curve to bundles B,C,D,and finally E.As she moves toward bundle E,she gives up:

Accepted Answer

According to the table, as Madeline moves from bundle A to bundle E, she is giving up fewer and fewer T-shirts to obtain another cup of coffee. This is consistent with a downward-sloping indifference curve, where the marginal utility of coffee is decreasing as Madeline consumes more of it, while the marginal utility of T-shirts is increasing as she has fewer of them. Therefore, the correct answer is (C) - Madeline gives up a decreasing number of T-shirts to obtain another cup of coffee.

Question 3

When we graphically isolate the substitution effect of a change in the price of one good,utility is held constant.

Accepted Answer

When we graphically isolate the substitution effect, we shift the budget line parallel to the original budget line until it is tangent to the new indifference curve at the original consumption bundle. This ensures that the consumer remains indifferent between the two consumption bundles before and after the price change, and hence, utility is held constant.

Question 4

Use the following to answer question: 
-(Table: Madeline's Preferences for T-Shirts and Coffee)Use Table Madeline's Preferences for T-Shirts and Coffee.Assume each consumption bundle provides the same level of utility.As Madeline moves from bundle A to bundle E,her total utility:

Accepted Answer

Since each consumption bundle provides the same level of utility, as Madeline moves from bundle A to bundle E, her total utility stays the same.

Question 5

A Giffen good is an inferior good for which the income effect dominates the substitution effect.

Accepted Answer

A Giffen good is a special case of an inferior good where the demand for the good increases when its price increases. This is because the income effect dominates the substitution effect, leading consumers to buy more of the good even as its price rises.

Question 6

Ellen consumes goods X and Y.As she consumes less X,she must be compensated with additional units of Y,and her marginal rate of substitution of X for Y decreases as she consumes more Y.This means that goods X and Y are:

Accepted Answer

Goods X and Y are ordinary because the diminishing marginal rate of substitution indicates a typical consumer behavior of deriving less satisfaction from each additional unit of a good as they consume more of it, which is characteristic of ordinary goods.

Question 7

An indifference curve map illustrates _____ levels of utility,while each indifference curve in the map indicates consumption bundles that yield _____ level of utility for an individual.

Accepted Answer

An indifference curve map shows various levels of utility through different curves, where each curve represents combinations of goods or services that provide the same level of utility to the consumer.

Question 8

Use the following to answer question: 
-(Table: Madeline's Preferences for T-Shirts and Coffee)Use Table Madeline's Preferences for T-Shirts and Coffee.Assume each consumption bundle provides the same level of utility for Madeline.Suppose Madeline is consuming bundle C.If she changes her purchases to bundle D,this means that she:

Accepted Answer

Without the specific details of bundles C and D from the table, we can deduce the correct answer based on the general principle of trade-offs in consumption choices. If moving from bundle C to D means giving up T-shirts for more coffee, it implies a trade-off where T-shirts are sacrificed for additional coffee, aligning with choice A's description.

Question 9

To find her optimal consumption bundle,Vanessa would have to:

Accepted Answer

To find her optimal consumption bundle, Vanessa needs to rank-order consumption bundles based on the level of utility she receives from each one, allowing her to choose the bundle that maximizes her utility within her budget constraints.

Question 10

A typical indifference curve is _____,and its slope is the _____ of the good on the horizontal axis divided by the marginal utility of the good on the vertical axis.

Accepted Answer

Indifference curves are typically downward-sloping, indicating that as a consumer gives up some of one good, they need to receive more of the other good to remain equally satisfied. The slope of the indifference curve is equal to the negative of the marginal utility of the good on the vertical axis divided by the marginal utility of the good on the horizontal axis.

Question 11

Since indifference curves depend on the _____ for individuals,this means that two consumers with the same income _____.

Accepted Answer

Indifference curves depend on an individual's utility function, which can differ between individuals even with the same income. Therefore, two consumers with the same income may consume different amounts of the two goods and still reach the same level of utility.

Question 12

Use the following to answer question: 
-(Figure: Oreos and Apples)Use Figure Oreos and Apples,which provides an indifference curve map for Diego.The consumption bundle that provides the highest level of utility is bundle:

Accepted Answer

In indifference curve analysis, the bundle that provides the highest level of utility is the one that is on the highest indifference curve that the consumer can reach given their budget constraint. Without seeing the figure, we can infer that options E or F must be on a higher indifference curve compared to the other options, as they are presented as distinct choices indicating a higher level of utility.

Question 13

Ms.Stardoe gets utility from coffee and cream,but only if they are consumed in the precise ratio of 8 ounces of coffee to 2 ounces of cream.This implies that coffee and cream are ordinary goods for Ms.Stardoe.

Accepted Answer

Coffee and cream, in this context, are considered complementary goods for Ms. Stardoe because her utility from consuming them depends on their consumption in a specific ratio, not on their individual consumption levels. Ordinary goods' utility doesn't rely on such precise consumption ratios with other goods.

Question 14

The ratio of the prices of two goods is equal to the ratio of the marginal utilities of the two goods at:

Accepted Answer

The marginal utility per dollar spent on each good is equal at the optimal consumption bundle. This means that the ratio of the marginal utilities of the two goods is equal to the ratio of their prices at this point.

Question 15

The assumption that more is preferred to less explains why indifference curves:

Accepted Answer

The assumption that more is preferred to less indicates that consumers prefer higher levels of goods and services. As a result, indifference curves that lie farther from the origin represent higher levels of utility, as they include combinations of goods and services that are more preferred.

Question 16

Use the following to answer question: 
-(Figure: Oreos and Apples)Use Figure Oreos and Apples,which provides an indifference curve map for Diego.Diego prefers:

Accepted Answer

The answer of Use the following to answer question: 
-(Figure:...

Question 17

Miguel eats only burgers with onion rings.Miguel's indifference curve between burgers and onion rings must be a straight line.

Accepted Answer

The statement is false. While it is possible for Miguel's indifference curve to be linear, it is not a necessary condition just because he only eats burgers with onion rings. The shape of the indifference curve depends on the individual's preferences between the two goods.

Question 18

Use the following to answer question: 
-(Figure: Oreos and Apples)Use Figure Oreos and Apples,which provides an indifference curve map for Diego.As Diego moves along an indifference curve from point F to point E,he buys _____ Oreos to obtain _____ apples.

Accepted Answer

As Diego moves from point F to point E on the indifference curve map, he is moving towards a higher level of utility. Therefore, he must be obtaining more of the preferred good (apples) and fewer of the non-preferred good (Oreos). Therefore, the answer is A – he buys fewer Oreos to obtain more apples.

Question 19

Diminishing marginal utility is the reason most indifference curves:

Accepted Answer

Diminishing marginal utility means that as a person consumes additional units of a good, the satisfaction or utility they receive from each additional unit will eventually decrease. This leads to a downward slope of indifference curves, as the consumer needs more and more of a good to maintain the same level of satisfaction.

Question 20

When an individual's consumption of an additional unit of a good generates a smaller increase in total utility than the previous unit consumed,then this person's indifference curve will be:

Accepted Answer

This phenomenon is described by the law of diminishing marginal utility, which states that as a person consumes more units of a good, the additional satisfaction (utility) gained from consuming each additional unit decreases. Indifference curves, which represent combinations of goods that provide the same level of utility to the consumer, are typically convex (bowed toward the origin) to reflect this diminishing marginal utility.

Quiz 22: Consumer Preferences and Consumer Choice

If Ian's indifference curve between guitars and Cadillacs is shaped like a right angle,then he considers the two goods perfect complements.

When we graphically isolate the substitution effect of a change in the price of one good,utility is held constant.

Use the following to answer question: -(Table: Madeline's Preferences for T-Shirts and Coffee) Use Table Madeline's Preferences for T-Shirts and Coffee.Assume each consumption bundle provides the same level of utility.As Madeline moves from bundle A to bundle E,her total utility:

A Giffen good is an inferior good for which the income effect dominates the substitution effect.

Ellen consumes goods X and Y.As she consumes less X,she must be compensated with additional units of Y,and her marginal rate of substitution of X for Y decreases as she consumes more Y.This means that goods X and Y are:

An indifference curve map illustrates _ levels of utility,while each indifference curve in the map indicates consumption bundles that yield _ level of utility for an individual.

To find her optimal consumption bundle,Vanessa would have to:

A typical indifference curve is _,and its slope is the _ of the good on the horizontal axis divided by the marginal utility of the good on the vertical axis.

Since indifference curves depend on the _ for individuals,this means that two consumers with the same income _.

Use the following to answer question: -(Figure: Oreos and Apples) Use Figure Oreos and Apples,which provides an indifference curve map for Diego.The consumption bundle that provides the highest level of utility is bundle:

Ms.Stardoe gets utility from coffee and cream,but only if they are consumed in the precise ratio of 8 ounces of coffee to 2 ounces of cream.This implies that coffee and cream are ordinary goods for Ms.Stardoe.

The ratio of the prices of two goods is equal to the ratio of the marginal utilities of the two goods at:

The assumption that more is preferred to less explains why indifference curves:

Use the following to answer question: -(Figure: Oreos and Apples) Use Figure Oreos and Apples,which provides an indifference curve map for Diego.Diego prefers:

Miguel eats only burgers with onion rings.Miguel's indifference curve between burgers and onion rings must be a straight line.

Use the following to answer question: -(Figure: Oreos and Apples) Use Figure Oreos and Apples,which provides an indifference curve map for Diego.As Diego moves along an indifference curve from point F to point E,he buys _ Oreos to obtain _ apples.

Diminishing marginal utility is the reason most indifference curves:

When an individual's consumption of an additional unit of a good generates a smaller increase in total utility than the previous unit consumed,then this person's indifference curve will be:

Quiz 22: Consumer Preferences and Consumer Choice

If Ian's indifference curve between guitars and Cadillacs is shaped like a right angle,then he considers the two goods perfect complements.

When we graphically isolate the substitution effect of a change in the price of one good,utility is held constant.

Use the following to answer question: -(Table: Madeline's Preferences for T-Shirts and Coffee) Use Table Madeline's Preferences for T-Shirts and Coffee.Assume each consumption bundle provides the same level of utility.As Madeline moves from bundle A to bundle E,her total utility:

A Giffen good is an inferior good for which the income effect dominates the substitution effect.

Ellen consumes goods X and Y.As she consumes less X,she must be compensated with additional units of Y,and her marginal rate of substitution of X for Y decreases as she consumes more Y.This means that goods X and Y are:

An indifference curve map illustrates _____ levels of utility,while each indifference curve in the map indicates consumption bundles that yield _____ level of utility for an individual.

To find her optimal consumption bundle,Vanessa would have to:

A typical indifference curve is _____,and its slope is the _____ of the good on the horizontal axis divided by the marginal utility of the good on the vertical axis.

Since indifference curves depend on the _____ for individuals,this means that two consumers with the same income _____.

Use the following to answer question: -(Figure: Oreos and Apples) Use Figure Oreos and Apples,which provides an indifference curve map for Diego.The consumption bundle that provides the highest level of utility is bundle:

Ms.Stardoe gets utility from coffee and cream,but only if they are consumed in the precise ratio of 8 ounces of coffee to 2 ounces of cream.This implies that coffee and cream are ordinary goods for Ms.Stardoe.

The ratio of the prices of two goods is equal to the ratio of the marginal utilities of the two goods at:

The assumption that more is preferred to less explains why indifference curves:

Use the following to answer question: -(Figure: Oreos and Apples) Use Figure Oreos and Apples,which provides an indifference curve map for Diego.Diego prefers:

Miguel eats only burgers with onion rings.Miguel's indifference curve between burgers and onion rings must be a straight line.

Use the following to answer question: -(Figure: Oreos and Apples) Use Figure Oreos and Apples,which provides an indifference curve map for Diego.As Diego moves along an indifference curve from point F to point E,he buys _____ Oreos to obtain _____ apples.

Diminishing marginal utility is the reason most indifference curves:

When an individual's consumption of an additional unit of a good generates a smaller increase in total utility than the previous unit consumed,then this person's indifference curve will be:

An indifference curve map illustrates _ levels of utility,while each indifference curve in the map indicates consumption bundles that yield _ level of utility for an individual.

A typical indifference curve is _,and its slope is the _ of the good on the horizontal axis divided by the marginal utility of the good on the vertical axis.

Since indifference curves depend on the _ for individuals,this means that two consumers with the same income _.

Use the following to answer question: -(Figure: Oreos and Apples) Use Figure Oreos and Apples,which provides an indifference curve map for Diego.As Diego moves along an indifference curve from point F to point E,he buys _ Oreos to obtain _ apples.