Question 1

How does an increase in the price of an individual good or service affect a consumer optimum, and how does this help explain the law of demand?

Accepted Answer

The answer of How does an increase in the price...

Question 2

To derive the demand curve from the indifference map,

Accepted Answer

To derive the demand curve from the indifference map, we need to vary the price of one good while holding the price of the other good and income constant. This will give us a series of budget lines and corresponding points of tangency with the indifference curves, which can be used to plot the demand curve for that particular good.

Question 3

Holding all other prices and money income constant, if the price of food rises, then the consumer will adjust her expenditures and

Accepted Answer

When the price of one good (in this case, food) increases, the consumer will have to adjust her expenditures in order to maintain her level of utility. Since the price of food has risen, the consumer will have less money to spend on other goods. This means that the consumer's budget constraint has become tighter, and she will have to consume less of all other goods. As a result, the consumer will reach an optimum on a lower indifference curve. This is because the consumer is now able to afford less of all goods, so her level of satisfaction will decrease.

Question 4

If price of a product falls

Accepted Answer

If the price of a product falls, the budget line rotates to the right. This is because the consumer can now afford more of the product for the same amount of income. Marginal utility is not directly affected by the price change, and indifference curves will only shift if there is a change in the consumer's preferences or income.

Question 5

The slope of the budget line will change

Accepted Answer

The slope of the budget line is determined by the relative prices of the two products. When the price of one of the products changes, the slope of the budget line will also change.

Question 6

To derive the demand curve for good X, all the following are constant EXCEPT

Accepted Answer

The demand curve for a good shows the relationship between the price of the good and the quantity demanded, holding all other factors constant except the price of the good itself.

Question 7

-Use the above figure. The consumer's choice changes from Y_B to Y_A. Which of the following statements about good Y is true?

Accepted Answer

The answer of 
-Use the above figure. The consumer's choice...

Question 8

-Use the above figure. When the budget line rotates from "b" to "c"

Accepted Answer

The answer of 
-Use the above figure. When the budget...

Question 9

If the budget line rotates, then we know that

Accepted Answer

The rotation of the budget line indicates a change in the relative price of the two goods. If the price of one good decreases, then more of it can be purchased relative to the other good, causing a rotation of the budget line. Therefore, option C is the best choice.

Question 10

-Use the above figure. The consumer's choice changes from Y_A to Y_B. Which of the following statements about good Y is true?

Accepted Answer

When the consumer's choice changes from Y_A to Y_B, it indicates that the price of good Y has decreased, leading to an increase in the quantity demanded.

Question 11

-Use the above figure. Last week Joe consumed combination "B" of goods "X" and "Y." This week he purchased combination "A." The reason for this change is that the

Accepted Answer

The answer of 
-Use the above figure. Last week Joe...

Question 12

The information on a demand curve is also on a(n)

Accepted Answer

The price-consumption curve shows the different combinations of two goods that a consumer can purchase at various prices of one of the goods while utility remains constant. This curve contains the same information as the demand curve, which shows the quantity of a good that consumers are willing and able to buy at different prices, but it also provides additional information, such as changes in income or preferences. Indifference curves show the different combinations of two goods that give a consumer equal levels of utility, whereas budget constraints show the different combinations of two goods that a consumer can purchase with a given income and prices of the goods. Income-consumption curves show the effect of changes in income on the quantities of two goods that a consumer can afford.

Question 13

If the price of a product increases, then

Accepted Answer

When the price of a product increases, the budget line rotates inward, meaning that the consumer can afford to purchase fewer units of the product at the new higher price. Therefore, the optimal quantity demanded, which corresponds to the higher price, decreases. This is because the consumer is now facing a higher marginal cost for each additional unit of the product, leading them to purchase fewer units to maximize their satisfaction within their budget constraint.

Question 14

-Use the above figure. Last week Joe consumed combination "A" of goods "X" and "Y." This week he purchased combination "B." The reason for this change is that the

Accepted Answer

The answer of 
-Use the above figure. Last week Joe...

Question 15

Suppose that the quantity of hamburgers is measured along the vertical axis and that the quantity of popcorn is measured along the horizontal axis. The vertical intercept is 10 hamburgers, and the slope of the budget line is -2. If the price of popcorn falls from $1 to $0.50, then we know that

Accepted Answer

The answer of Suppose that the quantity of hamburgers is...

Question 16

Suppose that the quantity of hamburgers is measured along the vertical axis and that the number of bags of popcorn is measured along the horizontal axis. The budget constraint has a vertical intercept of 10 hamburgers, and the slope of the line is -1. If the price of popcorn doubles, we know that

Accepted Answer

The answer of Suppose that the quantity of hamburgers is...

Question 17

-Use the above figure. The consumer's choice changes from Y_B to Y_A. Which of the following statements is true?

Accepted Answer

The answer of 
-Use the above figure. The consumer's choice...

Question 18

-Use the above figure. When the budget line rotates from "c" to "b"

Accepted Answer

The answer of 
-Use the above figure. When the budget...

Quiz 20: Consumer Choice

How does an increase in the price of an individual good or service affect a consumer optimum, and how does this help explain the law of demand?

To derive the demand curve from the indifference map,

Holding all other prices and money income constant, if the price of food rises, then the consumer will adjust her expenditures and

If price of a product falls

The slope of the budget line will change

To derive the demand curve for good X, all the following are constant EXCEPT

-Use the above figure. The consumer's choice changes from YB to YA. Which of the following statements about good Y is true?

-Use the above figure. When the budget line rotates from "b" to "c"

If the budget line rotates, then we know that

-Use the above figure. The consumer's choice changes from YA to YB. Which of the following statements about good Y is true?

-Use the above figure. Last week Joe consumed combination "B" of goods "X" and "Y." This week he purchased combination "A." The reason for this change is that the

The information on a demand curve is also on a(n)

If the price of a product increases, then

-Use the above figure. Last week Joe consumed combination "A" of goods "X" and "Y." This week he purchased combination "B." The reason for this change is that the

Suppose that the quantity of hamburgers is measured along the vertical axis and that the quantity of popcorn is measured along the horizontal axis. The vertical intercept is 10 hamburgers, and the slope of the budget line is -2. If the price of popcorn falls from $1 to $0.50, then we know that

Suppose that the quantity of hamburgers is measured along the vertical axis and that the number of bags of popcorn is measured along the horizontal axis. The budget constraint has a vertical intercept of 10 hamburgers, and the slope of the line is -1. If the price of popcorn doubles, we know that

-Use the above figure. The consumer's choice changes from YB to YA. Which of the following statements is true?

-Use the above figure. When the budget line rotates from "c" to "b"

-Use the above figure. The consumer's choice changes from Y_B to Y_A. Which of the following statements about good Y is true?

-Use the above figure. The consumer's choice changes from Y_A to Y_B. Which of the following statements about good Y is true?

-Use the above figure. The consumer's choice changes from Y_B to Y_A. Which of the following statements is true?