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Suppose Jill's consumption bundle is made up of 2 goods, apples, and bottles of juice. If the price of an apple increases, the Jill's budget line would...
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Utility is best defined as
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MicroEconomics
Exam 2 Chapters 8-9
| Question | Answer |
|---|---|
| Suppose Jill's consumption bundle is made up of 2 goods, apples, and bottles of juice. If the price of an apple increases, the Jill's budget line would... | shift toward the origin on the apples axis only. |
| Utility is best defined as | the satisfaction from consuming a good. |
| As Sean's consumption of rice goes up, his | total utility from consuming rice increases |
| Mark's marginal utility from reading books is the ____ when he reads _____. | change in his total utility; one additional book |
| The total utility you get from eating slices of pizza on a given night is the | sum of the marginal utilities of all slices eaten |
| The total utility from three skirts is | the sum of the marginal utility of the first skirt plus the marginal utility of the second skirt plus the marginal utility of the third skirt. |
| Which of the following is consistent with the assumptions of marginal utility theory? | As Jose consumes more of one good, his marginal utility from consuming more of that good decreases. |
| If Pete enjoys his first pancake of the morning much more than his fifth pancake of the morning, he is exhibiting | diminishing marginal utility |
| If marginal utility is positive but diminishing, as more units of a good are consumed, then the total utility from the good must be | positive and rising at a decreasing rate |
| Jeannie's marginal utility from her 4th book in a month is 50. Her marginal utility from her 5th book.. | is less than 50 |
| When Ramona is in consumer equilibrium, | she is maximizing her utility, given her income and the prices of goods and services |
| Liane maximizes her total utility when she allocates all of her available income such that the marginal utility per dollar spen on each good.... | is the same |
| Danny has $12 to spend on two goods: pies and soda. The price of a pie is $4, and the price of a can of soda is $2. To maximize his utility, Danny buys... | the combination that gives him the same marginal utility per dollar spent on pies as on soda |
| When Frankie spends all his money in such a way that the marginal utility per dollar is the same for all final purchases of products he consumes, Frankie has maximized... | his total utility |
| Emma consumes only hot dogs and hamburgers. She is at her consumer equilibrium. Hot dogs and hamburgers have the same marginal utility. Thus | the price of a hot dog and the price of a hamburger must be the same |
| Tom spends all his income on comics and cola and maximizes his total utility. If the price of a comic is $4 and the price of a can of cola is $1, then the ratio of the _____ is 4. | marginal utility from comics to the marginal utility from cola |
| A budget line shows the | consumption possibilities of a consumer at a given level of income and prices |
| For a consumer, a budget line shows the boundary between | what is affordable and what is not affordable |
| Bob plans to spend $60 per month on DVD movie rentals and CDs. The price of a movie rental is $3 and the price of a CD is $15. If Bob rents 5 DVDs per month, how many Cds can he buy? | 3 |
| Suppose that Dave has $200 to spend per week and he buys only magazines and pizza. The price of a pizza is $10 and the price of a magazine is $5. What is the maximum amount of pizza Dave can buy each week? | 20 |
| Suppose that Dave has $200 to spend per week and he buys only magazines and pizza. The price of a pizza is $10 and the price of a magazine is $5. If dave buys 15 pizza each week, what is the max number of magazines he can buy? | 10 |
| Real income measure the | purchasing power of a given income |
| Suppose that Dave has $200 to spend per week and he buys only magazines and pizza. The price of a pizza is $10 and the price of a magazine is $5. What is Dave's real income in terms of magazines? | 40 |
| John has $40 to spend on pizza and tacos. Pizza costs $10 each and tacos are $1 per taco. John's real income ... | is 4 pizzas or 40 tacos |
| If the price of gas increases and the price of food remains the same, then real income measured in terms of ... | gasoline decreases |
| The price of one good divided by the price of another good is a ____ | relative price |
| If the relative price of a pizza in terms of movies is 3, this means that | the opportunity cost of a pizza is 3 movies, 3 pizzas can be traded for 9 movies, in terms of the dollars that must be spent to buy the product, pizza is more expensive than movies |
| Suppose the price of chocolate chip cookies is $4 per pound and the price of a slice of cake is $2 per slice. The relative price of cookies in terms of cake is | 2 slices of cake per cookie |
| If the price of peanuts increases by 10 percent and the price of potato chips does not change, then the relative price of peanuts with respect to potato chips will ______ and the relative price of potato chips with respect to peanuts will ____. | rise;fall |
| The magnitude of the slope of the budget line is determined by | relative prices |
| Nick consumes two goods, chips and lemonade. Located on the x-axis is the quantity of chips and on the y-axis is the quantity of lemonade. The magnitude of the slope of the budget line equals the --- | price of chips/price of lemonade |
| If all prices rise by 5 percent and money income remains constant, the new budget line will have | the same slope |
| If the price of the good measured on the horizontal axis falls, a consumer's budget line | becomes flatter |
| Joe has $50, which he spends on movies and pizza. If the price of pizza falls, Joe can | consume more of both goods |
| Sharmila has a budget line for DVDs and books. DVDs are on the vertical axis and books on the horizontal. Her budget line becomes steeper as | the price of DVD falls |
| If an individual's income increases, | the person's budget line shifts outward in a parallel manner |
| An indifference curve shows combination of goods --- | which the consumer prefers equally |
| Indifference curves are drawn on a diagram with the --- | quantity of one good on the vertical axis and the quantity of another good on the horizontal axis |
| The rate at which sam is willing to give up a gallon of gasoline to get one more pound of coffee and remain on the same indifference curve is called his | marginal rate of substitution |
| The magnitude of the slope of an indifference curve --- | is equal to the marginal rate of substitution |
| As Sam moves rightward along his indifference curve, his marginal rate of substitution | is diminishing |
| Jodie has indifference curves for CDs and colas, with CDs on the vertical axis. The flatter her indifference curves are, the | smaller her marginal rate of substitution |
| Bobby moves along an indifference curve for shirts and pants by increasing consumption of shirts and decreasing consumption of pants. As bobby has more and more pants, the number of shirts he is willing to trade for yet another pair of pants --- | decreases |
| If green bikes and brown bikes are perfect substitutes, the corresponding indifference curves | have constant slope |
| If two goods are perfect complements, the shapes of the indifference curves are --- | right- angled lines |
| If Bill thinks tacos and turkey sandwiches are perfect substitutes, the his indifference curves for these two goods -- | are negatively sloped and linear |
| If consumers buy only gas and food, at their best affordable choice the marginal rate of substitution between food and gas _____ the relative price of food and gas. | must equal |
| Tunitra consumes at a point on her budget line where her marginal rate of substitution exceeds the magnitude of the slope of her budget line. As tunitra moves toward her conmer equilibrium point, she will move to a --- | higher indifference curve |
| If Sue is consuming two normal goods and her income decreases, then her best affordable bundle of goods will contain _____ goods with ____ marginal rate of substitution as her bundle prior to her income change. | less ; the same |
| The ______ effect can be divided into the _____ effect and the _____ effect. | price ; substitution ; income |
| The effect of a change in price on the quantity bought when the consumer remains indifferent between the original and new situation is called the --- | substitution effect |
| When the price of a normal good decreases, the _____ can be divided between the ____, which keeps the best affordable point on the same indifference curve and the ___, which moves the best affordable point farther away from the origin. | Price effect ; substitution effect ; income effect |
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