Chapter 6 Flashcards
The budget line shows all combinations of two products that the consumer can purchase given money income and the prices of the product
True
The slope of the budget line when quantities of Alpha are measured horizontally and quantities of Beta are measured vertically is equal to the price of beta divided by the price of Alpha
False
A consumer is unable to purchase any combinations of two products which lie below the consumers budget line
False
An increase in the money income of a consmuer shifts the budget line to the right
True
An indifference curve is concave to origion
False
The marginal rate of subsitution shows the rate, at the margin, at which the consumer is prepared to subsitiute one good for the other so as to remain equally satifiied
True
The closer to the origion an indifference curve lies, the smaller the total utility a consumer obtains from the combinations of prouducts on that indifference curve
True
On an indifference map, the further from the origion, the lower the level of utility associated with each indifference curve
True
If a consumer moves from one combination on an indifference curve to another combination on the same curve the total utility obtained by the consmuer does not change
True
There can be an intersection of consumer indifference curves
False
A consumer maxamizes total utility whe she or he purchases a combination of two products at which her or his budget crosses the indifference curve
False
On an indifference map, the consumers equalibrium position will be where the slope of the highest attainable indifference curve equals the slope of the budget line
True
It is assumed in the marginal-utility approach to consumer behavior that utility is cardinal, or numerically measured
True
In both the marginal utility and indifference curve, it is assumed that a consumer is able to say wheteher the total utility obtained from combination A is greater than, equal to, or less than the total utility obtained from combination B
True
A decrease in the price of a product normally enables a consumer to reach a higher indifference curve
True
Suppose a consumer has an income of $8, the price of R is $1 and the price of S is .5. Which of the following combinations is on the budget line
A. 8R and 1S
B. 7R and 1S
C. 6R and 6S
D. 5R and 6S
D. 5R and 6S
If a consumer has an income of $100, the price of U is $10 and the price of V is $20, the maxiumum quantitiy of U the consumer can purchase is:
A. 5
B. 10
C. 20
D. 30
B.10
WHen the income of a consumer is 20, the price of T is 5 amd the price of Z is 2. The quanttiy of T is measured horizontally, the lope of the budget line is:
A. .4
B. 2.5
C. 4
D. 10
B. 2.5
Assume that everything else remains the same, but there is a decrese in a consumers income, The most likely affect:
A. An inward shift in the indifference curves because the consumer can now satisfy fewer wants
B. AN inward shift in the budgelt line becuase the consumer cna now purhcase less of each.
B. AN inward shift in the budgelt line becuase the consumer cna now purhcase less of each.
An indifference curve is a curve that shows the differnec combinations of twho products that:
A. give the consumer eqaual marginal utilites
B. Give a consumer equal total utilities
C. Cost a consumer equal ammounts
D. have the same prices
C. Cost the consumer equal ammounts
The slope of an indifference curve measures the:
A. slope of budget line
B. Total utility of a good
C. Space on an indiffernce map
D. Marginal rate of subsititon
D. Marginal rate of subsititon
Which of the following is charateristic of indiffernce curves:
A. they are concave to orgiion
B. They are convex to origion
C. Curves cloer to the origion have higest level of total utility
D. Curves closer to the origion have the highest level of marginal utility.
B. They are convex to origion
The marginal rate of substition may:
A. Rise or fall depending on the slope of budget line
B. Rises as you move downward along an indifference curve
C. Falls as you move downward along an indifference curve
D. Remain the same along a budget line
C. Falls as you move downward along an indifference curve
To derrive the demand curve of a product, the price of the product is varried. For the indiferrence curve analyasis, the
A. budget line is held constatnt
B. Money income of the consumer changes
C. Tastes and preferences of the consumer are held constant
D. Prices of other products the consumer may want change.
C. Tastes and preferences of the consumer are held constant
In an indifference curve analysis, the consumer will be in equalibrium when the
A. indiffernce curve is concave to origion
B. Budget line crosses axis
C. Two indifferenc curves intersect and are tangent to the budget line
D. The budget line is tangent to an indifference curve.
D. The budget line is tangent to an indifference curve.
If a consumer is intiially in equalibrium a decrese in money income will
A. move the consuemer ot a new equilibrium
B. move the consumer
D. Have no effect.
A. move the consuemer ot a new equilibrium