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