Exam 1 Practice Flashcards
A doubling of all prices has the same effect on the budget line as reducing income by half. T or F?
True
If the consumer has the same tax bill under a head tax as under an income tax, then the consumer be indifferent between the two taxes. T or F
False
The consumer’s income has no effect on the slope of the consumer’s budget line. T or F
True- A change in price will effect the slope
An increase in the price of corn will cause a rise in the supply of corn. T or F
False
A rise in supply is illustrated by an upward shift in the supply curve. T or F
False
Suppose there are only two good: Milk and honey. If the relative price of milk falls, then the relative price of honey
must rise
If the substitution and income effects are in opposite directions, the law of demand will hold
as long as the substitution effect outweighs the income effect
When the price of a good falls, the consumer’s level of satisfaction
is unaffected or rises
Suppose the price of a commodity is $15 per unit. At that price, consumers wish to purchase 6,000 units weekly and producers wish to sell 4,000 units weekly. In this situation-
unsatisfied consumers will bid up the market price
What would cause the demand curve for peanuts to shift to the left?
A tariff that doubles the price of imported pistachio nuts
An indifference curve shows the bundles of goods which
Provide the consumer with some fixed level of satisfaction
What is not held constant when we use indifference-curve analysis to derive the Engel curve for good X?
the consumer’s income
Jannet has $50 that she earned from a day’s work. She has decided to use her money to buy a teddy bear. a gourmet dinner or a breifcase. Of these three alternatives, Jannett likes the teddy bear best and the briefcase least. what is Jannet’s cost of buying the teddy bear?
a gourmet dinner
