Higher indifference curves are preferred to lower ones as long as the
a.budget constraint does not shift.
b.commodities in the bundle are “bads.”
c.marginal rate of substitution is diminishing.
d.commodities in the bundle are “goods.”
Assume that a college student purchases only coffee and Snickers. If both coffee
and Snickers are normal goods, the income effect associated with a decrease in the
price of a Snickers will result in
a.a decrease in the consumption of Snickers and an increase in the consumption of
coffee.
b.an increase in the consumption of Snickers and a decrease in the consumption of
coffee.
c.a decrease in the consumption of Snickers and a decrease in the consumption of
coffee.
d.an increase in the consumption of Snickers and an increase in the consumption of
coffee.
The rate at which a consumer is willing to exchange one good for another, and
maintain a constant level of satisfaction, is called the
a.relative price ratio.
b.value of marginal product.
c.marginal rate of substitution.
d.relative expenditure ratio.
An optimizing consumer will select the consumption bundle in which the
a.ratio of total utilities is equal to the relative price.
b.marginal rate of substitution is equal to the relative price.
c.ratio of income to price equals the marginal rate of substitution.
d.marginal rate of substitution is equal to income.
The bowed shape of the indifference curve reflects the consumer’s
a.greater willingness to purchase a good that he already has in large quantity.
b.unwillingness to purchase a good that he already has in large quantity.
c.greater willingness to give up a good that he already has in large quantity.
d.unwillingness to give up a good that he already has in large quantity.
The combination of two goods a consumer chooses depends on the consumer’s
a.budget constraint and the consumer’s income.
b.preferences and the consumer’s income.
c.budget constraint and the consumer’s preferences.
