Economics Chapter 7 3 Joe Has Budget Constraint The Graph Shown

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If Joe has budget constraint C in the graph shown, what is the relative price of three gallons of milk?

88. This graph shows three different budget constraints: A, B, and C.

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If Bart has budget constraint A in the graph shown, what would cause his budget constraint to shift to B?

89. This graph shows three different budget constraints: A, B, and C. If Ted’s budget constraint is shown

by line A in the graph shown, and Ted’s income for these two items is $36, what are the prices of the two

goods?

90. Quinn’s income to spend on either bowling or eating out each month is $100. It costs $10 to bowl for

the night and it costs $20 for Quinn to eat at a restaurant. A point on Quinn’s budget constraint would be:

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91. Sam has $200 a month to spend on either tanning sessions or rounds of golf. Tanning sessions are

$20 each, and a round of golf is $50. A point on Sam’s budget constraint would be:

92. Sam has $200 a month to spend on either tanning sessions or rounds of golf. Tanning sessions are

$20 each, and a round of golf is $40. What can we say about Sam’s utility?

93. Rational utility maximizing consumers tend to:

94. This table shows the different combinations of goods that Jack can consume, given that his income to

spend on these two items is $10. Considering the information in the table shown, if Jack’s income to

spend on these two items were to increase to $16:

95. When a person’s income increases:

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96. When a person’s income increases:

97. When a person’s income decreases, the slope of the individual’s budget constraint stays the same

because:

98.

Assume the graph shown represents Kerri’s budget constraint. If Kerri’s income to spend on these two

items increased, which of the following would be true?

99.

Assume the graph shown represents Dana’s budget constraint. If Dana’s income to spend on these two

items decreased, which of the following could be said?

100.

Assume the graph shown represents Dawn’s budget constraint. If Dawn’s income to spend on these two

items increased and Dawn spends all her income on these two goods, then Dawn’s total utility from

consuming these two goods:

101. In general, a change in the price of a good:

102. In general, an increase in the price of a good:

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103. In general, the income effect of an increase in the price of a normal good:

104. In general, the substitution effect of an increase in the price of a normal good:

105. The substitution effect can be defined as:

106. Sam has $200 a month to spend on two normal goods-tanning sessions or rounds of golf. Tanning

sessions are $20 each, and a round of golf is $40. Sam currently consumes six tanning sessions and two

rounds of golf. If the price of a round of golf drops to $20, the income effect:

107. Sam has $200 a month to spend on either tanning sessions or rounds of golf. Tanning sessions are

$20 each, and a round of golf is $40. Sam currently consumes six tanning sessions and two rounds of

golf. Both tanning and golf are normal goods. If the price of a round of golf drops to $20, the income and

substitution effects will cause Sam’s consumption of tanning sessions:

108. Quinn’s income to spend each month on two normal goods, bowling or eating out, is $100. It costs

$10 to bowl for the night, and it costs $20 for Quinn to eat at a restaurant. Quinn currently consumes four

nights of bowling and three meals at a restaurant. If the price of bowling increased to $15, the income

effect would predict:

109. Ethan enjoys buying books and going to the movies. He has income of $150 to spend on these two

goods each month. The price of a book is $15 and the price of going to the movies is also $15. He

currently consumes four books and six movies a month. If the price of a book drops to $10, the

substitution effect would predict:

110. Ethan enjoys buying books and going to the movies. He has income of $150 to spend on these two

goods each month. The price of a book is $15 and the price of going to the movies is also $15. He

currently consumes four books and six movies a month. If the price of a book increases to $20, then:

111. Nick has $300 a month to spend on detailing his sports car or buying bottles of good wine. It costs

$100 to have his car detailed and $50 for a bottle of wine. He currently buys four bottles of wine and has

his car detailed once a month. If the price of detailing his car decreased to $75, Nick’s budget constraint:

112. When the price of one good changes, while the prices of all others stay the same:

113. Kimberly decides to go back to college full time at the age of 30, and finds herself with a much lower

income than she was earning before. Now that she has less income, she finds herself eating less steak

and more pasta than ever before. We can conclude:

114. Veblen goods:

115. Max is shopping for a new winter jacket. The salesperson explains that two coats have identical

features-the Columbia jacket that costs $120, and the Burton jacket that costs $300. Max buys the Burton

jacket. Burton jackets may be a good example of:

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116. The concept of utility maximization:

117.

If the graph shown represents Hanna’s budget constraint, and the price of hairbands were to decrease,

the slope of Hanna’s budget constraint would become:

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118.

If the graph shown represents Steph’s budget constraint, and the price of hairbands were to increase, the

slope of Steph’s budget constraint would become:

119.

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If the graph shown represents Donna’s budget constraint, and the price of earrings were to decrease, the

slope of Donna’s budget constraint would become:

120.

If the graph shown represents Heather’s budget constraint, and the price of hairbands were to decrease,

the slope of Heather’s budget constraint would become:

121.

Consider budget constraints A and B in the graph shown. The slope of A compared to the slope of B:

122. The utility we get from something:

123. Joe works for an environmental agency. Every day he chooses to fill his reusable water bottle and

bring it to work instead of bringing in a plastic disposable water bottle each day. Joe most likely derives

utility from:

124. Betty is out on a first date with Barney. She decides to order the garden salad with dressing on the

side in an effort to make a good first impression, even though she prefers leg of lamb. Economic theory:

125. Altruism describes:

126. The concept of utility:

127. Seth is a surgeon who goes to Cambodia each summer and donates two weeks of his time to local

hospitals. From an economic standpoint, utility is gained by:

128. Reciprocity means:

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129. The Golden Rule “Do unto others as you would have done unto you” is an example of the economic

concept of:

130. You decide to buy your friend lunch after she helped you study for your exam. This is an example of

the economic concept of:

131. You decide to donate $5 to Jerry’s Kids at the grocery store checkout, and get to sign your name to

a shamrock and hang it in their window. This is an example of the economic concept of:

Chapter 07 Test Bank Summary