1. Economists use indifference curves to characterize the preferences of a rational consumer. There are some plausible assumptions that lead to a set of âwell-behavedâ (i.e., downward-sloping and strictly convex) indifference curves. Which one of the following is NOT among the assumptions?
a. All goods must be economic âgoods.â
b. Preferences are complete.
c. Preferences are transitive.
d. All goods are normal goods
2. Given the prices of good X and Y, the (negative of the) slope of the budget constraint (i.e., - PX/PY) measures
a. the amount of good Y the consumer is willing to forgo in order to consume one more unit of good X.
b. the ratio of the consumer's income to the price of the X good.
c. the quantity of the Y good that must be forgone in order to purchase one more unit of the X good.
d. the quantity of the X good that must be forgone in order to purchase one more unit of the Y good.
3. Which of the following statements is incorrect for an inferior good?
a. An inferior good may have an upward-sloping demand curve.
b. The income elasticity of demand for an inferior good is negative.
c. An inferior good is an economic âbad.â
d. All of the above.
1. Economists use indifference curves to characterize the preferences of a rational consumer. There are some plausible assumptions that lead to a set of âwell-behavedâ (i.e., downward-sloping and strictly convex) indifference curves. Which one of the following is NOT among the assumptions?
a. All goods must be economic âgoods.â
b. Preferences are complete.
c. Preferences are transitive.
d. All goods are normal goods
2. Given the prices of good X and Y, the (negative of the) slope of the budget constraint (i.e., - PX/PY) measures
a. the amount of good Y the consumer is willing to forgo in order to consume one more unit of good X.
b. the ratio of the consumer's income to the price of the X good.
c. the quantity of the Y good that must be forgone in order to purchase one more unit of the X good.
d. the quantity of the X good that must be forgone in order to purchase one more unit of the Y good.
3. Which of the following statements is incorrect for an inferior good?
a. An inferior good may have an upward-sloping demand curve.
b. The income elasticity of demand for an inferior good is negative.
c. An inferior good is an economic âbad.â
d. All of the above.
Related textbook solutions
Related questions
budget line
marginal utility
complete property of preferences
market demand
consumption bundle
substitution effect
Giffen good
total effect
income effect
transitive property of preferences
indifference curves
utility
the marginal rate of substitution
utility function
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1. |
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The satisfaction or benefit that consumers receive from consuming goods or services.
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2. |
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A particular combination of specific quantities of goods or services |
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3. |
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Consumers can rank all conceivable bundles of goods or services |
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4. |
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If A is preferred to B, and B is preferred to C, then A is always preferred to C. |
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5. |
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Equation showing a consumerâs perception of the total utility forthcoming from consuming each bundle of goods and services. |
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6. |
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A set of consumption bundles each and every one of which provides a consumer with exactly the same level of total utility. |
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7. |
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The number of units of Y that must be given up for total utility to remain the same when one more unit of X is consumed. |
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8. |
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The addition to total utility attributable to consuming one more unit of a good, holding the consumption of all other goods constant. |
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9. |
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The line showing all bundles of goods that can be purchased at given prices if the entire income is spent. |
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10. |
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The change in the consumption of a good that would result if the consumer remained on the original indifference curve after the price of the good changes. |
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11. |
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The change in consumption of goods results strictly from the change in purchasing power after the price of a good changes. |
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12. |
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The sum of the substitution and income effects. |
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13. |
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A good for which quantity demanded varies directly with price, causing an upward sloping demand curve. |
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14. |
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A list of prices and the corresponding quantity consumers are willing and able to purchase at each price. |
