The possible goods and services a consumer can afford to consume represents the:

  • Consumer opportunities

What is/are the important things that must be developed when characterizing consumer behavior?

  • Consumer preferences and consumer opportunities

Individuals who purchase services and goods for the purpose of consumption are:

  • Consumers

If the price of good X is $10 and the price of good Y is $5, how much of good X would the consumer purchase if her income is $15?

Which of the following is true?

  • Indifference curves may intersect
  • At a point of consumer equilibrium, the MRS equals 1
  • If income increases, a consumer will always consume more of a good
  • None of the statements associated with this question are correct
  • None of the statements associated with this question are correct

Joe prefers a three pack of soda to a six-pack. What properties does this preference violate?

  • More is better

The difference between a price decrease and an increase in income is that

  • An increase in income does not affect the slope of the budget line while a decrease in price does change the slope

Suppose a consumer with an income of $100 who is faced with PX = 1 and PY = 1/2. What is the market rate of substitution between good X (horizontal axis) and good Y (vertical axis)?

  • -2.0

A firm derives revenue from two sources: goods X and Y. Annual revenues from good X and Y are $10,000 and $20,000, respectively. If the price elasticity of demand for good X is -2.0 and the cross-price elasticity of demand between Y and X is 1.5 then a 4 percent price increase will

  • Increase total revenues from X and Y by $800

A firm derives revenue from two sources: goods X and Y. Annual revenues from good X and Y are $10,000 and $20,000, respectively. If the price elasticity of demand for good X is -4.0 and the cross-price elasticity of demand between Y and X is 2.0 then a 2 percent price decrease will

  • Increase total revenues from X and Y by $520

Suppose the equilibrium price in the market is $60 and the marginal revenue associated with the linear (inverse) demand function is $20. Then we know that the own price elasticity of demand is

  • Cannot be determined from the information contained in the question

Suppose the equilibrium price in the market is $100 and the marginal revenue associated with the linear (inverse) demand function is $50. Then we know that the own price elasticity of demand is

  • -1

Suppose that at the equilibrium price and quantity the marginal revenue is -$15 and the price elasticity of demand for a linear demand function is -0.75. Then we know that the equilibrium price is

  • $45

Suppose the equilibrium price in the market is $10 and the price elasticity of demand for the linear demand function at the market equilibrium is -1.25. Then we know that

  • Marginal revenue is $2

When marginal revenue is negative, demand is

  • Inelastic

When marginal revenue is positive, demand is

  • Elastic

When marginal revenue is zero, total revenue

  • Is maximized

When marginal revenue is zero, demand will be

  • Unit elastic

Which of the following is a correct statement about the own-price elasticity of demand?

  • All of the statements are correct

The demand for Cinnamon Toast Crunch brand cereal is

  • More elastic than the demand for cereal in general

When a demand curve is linear,

  • Demand is inelastic at low prices

If the own price elasticity of demand is infinite in absolute value, then

  • Demand is perfectly elastic

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