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A cash gift causes the budget line to
Correct answer(s):
- Shift to the right in a parallel fashion
An in-kind gift causes the budget line to
Correct answer(s):
- None of the statements associated with this question are correct
If income increases, then the
Correct answer(s):
- Budget line shifts to the right
If the price of computers decreases, then the
Correct answer(s):
- Sales of a substitute, such as a telephone, decreases
Under the buy one, get one free regime, the
Correct answer(s):
- Budget set expands
If the price of a good rises, then the equilibrium consumption of that good
Correct answer(s):
- Decreases if it is a normal good
If an increase in the price of good X leads to a decrease in the consumption of good Y, then goods X and Y are called
Correct answer(s):
- Complements
If an increase in the price of good X leads to an increase in the consumption of good Y, then goods X and Y are called
Correct answer(s):
- Substitutes
If the slope of the indifference curve is steeper than the slope of the budget line, and X is on the horizontal axis
Correct answer(s):
- The consumer is willing to give up more of good Y to get an additional unit of good X than is necessary under the current market prices
At the equilibrium consumption bundle, which of the following holds?
Correct answer(s):
- MRSX,Y = PX /PY
The equilibrium consumption bundle is
Correct answer(s):
- The affordable bundle that yields the greatest satisfaction to the consumer
Indifference curves further from the origin imply
Correct answer(s):
- A higher level of satisfaction
If income decreases, then
Correct answer(s):
- The vertical intercept of the budget line shifts downward
If income increases, the budget line
Correct answer(s):
- Shifts to the right
The slope of the budget line represents
Correct answer(s):
- The market rate of substitution
PXX + PYY = M is called
Correct answer(s):
- A budget line
The budget set defines the combinations of good X and Y that
Correct answer(s):
- Are affordable to the consumer
Some individuals choose to undertake risky prospects while others choose safer ones, because they have different
Correct answer(s):
- Marginal rates of substitution between risk and reward
The possibility of the endless cyclical preference is eliminated by the property of
Correct answer(s):
- Transitivity
By the property of “more is better” and transitivity, indifference curves
Correct answer(s):
- Do not intersect one another