After a price decrease for good X, the new consumer equilibrium level of good X will be:
  • Indeterminate without more information

Given that income is $500 and PX = $20 and PY = $5, what is the market rate of substitution between goods X and Y?

  • -4

What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and PX = $5, PY = $10, X = 20, and M = 500?

  • 40

The idea that a consumer is limited to selecting a bundle of goods that is affordable is captured by the:

  • Budget constraint
The property that implies that indifference curves are convex to the origin is:
  • Diminishing marginal rate of substitution
An increase in the price of good X will have what effect on the budget line on a normal X-Y graph?
  • Decrease the horizontal intercept

 A situation where a consumer says he does not know his preference ordering for bundlesX and Y would violate the property of:

  • Completeness

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

  • Consumer preferences and consumer opportunities