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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
Diminishing marginal rate of substitution implies that
Correct answer(s):
- Indifference curves are convex from the origin
Along the same indifference curve, MRS is
Correct answer(s):
- Decreasing as more of one good is obtained
The marginal rate of substitution (MRS) determines the rate at which a consumer is willing to substitute between two goods in order to achieve
Correct answer(s):
- The same level of satisfaction
By the property of “more is better,” the consumer views the products under consideration as
Correct answer(s):
- Goods
A≻B means
Correct answer(s):
- Bundle A is preferred to bundle B
What is the horizontal intercept of the budget line, given that M = $1,000, PX = $50, and PY = $40?
Correct answer(s):
- 20.0
Consumers adjust their purchasing behavior so that:
Correct answer(s):
- The ratio of prices they pay equals their marginal rate of substitution
Managers can get workers to work longer hours by:
Correct answer(s):
- Offering overtime pay
Suppose earnings are given by E = $60 + $7(24 – L), where E is earnings and L is the hours of leisure. What is the price to the worker of consuming an additional hour of leisure?
Correct answer(s):
- $7
Suppose earnings are given by E = $60 + $7(24 – L), where E is earnings and L is the hours of leisure. The fixed payment for this worker is:
Correct answer(s):
- $60