The property that implies that indifference curves are convex to the origin is:
Correct answer(s):
- Diminishing marginal rate of substitution
Topic
The Theory of Individual Behavior
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Quizzes in The Theory of Individual Behavior
An increase in the price of good X will have what effect on the budget line on a normal X-Y graph?
Correct answer(s):
- Decrease the horizontal intercept
The absolute value of the slope of the indifference curve is called the:
Correct answer(s):
- Marginal rate of substitution
The affordable bundle that yields the greatest satisfaction to the consumer is:
Correct answer(s):
- The equilibrium consumption bundle
A situation where a consumer says he does not know his preference ordering for bundlesX and Y would violate the property of:
Correct answer(s):
- Completeness
The possible goods and services a consumer can afford to consume represents the:
Correct answer(s):
- Consumer opportunities
What is/are the important things that must be developed when characterizing consumer behavior?
Correct answer(s):
- Consumer preferences and consumer opportunities
Individuals who purchase services and goods for the purpose of consumption are:
Correct answer(s):
- 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?
Correct answer(s):
- Cannot tell based on the above information
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
Correct answer(s):
- 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?
Correct answer(s):
- More is better
The difference between a price decrease and an increase in income is that
Correct answer(s):
- 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)?
Correct answer(s):
- -2.0