The Theory of Consumer Choice

According to the theory of consumer choice, what does a consumer's budget constraint show?

A consumer has an income of $1,000 per month. The price of a pizza is $10 and the price of a pint of Pepsi is $2. What is the slope of this consumer's budget constraint?

Which of the following statements accurately describes an indifference curve?

Which of the following is NOT one of the four standard properties of indifference curves discussed in the chapter?

The rate at which a consumer is willing to trade one good for another is called the:

At the consumer's optimal choice, what is the relationship between the indifference curve and the budget constraint?

If a consumer's income increases, and both goods are normal goods, what happens to the budget constraint and the optimal consumption point?

What is an inferior good?

When the price of a good falls, the change in consumption that results from the consumer feeling richer is called the:

A Giffen good is a special type of good for which:

When analyzing a worker's decision between consumption and leisure, a higher wage has what effect on the budget constraint?

If a worker responds to a higher wage by working fewer hours, which of the following is true?

What is the shape of indifference curves for two goods that are perfect substitutes, like nickels and dimes?

An increase in the interest rate a consumer can earn on savings will cause their budget constraint between current and future consumption to:

According to the theory of consumer choice, an increase in the interest rate could lead to either an increase or a decrease in saving because:

If a consumer has an income of $3,000, wine costs $3 per glass, and cheese costs $6 per pound, what is the maximum number of glasses of wine the consumer can purchase?

The property that indifference curves do not cross is a consequence of the assumption that:

In the theory of consumer choice, what does the term 'utility' represent?

If Jim earns $100, milk costs $2 per quart, and cookies cost $4 per dozen, what happens to his budget constraint if all prices and his income double?

The case study about lottery winners is used to illustrate that:

If a consumer's MRS of pizza for Pepsi is 4, and the price of a pizza is $10 and the price of Pepsi is $2, what should the consumer do to maximize satisfaction?

The historical trend of a falling workweek alongside rising real wages suggests that, for labor supply over the long run:

What is the key reason that the theory of consumer choice concludes a higher interest rate might either increase or decrease saving?

A fall in the price of a good, with income held constant, causes the budget constraint to:

The analysis of consumer choice provides a theoretical foundation for the:

If a consumer is spending their entire income of $1,000 on 50 pizzas at $10 each and 250 pints of Pepsi at $2 each, they are at a point:

The reason indifference curves are typically bowed inward is that:

In the context of labor supply, what does the substitution effect of a higher wage encourage a worker to do?

Based on the text, which of the following pairs of goods would most likely be represented by right-angle indifference curves?

If Sam is a saver and the interest rate rises from 10 percent to 20 percent, what is the unambiguous effect on his consumption?

The theory of consumer choice is presented as a metaphor for decision-making because:

What is the primary reason the Irish potato famine is sometimes cited as an example of a Giffen good?

What is the consumer's optimal choice of pizza and Pepsi if their income is $1,000, the price of pizza is $10, the price of Pepsi is $2, and they are on the highest possible indifference curve?

A consumer who is indifferent between a bundle of 5 left shoes and 5 right shoes, and a bundle of 5 left shoes and 7 right shoes, likely considers these goods to be:

If the price of Pepsi falls from $2 to $1, and a consumer's purchases of Pepsi increase from 250 to 750 pints, this relationship is shown graphically as:

According to the FYI box on utility, at the consumer's optimum, the marginal utility per dollar spent on pizza should be:

When the price of an inferior good falls, the substitution effect leads to _______ consumption of the good, and the income effect leads to _______ consumption of the good.

A consumer's preferences are represented by a set of indifference curves. If this consumer is offered a point on a higher indifference curve, what can be concluded?

If a consumer spends his entire income, he can afford 75 pizzas at $8 each or 100 gallons of milk at $6 each. What is his income?

When the price of pizza is $10 and the price of Pepsi is $2, the consumer's optimal bundle is 50 pizzas and 250 Pepsi. When the price of pizza falls to $8, the consumer's new optimum is 70 pizzas and 310 Pepsi. In this case, pizza is a:

A consumer is choosing between apples and bananas. If the marginal rate of substitution is 3 apples per banana, it means:

The theory of consumer choice helps explain why the labor supply curve for an individual might be backward-sloping by showing that:

A consumer with an income of $2,000 can buy 100 units of good X at $20 each or 200 units of good Y at $10 each. What is the opportunity cost of one unit of good X?

The substitution effect from a price change is the change in consumption that results from the movement:

An increase in income causes a consumer's budget constraint to:

A consumer chooses an optimal consumption point where the ratio of the marginal utilities of two goods equals:

If Sally's wage increases from $50 to $60 an hour, the opportunity cost of her taking an hour of leisure:

The main finding of the Jensen and Miller study on Giffen behavior in China was that:

A consumer's budget constraint for two goods, X and Y, will pivot inward from the Y-axis if:

If a consumer is currently at a point where their indifference curve is steeper than their budget constraint, they can increase their satisfaction by: