18) Which of the following will keep a consumer on the same indifference curve even if he wishes to move to a higher one? An increase in the consumer's income b. An increase in the relative price of one good the consumer purchases, other prices remaining unchanged c. A decrease in the relative price of one good the consumer purchases, other prices remaining unchanged d. A doubling of the consumer's income and a halving of the prices of all the goods the consumer purchases

18) Which of the following will keep a consumer on the same indifference curve even if he wishes to move to a higher one? An increase in the consumer's income b. An increase in the relative price of one good the consumer purchases, other prices remaining unchanged c. A decrease in the relative price of one good the consumer purchases, other prices remaining unchanged d. A doubling of the consumer's income and a halving of the prices of all the goods the consumer purchases

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section: Chapter Questions

Problem 2CQQ

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5) Below is John's indifference map for juice and snacks. Also shown are three budget lines resulting from different snack prices and assuming he has $20 to spend on these goods. (Hint: Be aware that we put price of product (snacks) on the Y-axis to draw demand curve.) Juice 20 15. 134 10- 5710 20 40 Snacks Which of the following points are on John's demand curve for snacks? a) p = 2, q=10 b) p=2, q=13 c) p = 2,q=5 d) p = 1, q=20
3. Indifference curves and preferences Gilberto likes both chocolate and milk. Assume that the "more is better" principle applies to Gilberto; that is, he would always prefer to consume more of either good, holding the consumption of the other good constant. The points on Figure 1 represent combinations of milk and chocolate that Gilberto might choose to consume. Figure 2 shows the same points as Figure 1, but it also shows some of Gilberto's indifference curves: I, I, and I3. These curves show more information about Gilberto's preferences than Figure 1. Figure 2 Figure 1 O. O E MILK Giasses MILK Glasses CHOCOLATE (Bars) CHOCOLATE (Bars)
3. Indifference curves and preferences Susan likes both soda and ice cream. Assume that the "more is better" principle applies to Susan; that is, she would always prefer to consume more of either good, holding the consumption of the other good constant. The points on Figure 1 represent combinations of ice cream and soda that Susan might choose to consume. Figure 2 shows the same points as Figure 1, but it also shows some of Susan's indifference curves: I1, I2, and I3 . These curves show more information about Susan's preferences than Figure 1. Figure 1 Figure 2 E 04 D A ICE CREAM (Cones) ICE CREAM (Cones) SODA (Cans) SODA (Cans) F. E.
6. Consumer spends $360 per week on two goods, X and Y. PX=$ 3 and PY=$2. His utility function is U= 2X2Y. What quantities of X and Y does he buy each week in equilibrium?.
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Question 4 A consumer has income of $15,000. Pillows costs $35 per pillow, and soda costs $70 per bottle. Draw the consumer’s budget constraint (put pillow on the horizontal axis). What is the slope of this budget constraint? Suppose his income increases from $15,000 to $20,000. Illustrate what happens if both pillows and soda are normal goods. The price of pillows rises from $35 to $40 per pillow, while the price of sodas is unchanged. For a consumer with constant income of $15,000, show what happens to consumption of both goods (assume both goods are normal goods). Decompose the change into income and substitution effects. Under what circumstance(s) if any can an increase in the price of pillows induce a consumer to buy more of that good? Explain. Explain how a consumer should allocate expenditure in order to achieve maximum satisfaction and analyse how a rise in income might affect that allocation.
QUESTION 10 An indifference curve illustrates ... Ohow consumers are indifferent about the location of their own consumption levels relative to their reference points. how consumers get more utility, the more they consume of any particular good. how a consumer might trade off different levels of consumption of each of two goods, while staying at the same utility level. the limitations on spending dictated by a consumer's income and prices.
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4- An indifference curve connects points on a graph representing different quantities of two goods, points between which a consumer is indifferent. Food Clothing a) Danyal is obsessed with food and clothes. Assume you have no knowledge of the budget line, what point would Danyal prefer to be at. b) Why can't two indifference curves not intersect, explain and illustrate your answer. c) As we move from point c to f, who's marginal rate of substitution declines.
1. Suppose you get utility from two goods, food and clothing, and have a certain amount income. Explain briefly how to derive the demand curve for food while the price of clothing and the amount of income remain constant?