If we have a quasilinear good, such that good X measured on the horizontal axis is independent of income, what will the income offer and Engel curves look like for good X? O The income offer curve and Engel curves will be vertical lines. O The income offer curve and Engel curve will both be along the horizontal axis. O The income offer curve and Engel curves will both be upward sloping through the origin. O The income offer curve will be a horizontal line along the X axis, while the Engel curve will be upward sloping. O The income offer curve will be an upward sloping straight line, while the Engel curve will be a vertical line along the Y axis. O No answer

If we have a quasilinear good, such that good X measured on the horizontal axis is independent of income, what will the income offer and Engel curves look like for good X? O The income offer curve and Engel curves will be vertical lines. O The income offer curve and Engel curve will both be along the horizontal axis. O The income offer curve and Engel curves will both be upward sloping through the origin. O The income offer curve will be a horizontal line along the X axis, while the Engel curve will be upward sloping. O The income offer curve will be an upward sloping straight line, while the Engel curve will be a vertical line along the Y axis. O No answer

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 5CQQ

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1. Say that there are two goods in the world, books and video games. Say that we observed two of Jim's choices: he chooses bundle A from the budget set bounded by budget line 1, and the bundle B from the budget set bounded by budget line 2. video games B A budget line 2 budget line 1 books a) For each of the two goods, based on the diagram: is the good normal, inferior, or we can't say for sure? Is the good ordinary, Giffen, or we can't say for sure? Explain. b) For which of the two budget lines is the opportunity cost of a book higher and why? What does that statement mean in the context of this model?
When deciding which goods to consume, you should choose to consume the good with the highest marginal utility per dollar. O False, you should choose a combination of goods with equal marginal utility per dollar. O True, consumers are maximizing marginal utility and should always choose the highest amount per dollar. O False, you should buy the cheapest good to get a higher level of total utility. True, with diminishing marginal returns consuming more goods will reduce the marginal utility per dollar.
It shows the different combinations that the consumers can purchase from good [X] and [Y), given the income and the prices of the two goods. O a. Demand Curve O b. Budget line O c. Indifference curve O d. Supply Curve e. No correct answer
Suppose the price of Xylophones is $3 and the price of Yoyos is $7. Robin's marginal utility of Xylophones is 15 and the marginal utility of Yoyos is 21. In order to maximize utility, Robin should O Buy fewer Xylophones and fewer Yoyos O Buy fewer Xylophones and more Yoyos Buy fewer Yoyos and more Xylophones Continue to buy the same number of Xylophones and Yoyos.
For normal goodsA) the substitution effect of a price decrease will decrease the quantity of the good demanded while theincome effect of a price decrease will increase the quantity of the good demanded.B) the substitution and income effects of a price decrease will both increase the quantity of the gooddemanded.C) the substitution and income effects of a price decrease will both decrease the quantity of the gooddemanded.D) the substitution effect of a price decrease will increase the quantity of the good demanded while theincome effect of a price decrease will decrease the quantity of the good demanded.
Answer the following short questions:a. Suppose that a consumer’s preferences between goods x andy are represented by the utility function u(x, y) = x^2 + 16xy + 64y^2. If these two goods have the same price, describe the optimal consumptionchoice of this consumer.b. Suppose that when the price of a good change, the incomeand substitution effects change the consumer’s demand for that goodin opposite directions.i. Is this good a normal or an inferior good? Explain.ii. Is this good a Giffen or an ordinary good? Explain.c. Is the following statement true or false? The differencebetween a monopolist’s marginal cost and its profit-maximizing price issmaller when the demand is more elastic.
Which of the following is true about utility? O Utility same for all the consumers O Utlity is subjective Utility for a good is constant O Utlity is same as usefulness
If a consumer consumes two goods, A and B, and the price of A falls, then the income effect would cause the consumer to: O a buy more A and less B. O b. buy less A and more B Oc. buy less A and less B. O d. buy more A and more B
Suppose that price of good X rises by 25 % while price of Y rises by 50% and Income rises by 50%. Then which of the following is correct? O Budget line becomes flatter and consumer is able to afford new bundles that were not affordable before. Budget line becomes steeper and consumer is not able to afford some bundles that were affordable before. Budget line becomes flatter and consumer is not able to afford some bundles that were affordable before. Budget line becomes steeper and consumer is able to afford new bundles that were not affordable before.
Hari draws an indifference map between two goods A and B, and marks in points to show the combinations of A and B that he would buy if the prices of A and B remained the same but his income increased. Which of the following statements is false O a. The line is called an income consumption curve Ob. The line will always slope upwards to the right if both products are normal goods O C. The line will slope backwards or downwards at income levels where one product is an inferior good D.The line is called the budget line
Assume that Bob's utility function over beer x and pizza y is U(x,y) = 4x+12y. Which of the following statements is false? O It the price of pizza is 15 and the price of beer is 4, Bob purchases only beer Pizza and beer are perfect substitutes. O If the price of pizza is 12 and the price of beer is 3, then we can't determine how much pizza relative to beer Bob purchases.
QUESTION 4 Diminishing marginal utility provides an explanation for the slope of the demand curve. O True O False QUESTION 5 Diminishing marginal utility provides a theory of consumer behavior. O True O False QUESTION 6 If total utility is increasing, marginal utility must be increasing. O True O False