Janet tells you that she prefers shoes to handbags, handbags to dresses, and dresses to makeup. This violates what assumption made when analyzing consumer preferences? Question 19Answer a. indifference curves are convex b. consumers seek to maximize utility c. Indifference curves cannot cross d. That consumers are able to choose all the combinations of goods and services available

Janet tells you that she prefers shoes to handbags, handbags to dresses, and dresses to makeup. This violates what assumption made when analyzing consumer preferences? Question 19Answer a. indifference curves are convex b. consumers seek to maximize utility c. Indifference curves cannot cross d. That consumers are able to choose all the combinations of goods and services available

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 16SQ

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8. Normal and inferior goods Becky likes going to the ballpark to watch baseball, and she also is fond of going to the theater to listen to the symphony orchestra. The following diagram shows two of Becky's indifference curves for going to ballgames and symphonies. With Becky's initial budget constraint (BC₁), she chose to go to four symphonies and four baseball games per month (point X). Then her budget constraint shifted to BC₂, and she chose to go to five symphonies and five ballgames per month (point Y). BALLGAMES 0 4 SYMPHONIES 10 of the following choices, which could have shifted Becky's budget constraint from BC to BC₂? Check all that apply. Her income increased while the prices of baseball and symphony tickets stayed the same. The prices of both baseball and symphony tickets decreased while her income stayed the same. The price of baseball tickets increased while her income and the price of symphony tickets stayed the same. The prices of both baseball and symphony tickets…
Describe the point at which a consumer maximizes utility.
Which one is answer?
8. Normal and inferior goods Shen likes going to the ballpark to watch baseball, and he also is fond of going to the theater to listen to the symphony orchestra. The following diagram shows two of Shen's Indifference curves for going to ballgames and symphonies. With Shen's initial budget constraint (BC₁), he chose to go to five symphonies and three baseball games per month (point X). Then his budget constraint shifted to BC₂, and he chose to go to four symphonies and six ballgames per month (point Y). BALLGAMES 0 0 5 SYMPHONIES BC 8 goods. BC 10 ? of the following choices, which could have shifted Shen's budget constraint from BC, to BC₂? Check all that apply. The price of baseball tickets Increased while his income and the price of symphony tickets stayed the same. The prices of both baseball and symphony tickets decreased while his income stayed the same. His Income increased while the prices of baseball and symphony tickets stayed the same. His Income decreased while the prices of…
i. It is known that the indifference curve is convex. What does this tell you about the relationship between the goods? ii. Assuming that seafood is your favorite food. Would the law of diminishing marginal utility apply to your consumption of seafood? iii. Using examples, does an increase in income affect a consumer’s budget line? Does it impact their total utility.
What information is contained in an indifference curve? Why are such curves (a) downsloping and (b) convex to the origin? Why does total utility increase as the consumer moves to indifference curves farther from the origin? Why can’t indifference curves intersect?
The marginal utility for shoes and coffee is given below for five individuals. A pair of shoes costs $2, and a cup of coffee costs $1. Which of these consumers are optimizing over their choices? Explain For those who are not, how should they adjust their spending? Explain “Pasta is Miguel’s favorite meal therefore the law of diminishing marginal utility does not apply”. Do you agree with this statement? It is known that the indifference curve is convex. What does this tell you about the relationship between the goods? The income effect and the substitution effect work in the same direction for a normal good. Explain how this differs for an inferior good.
Suppose Tom has $60 in income and only buys cheese and tuna. Walmart charges $2 for a can of tuna and $4 for a block of cheese. Tom shops at Walmart and buys 20 cans of tuna and 5 blocks of cheese. a) Draw the budget constraint and indifference for Tom (put Tuna on X-axis). b) Suppose Tom’s income increases to $100, and his consumption of cheese increases to 6 blocks. Draw the new budget constraint and new optimal consumption bundle. c) Is tuna a normal or inferior good for Tom? Draw the Engel curve of tuna.
What information is contained in an indifference curve? Why are such curves (a) downward-sloping and (b) convex to the origin? Why does total utility increase as the consumer moves to indifference curves farther from the origin? Why can’t indifference curves intersect?
Assume that you only buy two goods, fish and Fanta soda. You are analyzing your personal consumption for the two goods. Assume that you have a weekly budget of $80, fish costs $5 per Ib and Fanta costs $2 a soda. a. Draw your budget line with Fanta on the y-axis. Calculate the x and y intercepts as well as the slope of the budget line. Include your personal indifference curve to show your optimal consumption between the two goods (assume that your indifference curve is such that you consume positive values of each good). 3. Assume that the price of fish falls from $5 per Ib to $4 per Ib. On a new graph draw the change in price along with the new intercept(s) and new optimal consumption point.
Explain why it is that as the consumer purchases more of a good, her marginal utility falls while her total utility rises.