ECON 1010H Lecture Notes - Lecture 8: Indifference Curve, Demand Curve

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crimsonplatypus502

25 Nov 2016

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Limited number of choices and are going use personal preferences to make the choice. Aim to stay in orange triangle (inside of budget line) Explicit way of writing the equation for the budget line. The relati(cid:448)e price is (cid:862)the market is (cid:449)hich allo(cid:449)s her to trade(cid:863) Right side of equation is relative to the high of the budge line, the other side is the slope of the budget line. (these are comments to page 9 slide) 8$ 16$ the ability to consume goes down (slope steepens) 8$ 4$ ability to consume increases (slope gets less steep) If income changes, the relative prices do not change at all. Every point has an indifference curve to it. You want to choose the point that makes you as well off as possible. Any point on i2 is preferred over any point is i1. Willing to trade 4 cases of pop for 4 movies.

Related Questions

budget line

marginal utility

complete property of preferences

market demand

consumption bundle

substitution effect

Giffen good

total effect

income effect

transitive property of preferences

indifference curves

utility

the marginal rate of substitution

utility function

1.	_____	The satisfaction or benefit that consumers receive from consuming goods or services.
2.	________________ _	A particular combination of specific quantities of goods or services
3.	________________ _	Consumers can rank all conceivable bundles of goods or services
4.	_____	If A is preferred to B, and B is preferred to C, then A is always preferred to C.
5.	_____	Equation showing a consumerâs perception of the total utility forthcoming from consuming each bundle of goods and services.
6.	_____	A set of consumption bundles each and every one of which provides a consumer with exactly the same level of total utility.
7.	_____	The number of units of Y that must be given up for total utility to remain the same when one more unit of X is consumed.
8.	_____	The addition to total utility attributable to consuming one more unit of a good, holding the consumption of all other goods constant.
9.	_____	The line showing all bundles of goods that can be purchased at given prices if the entire income is spent.
10.	_____	The change in the consumption of a good that would result if the consumer remained on the original indifference curve after the price of the good changes.
11.	_____	The change in consumption of goods results strictly from the change in purchasing power after the price of a good changes.
12.	________________ _	The sum of the substitution and income effects.
13.	_____	A good for which quantity demanded varies directly with price, causing an upward sloping demand curve.
14.	_____	A list of prices and the corresponding quantity consumers are willing and able to purchase at each price.

blushwildebeest943

Question 1

Public finance

		is not like public economics
		is about the taxing and spending activities of government.
		only works for local and state governments.
		is all of the above.

5 points

Question 2

The organic view of government refers to:

		individuals and their goals are less important than the state.
		individuals and their wants are more important than the state.
		individuals and state are equally important.
		ethical considerations are most important.

5 points

Question 3

The mechanic view of government refers to:

		individuals and their goals are less important than the state.
		individuals and their wants are more important than the state.
		individuals and state are equally important.
		ethical considerations are most important.

5 points

Question 4

State and local governments receive the largest amount of revenue from

		sales taxes
		property taxes.
		payroll taxes.
		personal income taxes.

5 points

Question 5

Education is

		generally financed at the state and local level.
		too expensive for the federal government.
		generally financed at the federal level.
		financed on a voluntary basis.

5 points

Question 6

The unified budget is

		a budget that includes all nations.
		a document which itemizes all the federal governmentâs expenditures and revenues.
		a document that accounts for all spending by states.
		none of the above

5 points

Question 7

The federal government gets most of its revenue from

		sales taxes.
		payroll taxes.
		property taxes.
		personal income taxes.

5 points

Question 8

The substitution effect

		is when individuals consume more of one good and less of another.
		is associated with changes in relative prices.
		will have no effect if goods are unrelated.
		is all of the above.

5 points

Question 9

The slope of a regression line is calculated by dividing

		the intercept by the change in horizontal distance.
		the change in horizontal distance by the change in vertical distance.
		the change in horizontal distance by the intercept term.
		the change in vertical distance by the change in horizontal distance.

5 points

Question 10

The function Y = f(X,Z) means

		X multiplied by Y equals f.
		X + Y = Z
		Y is a function of both X and Z.
		none of the above.

violetwhale394

Please circle the right answer. (two points each)

1. If the price of gasoline is $2.0, and the price elasticity of demand is 0.5, how much will a 10 % reduction in the quantity placed on the market increase the price?

a.There will be 22% increase in the price

b.There will be 5% increase in the price

c.There will be 10 % increase in price

d.There will be 20% increase in price

e. None of the above

2.The consumer's budget line

a. indicates the options from which the consumer can choose

b. identifies the optimal basket for the consumer.

c. identifies the tastes of the consumer

d. ranks the baskets of goods in the order the consumer prefers them

e. shows that the consumer prefers more better than less

3. In the long run, a profit-maximizing firm will choose to exit a market when
a. fixed costs exceed sunk costs.
b. average fixed cost is rising.
c. revenue from production is less than total costs.
d. marginal cost exceeds marginal revenue at the current level of production.

4. When a perfectly competitive firm makes a decision to shut down, it is most likely that
a. price is below the minimum of average variable cost.
b. fixed costs exceed variable costs.
c. average fixed costs are rising.
d. marginal cost is above average variable cost.

5. Which of the following will always cause the demand curve for a product to shift to the right?

a. an increase in income whether the good is a compliment or substitute

b. an increase in the price of the compliment

c. an increase in the price of a substitute

d. an increase in technology

e. a decrease in the price of the good

6. Consumers understandably like lower prices, but they should understand there is a great difference between a lower price produced by the government price ceiling and a lower price that comes about through normal market channels, one benefits the consumer, the other may not.

a. This statement is not true, Consumers are benefited when the government lowers the price and the consumers are benefited when businesses lower the price.

b. This is because when the government forces prices down, there is a shortage and reduction in total surplus. Lower prices through markets don't create shortage but they do benefit consumers.

c. this is because the government forces prices down, there is a surplus and reduction in total surplus. Lower prices through markets don't create surpluses but they do benefit consumers

d. This is because when markets force the prices down, there is a shortage and reduction in total surplus. Lower prices through government actions don't create shortages but they do benefit consumers

e. None of the above

7. How does an increase in the price of a variable input affect the AC and the MC curves?

a. MC shifts to the right and AC increases.

b. MC shifts to the left and AC increases

c. MC shifts to the right and AC does not change

d. MC does not change but AC increases

e. none of the above

8. Which of the following is a characteristic of a perfectly competitive market?
a. Firms are price setters.
b. There are few sellers in the market.
c. Firms can exit and enter the market freely.
d. All of the above are correct.

9. In a perfectly competitive market, the process of entry or exit ends when
a. firms are operating with excess capacity.
b. firms are making zero economic profit.
c. firms experience decreasing marginal revenue.
d. price is equal to marginal cost.

10. The relative price of two goods is shown by:

a. the slope of an indifference curve

b. the slope of the budget line

c. the diminishing marginal rate of substitution

d. the slope of the income-consumption curve

e. none of the above

11. When firms have an incentive to exit a competitive market, their exit will

a. drive down market prices.
b. drive down the profits of existing firms in the market.
c. decrease the number of goods supplied in the market.
d. All of the above are correct.

12. If a perfectly competitive firm currently produces where the price is greater than the marginal cost, it

a. will increase its profits by producing more.
b. will increase its profits by producing less.
c. is making positive economic profits.
d. is making negative economic profits.

13. Does a consumer well being vary along a demand curve?

a. Yes. When price increases, consumers move to a lower indifference curve.

b. Yes. When price increases, consumers move to a higher indifference curve.

c. No. When price increases, consumers stay on the same indifference curve.

d. No. When price increases, the higher price has no effect on budget constraints or indifference curves.

e. None of the above

14. If a competitive firm sets its output such that marginal revenue, marginal cost, and average total cost are equal, economic profit must be:

a. Negative

b. positive

c. Zero

d. Indeterminate from the given information

15. Which of the following is a characteristic of a perfectly competitive market?

a. Firms are price setters.

b. There are few sellers in the market.
c. Firms can exit and enter the market freely.
d. All of the above are correct.

tanchinchilla75

ECON 1010H Lecture Notes - Lecture 8: Indifference Curve, Demand Curve

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