True or False. If False explain why it's false.
1. If all prices are doubled an money income is the left the same, the budget set does not change because the relative prices do not change.
2. A decrease in income pivots the budget line around the bundle initially consumed.
3. If preferences are well-behaved, then for any commodity bundle (x1,x2), the set of commodity bundles that are worse than (x1,x2) is a convex set.
4. The marginal rate of substitution measures the distance betwee one indifference curve and the next one.
5. If someone has the utility function U= 2min(x, y), then x and y are perfect complements for that person.
6. At the boundary optimum, a consumers indifference curve must be tangent to her budget line.
7. If two goods are substitutes, then an increase in the price of one of them will increase the demand for the other.
8. An Engel curve is a demand curve with the vertical and horizontal axes reversed.
9. An inferior good is less durable than a normal good.
10. When other variables are held fixed, the demand for a Giffen good rises when income increase.
True or False. If False explain why it's false.
1. If all prices are doubled an money income is the left the same, the budget set does not change because the relative prices do not change.
2. A decrease in income pivots the budget line around the bundle initially consumed.
3. If preferences are well-behaved, then for any commodity bundle (x1,x2), the set of commodity bundles that are worse than (x1,x2) is a convex set.
4. The marginal rate of substitution measures the distance betwee one indifference curve and the next one.
5. If someone has the utility function U= 2min(x, y), then x and y are perfect complements for that person.
6. At the boundary optimum, a consumers indifference curve must be tangent to her budget line.
7. If two goods are substitutes, then an increase in the price of one of them will increase the demand for the other.
8. An Engel curve is a demand curve with the vertical and horizontal axes reversed.
9. An inferior good is less durable than a normal good.
10. When other variables are held fixed, the demand for a Giffen good rises when income increase.
Related textbook solutions
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
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1. |
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The satisfaction or benefit that consumers receive from consuming goods or services.
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2. |
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A particular combination of specific quantities of goods or services |
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3. |
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Consumers can rank all conceivable bundles of goods or services |
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4. |
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If A is preferred to B, and B is preferred to C, then A is always preferred to C. |
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5. |
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Equation showing a consumerâs perception of the total utility forthcoming from consuming each bundle of goods and services. |
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6. |
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A set of consumption bundles each and every one of which provides a consumer with exactly the same level of total utility. |
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7. |
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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. |
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8. |
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The addition to total utility attributable to consuming one more unit of a good, holding the consumption of all other goods constant. |
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9. |
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The line showing all bundles of goods that can be purchased at given prices if the entire income is spent. |
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10. |
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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. |
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11. |
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The change in consumption of goods results strictly from the change in purchasing power after the price of a good changes. |
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12. |
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The sum of the substitution and income effects. |
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13. |
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A good for which quantity demanded varies directly with price, causing an upward sloping demand curve. |
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14. |
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A list of prices and the corresponding quantity consumers are willing and able to purchase at each price. |
