ECON 230D1 Chapter Notes - Chapter 4: Transitive Relation, Indifference Curve, Utility
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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. |
1. Assume that beer is an inferior good for Wei. If the price of beer goes up, then the total effect results in Wei buying _______ beer and the substitution effect results in Wei buying ______ beer.
a. | more, more | |
b. | more, less | |
c. | less, more | |
d. | less, less | |
e. | not enough information to determine |
2. A consumer has preferences that are complete, transitive and satisfy the "more is better" property. Which of the following statements are necessarily true?
a. | Indifference curves are negatively sloped. | |
b. | Indifference curves do not cross. | |
c. | Indifference curves exhibit diminishing marginal rates of substitution. | |
d. | Both a) and b) are true. | |
e. | a), b), and c) are true. |
3. Suppose an individual has preferences over two goods - good X and good Y. In response to changes in the price of good X, the individual has a positively sloped price consumption curve, where good X is drawn on the horizontal axis. Which of the following statements is true?
a. | Good Y is a normal good. | |
b. | Good Y is a Giffen good. | |
c. | Good Y is a complement for good X. | |
d. | Good Y is an inferior good. | |
e. | Good Y is a substitute for good X. |