Microeconomics LS 5- Demand

Suppose Chalya's income is $60 per month, all of which he spends on hamburgers and cheeseburgers. In addition, suppose hamburgers cost $12 each and cheeseburgers cost $15 each. If Chayla's monthly budget constraint is graphed with hamburgers on the horizontal axis and cheeseburgers on the vertical axis, the vertical intercept will be

4

Suppose Preeda's weekly budget constraint is given by 3C + 6P = 24. If this budget constraint is graphed with P on the horizontal axis and C on the vertical axis, the vertical intercept will be

8

An indifference curve map describes _________, while a budget constraint describes _________

a consumer's preferences; what a consumer can afford

The line that describes the set of all bundles a consumer can purchase given the consumer's income prices is called a ________ contraint

budget

A _____ of goods if the term used to describe a particular combination of goods

bundle

The law of _______ states the people do less of what they want to do as the cost of doing it rises

demand

The affordable combination of good that yields the highest total utility for a consumer

is the optional combination of goods for a consumer

If two points lie on the same indifference curve, then we know the consumer

likes both bundles equally well

The additional utility gained from consuming an additional unit of a good is called _______ utility

marginal

The absolute value of the slope of an indifference curve is called the

marginal rate of substitution

Suppose most people either drink coffee or tea in the morning. If the price of tea increases, then you would expect ______ people to drink coffee and ______ people to drink tea

more; fewer

The real price of a good is

the dollar price of a good relative to the average dollar price of all other goods

The tendency for the additional utility gained from consuming an additional unit of a good diminish as consumption increases beyond some point if known as

the law of diminishing marginal utility

An increase in income will lead

to a parallel shift outward in the budget constraint

Economists use the term _____ to refer to the satisfaction that people derive from all of their consumer activities

utiilty

On the graph of a budget constraint, consumption bundles that lie ______ the budget constraint are afforable

on and below

The affordable combination of goods that yields the highest total utility for a consumer is known as the _____ combination of goods

optimal

a consumer will never purchase a bundle that lies ______ because they won't be able to afford it

outside their affordable triangle

When the price of a good goes up, part of the reason consumers purchase less of the good is that they

switch to less expensive substitues

The process whereby people allocate their income between different goods and services order to maximize their total satisfaction is known as

utility maximization

Provided people have achieved bare subsistence levels of consumption, economists speak mainly in terms of people's

wanted

If your marginal utility from eating French fries is positive but decreasing, then this implies that if you eat another french fry, your total utilility

will increase

Whenever there's a point of tangency between a consumer's indifference curve and his or her budget constraint, then the consumer's best affordable bundle

will lie at that point of tangency