Microecon Module 5 HW

Mary saw a bangle bracelet at an accessories shop that she liked and told her friend Susan that the most she would pay for it was ​$43.00. When she found out the price was ​$31.00​, she immediately bought it and gained ​$______ in consumer surplus

$12

The slope of​ John's budget constraint is

-0.4

The optimal choice for the consumer​ is: ______ ​unit(s) of good​ A, ______unit(s) of good​ B, and _______ unit(s) of good C.

1. 5 2. 3 3. 1

Combinations of apples and loaves of bread that a consumer could purchase would represent a __________ while a _________ represents the amount of apples and bread that a consumer could choose using his or her entire budget.

1. Budget Set 2. Budget Constraint

Which of the following best describes why consumers are price​ takers?

Individual transactions are too small to have much impact on the market price.

When​ optimizing, the marginal benefit a buyer gained from the last dollar spent on a sweater was ​$1.25​, and the price of a pair of jeans was ​$92. The marginal benefit gained from the last dollar spent on a pair of jeans is _______.

$1.25

In​ equilibrium, the total benefits received by the consumer are ​$

$378

For a normal​ good, the income elasticity of demand

must be positive

According to​ economists, the process of optimal decision making by consumers typically yields total benefits well above the amount paid for the goods. These​ market-created benefits are referred to as ________ and using the graph to the​ right, are represented by area _________.

1. consumer surplus 2. B

Based on your​ graph, the demand curve is ___________, because as price​ decreases, quantity demanded __________.

1. downward sloping 2. increases

The luxury good is

B

A gift shop sells ceramic figurines for​ $80 and crystal vases for​ $100. At these​ prices, the gift shop sells 12 ceramic figurines and 8 crystal vases per day. If the price of ceramic figurines falls to​ $64 and the price of crystal vases falls to​ $25, the quantity demanded of ceramin figurines and crystal vases will increase to 18 units and 12 units per​ day, respectively. If the gift shop wants to increase​ revenue, which of the following actions should be​ taken?

Decrease the price of ceramic figurines and increase the price of crystal vases.

If Mary was to buy another bangle​ bracelet, her additional consumer surplus would ______.

decrease

Everything else the​ same, as the price of the good​ increases, quantity demanded _______.

decreases

An inferior good is one in which demand is a __________ function of income.

decreasing

Which of the following criteria would most likely influence an optimizing​ buyer's purchasing​ decisions?

highest marginal benefit per dollar spent

Which of the following are necessary ingredients to the​ buyer's problem?

1. Price of goods and services 2. Consumer's tastes and preferences 3. Amount of money the consumer has to spend.

If a​ cross-price elasticity is​ positive, then the two goods are _______. If the price of coffee goes​ up, and as​ such, the demand for Coffee Mate​ decreases, this would indicate a _________ cross-price elasticity and that the two goods are ________.

1. Substitutes 2. negative 3. complements.

Anna Jones estimated the price elasticity of demand for new vehicles to be 0.83. If the price of cars increased by 18​%, one would expect the quantity of new cars demanded to______ by ____%

1. decrease 2. 14.94%

An​ individual's willingness to pay measured over different quantities of the same good define the ________. If the retail price of the good​ increases, the ________ will​ decrease, all other things constant.

1. demand curve 2. quantity demanded

The demand curve graphs a consumers responsiveness to a change in _________. The points on the curve can be verified through___________.

1. price 2. marginal analysis

Ryan, a fourth grade​ student, receives an allowance of ​$14 each week. Ryan uses this money to buy candy for himself at a store next to his house. Note that the store only sells boxes of jelly beans and pieces of hazelnut chocolate. Using the graph on the​ right, which of the following bundles of candy should Ryan​ buy, assuming that he does not save his​ money?

12 boxes of jelly beans and 3 pieces of hazelnut chocolate Your answer is correct.

Ria earns an income of ​$3 comma 000 per month. Assume that she can either buy 5 laptops or 10 mobile phones with her income. The price of laptops is ​$600​, and the price of the mobile phone is ​$300. Suppose ​Ria's income increases by​ 20% and the price of the laptops decreases to ​$450​, what will be the effect on the budget​ constraint?

12 phones 8 laptops

John earns ​$3,600 per month. He spends all of his money on two​ goods, A and B. The price of good A is ​$180​, and the price of good B is ​$450. Identify the intercepts of​ John's budget constraint if good A is plotted on the x​-axis and good B is plotted on the y​-axis.

20 units of good A on the x​-axis and 8 units of good B on the y​-axis

Charley spends all of his income on soft drinks and pizza. Suppose he is currently buying these products in amounts such that his marginal benefit from an additional soft drink is $ 40 and his marginal benefit from an additional slice of pizza is $ 90. If the price of a soft drink is $ 2 and the price of a slice of pizza is $ 3​, is Charley maximizing his total​ benefits?

No, he should shift consumption toward pizza and away from soft drinks to maximize total benefits.

Which of the following is not a possible reason for a change in the demand curve of Zee decorative light​ fixture, from DD to​ DD'?

The change in the rate of sales tax.

Ria has an income of​ $1,200. She consumes two types of​ goods, shoes and handbags. Suppose the price of a pair of shoes is​ $400, and the price of a handbag is​ $200. What is the opportunity cost of each​ good?

The opportunity cost of a pair of shoes is 2​ handbags, and the opportunity cost of a handbag is​ 1/2 pair of shoes

Richa wants to purchase 6 fluorescent light bulbs at a price of​ $30 per bulb. When the price of fluorescent light bulbs rises to​ $36, she purchases 5 bulbs. Which of the following could be the reason for​ Richa's change in the quantity​ purchased?

The opportunity cost of fluorescent light bulbs increases.

John is a soda drinker that likes both Coke and Pepsi. He usually picks whichever has the best price or is most convenient. If Pepsi is on sale for ​$1 a liter and Coke is charging ​$1.50 for the​ same, John's demand curve for Coke will​ experience:

a left shift (inward)

If an individual only consumes goods X and Y and is currently maximizing her total​ benefits, which of the following must be​ true?

all of the above

All of the following are elasticity​ measures, except:

behavioral elasticity of demand.

A​ consumer's budget constraint refers to the collection of all possible bundles that​ ________.

exactly exhaust a consumer's entire budget.

A decrease in a​ consumer's income causes her budget constraint to encompass _______ bundles

fewer

The demand curve shows​ ___________.

how the quantity demanded responds to changes in the price of the good.

Suppose now that the market price falls. According to the​ graph, the excess of total benefits over the total amount spent by consumers will

increase

The budget constraint pivots outward when​ _________.

the opportunity cost of any one good changes.

the budget constraint shifts outward when​ _________.

the price of both goods decreases.

If you were to purchase a ​$700 Samsung smart phone from​ Amazon, we could conclude all of the​ following, except:

you would rather have a laptop that costs ​$700.