PF &Taxes_2B

What is the feature of indifference curves?

• Consumers prefer higher indifference curves

• Consumers prefer lower indifference curves

• Indifference curves always slope upward

• Indifference curves always slope upward

A mathematical representation of all the combinations of goods an individual can afford to buy if she spends her entire income

• indifference curve

• budget constraint

• total utlity

substitution effect means that " Holding utility constant, a relative rise in the price of a good will always cause an individual to choose ......................of that good.

• less

• more

• the same amount

income effect means that "a fall in the price of a good will typically cause an individual to choose .............. of all goods because her income can purchase less than before.

• less

• more

• the same amount

Explain inferior goods

• goods for which the demand increases as income rises

• goods for which the demand falls as income rises

• goods for which the demand stays at the same level as income rises

The additional increment to utility obtained by consuming an additional unit of a good.

• marginal rate of substitution

• marginal cost

• marginal utility

The incremental cost to a firm of producing one more unit of a good.

• marginal rate of substitution

• marginal productivity

• marginal cost

• marginal utility

models are

• mathematical representations of reality

• graphical representations of reality

• mathematical or graphical representations of reality

The percentage change in the quantity demanded of a good caused by each 1% change in the price of that good.

• elasticity of supply

• cross price elasticity of demand
  

• elasticity of demand

The rate at which a consumer is willing to trade one good for another

• marginal utility

• marginal productivity

• marginal rate of substitution

• marginal cost