consumer theory

The slope of the budget constraint equals the of the goods.

The slope of an indifference curve is called the

Indifference curves are downward sloping because

• a consumer likes both the goods

• a consumer doesn't like both the goods

• a consumer likes one good and not the other

• None of the above

When the two goods are perfect substitutes

• MRS is constant

• Indifference curves are straight lines

• Both (a) and (b)

• Neither (a) nor (b)

When the two goods are perfect complements, say right shoes and left shoes

• A consumer cares just about the number of pairs of shoes

• The indifference curves are right angles

• both (a) and (b)

• neither (a) nor (b)

At the consumer's optimum point,

• Indifference curve is tangent to the budget line

• MRS equals the relative price

• both (a) and (b)

• neither (a) nor (b)

Income effect of the price change refers to the change in consumption

• that results from

  being at a point on an indifference curve with a different MRS

• that reduces consumer's welfare

• that results from the movement to higher IC

• None of the above

The demand curve is upward sloping

• in case of giffen good

• when for inferior goods, income effect of price change dominates the substitution effect

• both (a) and (b)

• neither (a) nor (b)

Labor supply curve is upward sloping when

• the substitution effect of change in wage rate is greater than the income effect

• the income effect of change in wage rate is greater than the substitution effect

• the income effect of change in wage rate is equal to the substitution effect

• None of the above

An increase in interest rate causes decrease in savings when

• the substitution effect of increase in interest rate is greater than the income effect

• the income effect of increase in interest rate is greater than the substitution effect

• the substitution effect of increase in interest rate is equal to the income effect

• None of the above