Consumer Theory vs. Real Consumers

A. will always increase the quantity of saving
B. will always decrease the quantity of saving
C. will increase the quantity of saving if the substitution effect outweighs the income effect
D. will increase the quantity of saving if the income effect outweighs the substitution effect

A. stay the same
B. rotate inward
C. shift outward in a parallel fashion
D. rotates outward
E. shift inward in parallel fashion

A. an inferior effect
B. a Geffen good
C. a normal good
D. none of these answers

A. Z to point X
B. X to point X
C. X to point Z
D. Y to point X

A. a substitute good
B. a normal good
C. a complementary good
D. an inferior good

A. rises
B. stays the same
C. could rise or fall depending on the relative prices of the two goods.
D. falls

A. the budget constraint crosses the indifference curve
B. the two highest indifference curves cross
C. the consumer reaches the highest indifference curve subject to remaining on the budget constraint
D. the consumer has reached the highest indifference curve

A. the marginal rate of substitution
B. the marginal rate of trade-off.
C. the trade-off rates
D. the marginal rate of indifference

A. The marginal utility per dollar spent on each good is the same
B. The marginal rate of substitution between goods is equal to the ratio of the prices between goods
C. The consumer’s indifference curve is tangent to his budget constraint
D. The consumer has reached his highest indifference curve subject to his budget constraint
E. The consumer is indifferent between any two points on his budget constraint

A. right shoes and left shoes
B. petrol from BP and petrol from shell
C. kit-Kat chocolate snacks and Twix chocolate snacks
D. coke and Pepsi