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In a usual week, Karl spends $20 to buy bagels and coffee. This week Karl has $25 to spend. Which of the following statements is correct?

Karl's consumption point when his income was $20 is on his new budget line.

Karl's budget line becomes either steeper or less steep, depending on which good is measured on the x-axis.

The relative price of a bagel in terms of coffee increases if Karl buys more bagels and less coffee.

Karl's budget line shifts outward, and the relative price of a bagel in terms of coffee does not change.

The relative price of a bagel in terms of coffee decreases if Karl buys more bagels and less coffee.

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If the price of the good measured on the horizontal axis increases, how does the consumer's budget line change?

It shifts leftward and parallel to the original budget line.

It shifts rightward and parallel to the original budget line.

It shifts leftward and becomes steeper.

It becomes steeper.

It becomes flatter.

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If the price of the good measured on the horizontal axis falls, the substitution effect of the price rise is indicated by which of the following events?

A movement closer to the origin.

A movement to the steeper part of the same indifference curve.

A movement to a lower indifference curve.

A movement to a higher indifference curve.

A movement to the flatter part of the same indifference curve.

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In a usual week, Karl spends $20 to buy bagels and coffee. This week the price of a coffee rises by $0.50 a cup. Which of the following statements is correct?

The relative price of coffee falls.

Karl's budget line shifts inward and is parallel to his original budget line.

The relative price of a bagel rises.

Karl's budget line shifts outward and is parallel to his original budget line.

The relative price of coffee rises.

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Sam buys gasoline and coffee each week. Which of the following variables does Sam need to be able to draw his budget line for gasoline and coffee?

Only the price of gasoline and the price of coffee.

Only how much coffee he wants to drink and how much gasoline he needs.

Only how much income he plans to spend on coffee and gasoline.

The income he plans to spend on gasoline and coffee, and the prices of gasoline and coffee.

His preferences for gasoline and coffee.

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Larry consumes only beer (B) and chips (C). Which of the following equations is Larry's budget line with beer measured on the vertical axis?

QB = Y - (PC/PB)QC

QB = Y/PB - (PC/PB)QB

QB = Y/PC - (PB/PC)QC

QB = Y/PB - (PC/PB)QC

QC = Y/PC - (PB/PC)QB

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A graph plots music downloads (per month) versus carrots (per month).The horizontal axis is labeled music downloads (per month), and the vertical axis is labeled carrots (per month). A graph displays three downward sloping lines. The first line falls from the top left in the vertical axis at point D to the bottom left in the horizontal axis at point A. The second line falls from point D to the bottom center in the horizontal axis at point B. The third line falls from point D to extreme right in the horizontal axis at point C.

Refer to Figure 9.1.2, which shows three budget lines. Which budget line has the lowest relative price for carrots?

The relative price is equal for all three budget lines.

Cannot be determined without the consumer's indifference curves.

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Abi spends her income on apples and oranges and is at her best affordable point. If apples and oranges are normal goods, and the price of an apple falls, which of the following statements about Abi's new best affordable point is correct?

Abi buys more apples and fewer oranges.

Abi buys more apples and more oranges.

Abi buys fewer apples and more oranges.

Abi buys more apples, but we do not know how many oranges she buys.

Abi buys fewer apples and fewer oranges.

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A graph plots good y (units) versus good x (units). The horizontal axis is labeled good x (units), and the vertical axis is labeled good y (units). The horizontal axis ranges from 0 to 10 in increments of 2 units, and the vertical axis ranges from 0 to 10 in increments of 2 units. A graph is a line labeled budget line falling through (0, 8), (3, 4), and (6, 0). A concave up decreasing curve labeled I sub 0 intersects the line at (3, 4). All values are estimated.

Refer to Figure 9.3.1, which shows a consumer's budget line, indifference curve, and best affordable point. At the best affordable point, what is the consumer's the marginal rate of substitution between good X and good Y?

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Four graphs plot good y versus good x. In graph (a), the horizontal axis is labeled good x, and the vertical axis is labeled good y. A concave up decreasing curve is drawn on an x y plane. In graph (b), the horizontal axis is labeled good x, and the vertical axis is labeled good y. A graph is a downward sloping line falling from the top left in the vertical axis to the bottom right in the horizontal axis. In graph (c), the horizontal axis is labeled good x, and the vertical axis is labeled good y. A graph displays a line parallel to the vertical axis and a line parallel to the horizontal axis. Both the lines are joined together. In graph (d), the horizontal axis is labeled good x, and the vertical axis is labeled good y. A concave down decreasing curve is drawn on an x y plane.

Refer to Figure 9.2.4, which shows possible indifference curves. Which of these indifference curves illustrates perfect complements?

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