PEARSON REVIEW QUESTIONS
for a consumer with a given level of income, the combinations of goods for the
budget set will be _______ than for the budget constraint - correct answer
higher
if the price of good x is $60 and the price of good y is $70, what is the opportunity
cost of buying one unit of good y? - correct answer 1.167
($70/$60)
a consumer's satisfaction is maximized when the marginal benefit from the last
dollar she spent on one good is equal to the marginal benefit from the last dollar
she spent on another good because - correct answer the
reality of diminishing marginal benefits assures that any shift in consumption
toward either good must necessarily make her worse off
when optimizing, the marginal benefit gained from the last dollar spent on each
good is __________ - correct answer equal
if the price of a good decreases, what happens to the budget constraint graph? -
correct answer pivots outward and the slope changes
demand curve - correct answer an individual's willingness to
pay over different quantities of the same good
when the absolute value of the price elasticity of demand is >1, the % change in
quantity demanded is _____ than the % change in price (meaning that any price
increase --> lower revenues) - correct answer greater
