Economics > SOPHIA Milestone > ECONOMICS 301Microeconomics Unit 2 milestone 2. (All)

ECONOMICS 301Microeconomics Unit 2 milestone 2.

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Which of the following is most likely to change in his spending habits?  Jacob's budget constraint will shift to the left if shown on a graph.  Jacob will not respond as much to price chang ... es in normal goods.  Jacob will purchase fewer normal goods and more inferior goods.  Jacob will purchase more normal goods. CONCEPT Budget Constraints: Change in Income 2 Which scenario below is an example of complementary products, based on their cross-price elasticity?  Green salsa and red salsa, with an elasticity of 2.75  Coffee and tea, with an elasticity of 2.25  Shampoo and conditioner, with an elasticity of -3.5  Bananas and lettuce, with an elasticity of 0 CONCEPT Cross-Price Elasticity 3 Which of the following describes what will happen to Peter’s budget constraint on his annual trip to the amusement park when the price of game tokens remains the same as last year but the price of ride tickets decreases?  The budget constraint will pivot out along the axis with ride tickets.  The budget constraint will remain the same.  Indifference curves will cross.  The budget constraint will shift to the right, parallel. CONCEPT Budget Constraints: Change in Price 4 This graph below shows three indifference curves for blankets and pillow cases. Consider choice A and determine why this would NOT be the optimal choice.  The consumer cannot afford this choice.  These indifference curves violate the conditions of consumer theory.  It does not provide the consumer with the highest level of utility possible.  Additional income would be left over with this choice. CONCEPT Optimal Choice 5 When the price of surfboards goes down, demand for both surfboards and wetsuits increases, meaning that these two goods are which of the following, based on their elasticity?  Complement goods  Normal goods  Unit elastic  Substitute goods CONCEPT Cross-Price Elasticity 6 Which scenario below is an example of completeness?  If a guest at a banquet can purchase a raffle ticket for gift baskets that are nearly identical, she will choose to purchase a ticket for the basket that has an additional gift.  A consumer is able to compare possible combinations and quantities of bath towels and wash cloths she is purchasing for her bathroom to determine the best combination based on her preferences.  For $7, a shopper can buy a gallon of milk and one box of an expensive cereal or a gallon of milk and two boxes of a cheaper cereal. He decides to purchase a gallon of milk and one box of cheaper cereal, keeping the leftover cash.  A consumer is able to logically rank his preferences for the three different price combinations for a flight that he will purchase for an upcoming trip. CONCEPT Consumer Choice Theory 7 Which of the following would most likely have an income elasticity of -1?  A necklace for regular price  A deluxe manicure-pedicure  A pair of brand new shoes that are not on sale  A dress on clearance CONCEPT Income Elasticity 8 Determine which scenario below is an example of own-price elasticity.  If the price of leather sofas increases next month, Heather will opt to purchase a microfiber sofa instead. [Show More]

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