What does point D on this graph represent?
A choice that would result in income left over
An optimal choice
A choice on the budget constraint
An impossible choice given the income
CONCEPT
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...
What does point D on this graph represent?
A choice that would result in income left over
An optimal choice
A choice on the budget constraint
An impossible choice given the income
CONCEPT
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Optimal Choice
2
As the women's soccer coach, Karissa was in charge of choosing and ordering uniforms. Since the knee socks
and shin guards had a unique matching logo, Karissa only ordered from one particular company. When she
ordered them three years ago, the knee socks were $5 per pair, and the shin guards were $7 per pair. Karissa
ordered 15 pairs of knee socks and 15 pairs of shin guards.
Now the price of the shin guards hasn't changed, but knee socks were $7 per pair. Karissa decided she would
only buy 10 pairs of shin guards this year.
Using the mid-point formula, the cross-price elasticity for the shin guards is __________.
1.25
-1.2
2
-0.83
CONCEPT
Cross-Price Elasticity
3
Determine which statement below applies when income goes down.
Consumer preference for normal goods increases.
The indifference curve shifts downward and to the left.
The indifference curve shifts to the right.
Consumer preference for inferior goods decreases.
CONCEPT
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Budget Constraints: Change in Income
4
Which statement defines a budget constraint?
This maximizes the consumer's utility.
When the price of one item goes up, the consumer purchases more of a second item.
This represents the combinations of two items that spend all of the consumer's money allotted for those
items.
When the price on one item increases, the consumer purchases less of both items.
CONCEPT
Budget Constraints: Change in Price
5
Last year, Paula's income was $2,000, and she went to vacation twice. This year, Paula's income increased to
$3,000, and she went to vacation five times.
Determine the income elasticity using the midpoint formula.
2.14
0.47
1.80
0.33
CONCEPT
Income Elasticity
6
Which of the following corresponds to an increase in income?
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The budget constraint will make a parallel shift outward.
The budget constraint will shift outward in a non-parallel fashion.
The budget constraint will make a parallel shift inward.
The budget constraint will shift inward in a non-parallel fashion.
CONCEPT
Budget Constraints: Change in Income
7
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
Substitute goods
Normal goods
Unit elastic
CONCEPT
Cross-Price Elasticity
8
Perfectly inelastic demand for a good exists when __________.
a 50% increase in price will result in a 50% decrease in quantity demanded
consumers will purchase the same amount of the good, regardless of price
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a small increase in price results in a big change in quantity demanded
firms will only offer a set amount of a good for sale, regardless of price
CONCEPT
Defining Elasticity
9
Which description below describes an indifference curve?
The curve on a consumer choice graph that indicates how much money the consumer can spend
Where the quantities of two items are maximized
A curve on a consumer choice graph that indicates different combinations of goods that are all equally
appealing to the consumer
The highest level of satisfaction that a consumer can attain within certain limit
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