Intermediate Micro. Fall 2009. Study Guide. Chap 4

Front 1

Locus of consumer optimum points resutling whn only the consumers income varies

Back 1

Income Consumption Curve

Front 2

Shows the amount ofa good that the consumer would purchase per unit of time at various income levels

Back 2

Engel Curve

Front 3

one of which the consumer purchases more when income increases.

For a ________, the substitution effect and the income effect of a price decline are both positive and reinforce each other in leading to a greater quantity purchased of the good.

Back 3

Normal Good

Front 4

One of which the consumer purchases less when income increases.

When the good is ________, the income effect moves in the opposite direction from the substitution effect. That is when the price of an inferior good falls, the substitution effect continues to operate as before to increase the quantity purchased of the good.

Back 4

Inferior good

Front 5

Locus of consumer points resulting when on the price of good X varies

Back 5

Price consumption curve

Front 6

Amounts of the good that the consumer would purchase per unit of time at various prices, holding everything else constant

Back 6

Individual Demand Curve

Front 7

Change in the quantity demanded of a good as the price of the good changes due to changes in relative prices

Back 7

Substitution effect

Front 8

change in quantity demanded of a good as the price of that good changes in real income

Normal Good:
Demand ↑ as income ↑

Inferior good:
Demand ↓ as income ↑

Back 8

Income Effect

Front 9

Differnce between what aconsumer is willing to pay for a good and what the consumer actually pays

Back 9

Consumer surplus

Front 10

A method used to show the indiffernce curves for two individuals eac consuming the same two goods and hte path to equilibrium through mutually beneficial exchange.

Back 10

Edgeworth Box diagram

Front 11

The income comsumption curve is

Back 11

The locus of consumer optimum points resulting when only the consumer's income varies

Front 12

The price consumption curve is

Back 12

The locus of consumer optimum points resulting only when the price of good X varies

Front 13

The substitution effect results from

Back 13

The relative reduction in the price of the good under consideration

Front 14

Which of the following is NOT a reason for the substitution between domestic and foreign goods and services reaching an all time high?

Back 14

the expansion of Giffen goods internationally

Front 15

Consumer surplus is the

Back 15

Differnce between what a consumer is willing to pay for a good and what he or she actually pays

Front 16

Providing poor families with food stamps versus a cash grant of the same value

Back 16

Affects families depending on their indiffernce map

Front 17

When the price of an inferior good falls and the positive substitution effect is samller then the negative income effect, then the

Back 17

Demand curve for the Giffen good has positive slope

Front 18

The income effect results from

Back 18

A change in real income

Front 19

If the proce of good X falls and the consumer buys less of good X, then the good must be

Back 19

a giffen good

Front 20

An individuals demand curve for the good X shows

Back 20

The amount of X (Qx) that the consumer would purchase per unit of time at various prices, ceteris paribus.

Front 21

As the income of an individual increases from $150 to $300 per week the consumer purchases

Back 21

Less of good X in a pattern reflected on a negatlievly sloped engel curve for an inferior good

Front 22

An Engel curve shows

Back 22

the amount of good X (Qx) the consumer would purchase per unit of time at various income levels

Front 23

In an Edgeworth box diagram representing the indiffernce curves of individuals A and B mutually, beneficial exchange will take place until

Back 23

the MRS of good X for good Y is the same for each individual