| For the sentences below, choose the appropriate word in the parentheses and fill it in the blank that immediately follows. In the instances where no parenthesized words are suggested, review the chapter content in your textbook and fill in the blank with the word(s) that you think will correctly complete the sentence. For questions with two or more blanks, please separate your answers by comma. |
| 1. All other things being equal, it is assumed that the consumer always prefers (more / less) _______________ of a commodity to (more / less) _______________ of a commodity. |
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| 2. Economists assume that the consumer attempts to (maximize / minimize) _______________ utility. |
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| 3. The consumer, when confronted with two alternative _______________, can decide which he or she prefers or whether he or she is _______________ between them. |
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| 4. If one market basket has more of one commodity than a second market basket, it must have (less / more) _______________ of the other commodity than the second market basket—assuming that the two market baskets are to yield equal _______________ to the consumer. |
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| 5. Besides knowing the consumer’s preferences, we must also know his or her _______________ and the _______________ of commodities to predict which market basket he or she will buy. |
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| 6. Every indifference curve must slope (downward / upward) _______________ and to the right to reflect the fact that commodities are defined so that (less / more) _______________ of them are preferred to (less / more) _______________. |
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| 7. Since market baskets on higher indifference curves are given (higher / lower) _______________ utilities, and since market baskets on higher indifference curves are always (preferred / not preferred) _______________ to market baskets on lower indifference curves, the consumer will always choose a market basket with a (higher / lower) _______________ utility over a market basket with a (higher / lower) _______________ utility. |
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| 8. fiogf49gjkf0d The consumer’s _______________ shows what he or she wants, and the consumer’s _______________ shows which market baskets his or her income and prices permit him or her to buy. |
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| 9. fiogf49gjkf0d An increase in money income means that the budget line (falls / rises) _______________, and a decrease in money income means that the budget line (falls / rises) _______________. |
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| 10. Commodity prices affect the budget line: A decrease in a commodity’s price causes the budget line to cut this commodity’s axis at a point (closer to / farther from) _______________ the origin. |
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