As Judy moves down along her budget line, ___________________________.

her income and the relative prices of goods and services do not change
the opportunity cost increases
her income decreases but the relative prices of the goods and services do not change
her income and the opportunity cost increase

John has $40 to spend on books and running shoes. Books cost $20 each and running shoes are $40 a pair. John's real income ______________________.

is 2 books or 1 pair of running shoes
is 2 books plus 1 pair of running shoes
depends only on his money wage
is $40

If the price of peanuts and potato chips both increase by the same percentage, then the _______ of peanuts with respect to potato chips will ______________.

price effect; not be an increase
relative price; remain the same
relative price; increase
price effect; be an increase

________ along an indifference curve that is farther from the origin ___________________ along an indifference curve that is closer to the origin.

Most combinations; are preferred to all combinations
Some combinations; are preferred to some combinations
Any combination; is preferred to any combination
Combinations; are not as affordable as combinations

Indifference curves __________________________.

shift rightward when income increases
do not intersect
never have a slope equal to zero
are bowed away from the origin

The marginal rate of substitution is _____________, the _____________ is the _______________.

smaller; steeper; indifference curve
greater; steeper; budget line
greater; steeper; indifference curve
greater; flatter; indifference curve

As a consumer moves along an indifference curve and __________ consumption of the good on the x-axis, the consumer gives up _______ of the good on the y-axis to obtain an additional unit of the good on the x-axis.

increases; more and more
increases; less and less
decreases; less and less
decreases; a constant amount

If Rachel is at her best affordable point, then _____________________________.

her marginal rate of substitution equals 1
she is as close to the origin as possible
the relative price of the goods she buys equals the marginal rate of substitution
she is indifferent among other points on her budget line

The _______ effect can be divided into the ______ effect and the _______ effect.

substitution; price; income
price; substitution; income
marginal; substitution; price
income; substitution; price

Julie's demand curve for videos is downward sloping because as the price of a video decreases, _________ and she watches ____________ videos.

the slope of her budget line changes; fewer
her budget line shifts outward; more
the slope of her budget line changes; more
her budget line shifts inward; fewer

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