Question

In: Economics

If we know that Bridget is a consumer who does not spend all of her income,...

If we know that Bridget is a consumer who does not spend all of her income, what else can we deduce?

a. Her budget line has moved outwards. b. Her budget line has moved inwards.
c. She is operating at a point outside her budget line. d. She is operating at a point inside her budget line.

Opportunity cost ______ directly involved in consumer choice; production costs ______ directly involved in consumer choice.

a. is; are b. is; are not
c. is not; are not d. is not; are

Utility refers to the _____________ by an individual to the consumption of a good or service.

a. satisfaction attached subjectively b. satisfaction attached objectively
c. number of uses attached objectively d. number of uses attached subjectively

Choice by consumers is based on maximizing ____________, and it is constrained directly by __________.

a. profits; household income b. profits; production technology
c. utility; production technology d. utility; household income

Solutions

Expert Solution

Answer 1

If we know that Bridget is a consumer who does not spend all of her income, what else can we deduce?

d. She is operating at a point inside her budget line.

Reason: The budget line shows the maximum amount one can spend on purchasing goods. If one des not touch the budget line and is inside it, it means that the consumer is not consuming all of its income.

Answer 2

Opportunity cost ______ directly involved in consumer choice; production costs ______ directly involved in consumer choice.

b. is; are not

Reason: Consumers have limited resources, thus, opportunity cost (singular) is directly involved in making an informed decision. At the same time, consumers are not directly related to production costs. It may be related to the producers instead.

Answer 3

Utility refers to the _____________ by an individual to the consumption of a good or service.

b. satisfaction attached objectively

Reason: Utility is a term in economics that refers to the total satisfaction received from consuming a good or service. it is objective because it can be measured in terms of utils.

Answer 4

Choice by consumers is based on maximizing ____________, and it is constrained directly by __________.

d. utility; household income

Reason: Consumers choices are based on utility and producers choices are based on profits. Also, consumers cannot spend more thn their household income, thus, the constraint.

Rahul Sunny answered 9 months ago
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