# Consumer Theory and Horizontal Axis

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Chapter 2 1. A consumer prefers more to less of every good. Her income rises, and the price of one of the goods falls while other prices stay constant. These changes must have made her better of. TRUE 2. A decrease in income pivots the budget line around the bundle initially consumed. FALSE 3. If all prices are doubled and money income is left the same, the budget set does not change because relative prices don 't change. FALSE 4. If all prices double and income triples, then the budget line will become steeper. FALSE 5. If good 1 is measured on the horizontal axis and good 2 is measured on the vertical axis, and if the price of good 1 is p1 and the price of good 2 is p2; then the slope of the budget line is ��p2=p1.…show more content…
6. Edmund must pay \$6 each for punk rock video casettes, V . If Edmund is paid \$24 per sack for accepting garbage, G; and if his relatives send him an allowance of \$168, then his budget line is described by the equation: (c) 6V �� 24G = 168. 7. Edmund must pay \$6 each for punk rock video casettes, V . If Edmund is paid \$24 per sack for accepting garbage, G; and if his relatives send him an allowance of \$192, then his budget line is described by the equation: (c) 6V �� 24G = 192. 8. Eduardo spends his entire income on 12 sacks of acorns and 2 crates of butternuts. The price of acorns is 2 dollars per sack and his income is 34 dollars. He can just afford a commodity bundle with A sacks of acorns and B crates of butternuts which satisffies the budget equation: (b) 4A+ 10B = 68. 9. Harry thrives on two goods, paperback novels and bananas. The cost of paperback novels is 4 dollars each and the cost of bananas is 3 dollars per bunch.If Harry spent all of his income on bananas, he could afford 12 bunches of bananas per week. How many paperback novels could he buy if he spent all of his income on paperback novels?(c) 9 10. Heidi thrives on two goods: bananas and apples. The cost of bananas is 30 marks each and the cost of apples is 15 marks each. If her income is 210 marks, how many bananas can she buy if she spends all of her income on bananas? (b) 7 11. If she spends all of her income on lemons and tangerines, Isabella can just afford 30