Mary has $10 to spend each week on coffee(Qc) and magazines (Qm). The price of a coffee is $1, and the price of a magazine is $2. Mary's budget equation is __________.

Qm + Qc = 20
Qm = 5 - (1/2)Qc
Qm = 10 - Qc
Qc = 10 - (1/2)Qm

The figure shows Ronald's budget line. He has a weekly income of $15 and he spends it on hot dogs and hamburgers. The relative price of a hamburger is ____________.

$1.50
3 hotdogs
1/3 hotdog
30 hotdogs

The figure shows Ronald's budget line. He has a weekly income of $15, which he spends on hotdogs and hamburgers. Ronald's real income in terms of hamburgers ________________.

depends on the quantity of hotdogs consumed
is 10 hamburgers
is $1.50
depends on the quantity of hamburgers consumed

The figure shows Ronald's budget line. He has a weekly income of $15, which he spends on hotdogs and hamburgers. Now Ronald's income increases to $20 per week and the price of a hotdog doubles. Ronald's budget line becomes ___________ and ______________.

flatter; does not shift
steeper; shifts rightward
flatter; shifts rightward
flatter; shifts rightward

If two consumption points are not on the same indifference curve, then one point is _____________________.

unaffordable and the other is affordable
a substitute for the other point
more expensive than the other
preferred to the other

The figure shows one of Sally's indifference curves and her budget line. At point a, Sally's marginal rate of substitution is ___________.

8/3
3/2
2/3
3/8

The figure shows Sally's budget line and one of her indifference curves. As Sally moves up along her indifference curve, her marginal rate of substitution _______________.

decreases
increases
remains the same
depends on her income

The figure illustrates Sally's budget line and her preferences. Point _______ is Sally's best affordable point, and Sally prefers point _______ to point _______.

e; c; b
a; b; a
b; d; b
b; a; b

The figure illustrates Sally's budget line and her preferences. At point _______, the marginal rate of substitution is equal to the relative price.

b
d
c
e

When the price of a normal good decreases, the ______ can be divided between the _________ , which keeps the best affordable point on the same indifference curve and the _______, which moves the best affordable point farther away from the origin.

price effect; income effect; substitution effect
income effect; substitution effect; price effect
price effect; substitution effect; income effect
substitution effect; price effect; income effect

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