Chapter 7

Question 1

budget line

Answer 1

boundary between affordable and unaffordable combinations of purchased goods

Question 2

consumer equilibrium

Answer 2

maximization of total utility of available income

Question 3

marginal utility per dollar

Answer 3

the marginal utility of one more dollar of good; marginal utility of the good / its price

Question 4

real income

Answer 4

income as affordable quantity of goods

Question 5

goal of a consumer

Answer 5

to maximize utility given a budget

Question 6

budget

Answer 6

spending

Question 7

marginal utility

Answer 7

change in utility from consuming one additional unit