1. If you know the price ratio and want to determine whether a consumer is making the best choice, ask the following question: What is your _____?
2. Arrows up or down: The selling of individual songs online rather than bundles of songs on CDs _____ the utility of the typical consumer and _____ the incentive for music piracy.
3. In the Amazon.com example of free shipping, the initial experience was different in France because in that country _____,
4. Terry is consuming the utility-maximizing combination of MP3 tunes and paintball sessions. The price of MP3 tunes is $1 and the price of paintball sessions is $6. The marginal rate of substitution is _____.
5. Sherman has a fixed budget to spend on sweaters (horizontal axis) and shirts (vertical axis). The price of shirts is $10 and the price of sweaters is $50. At his current consumption bundle, Sherman is willing to sacrifice two shirts to get one sweater. Arrows up or down: To maximize utility, Sherman should _____ the consumption of sweaters and _____ the consumption of shirts.
6. Suppose the price of amusement rides is $2 and the price of a video arcade game is $1. The following table shows points on the budget line (given an income of $30) and the associated MRS. to maximize utility, which point should the consumer choose?

7. When we use the consumer-choice model to find a point on a demand curve, we find the point at which a (n) _____ is tangent to the _____.

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Quantity ofrides Quantity of video games Marginal rate of substitution 28 26 24 22 5321