Please answer the questions or fill in the blank.

1.Say a consumer's demand for good 1 is affected by her income, the price of good 1, the price of good 2 but not by the prices of any other goods.How many demand elasticities would there be for this consumer's demand for this good?

2.The rational consumer chooses the market basket that they ( ) more than ( ).

3.We use elasticity to measure the responsiveness of demand to a variable in order to have a measure that doesn't depend on ( )in which the quantity demanded is ( ).For example, individual eggs versus dozens of eggs.

4.Here are the facts.A consumer is trying to make up her mind about what market basket to purchase.She's got so much good 1 in her shopping cart and so much good 2.The cost of those quantities add up to her income.When she consumes those quantities of goods 1 and2, her MWS is 5.The price of good 1 is $9 and the price of good 2 is $3.Would she head for the check-out line?Explain why you answer this way.

5.A subject will continue to adjust his consumption of goods 1 and 2 until their ( )equals ( ).

6.Say our subject is consuming the market basket (20, 35).Suppose with that consumption his MWS is 3.Suppose that his consumption is changed to (21, 32).There is an axiom about an individual's willingness to substitute (the axiom of a diminishing MWS) that implies that when he consumes (21, 32), ( )

7.Because of the correct answer to the previous two questions, economists claim that such a unit tax is ( )because ( ).

8.What is the benefit from an excise tax?

9.We can use consumers' surplus to measure some of ( ) from international trade.Let's see how we would figure a part of that.Say without automobiles being imported from Japan, Korea, etc., the price of a car would be $28,000 and 12 million cars would be sold. When foreign producers are allowed to sell their cars in the U.S., the price of a car goes down to $27,000 and 14 million vehicles are sold.Then the ( )in consumer's surplus would be ( )plus ( ).

10.Why would price go down when the U.S. allows foreign manufacturers to sell their cars in the U.S.?Because of ( ).

11.Suppose a person has a willingness to pay of $200 a year for something, X.Suppose in order to provide that person with X, they would have to be taxed.The tax scheme used would result in this person paying a tax of $300 a year.What would providing this person with X and taxing them this way do to their welfare?

12.Suppose consumer #1 has a MWS of 4 and consumer #2 has a MWS of 9.What would happen to the welfares of the two individuals from this trade: #1 gives #2 a unit of good 1 in exchange for 7 units of good 2.Explain that.

13.Policymakers might be interested in knowing how a change in the legal constraints facing consumers and firms would affect individual welfares.Suppose initially a consumer is consuming market basket A.If a certain policy is adopted, this consumer will end up consuming market basket B.Knowing what these two market baskets are, and nothing else, can you say if the consumer is better or worse off from the change in their consumption?