Question 1

A change in the price of the good measured on the vertical axis changes ________ of the budget line.

Accepted Answer

A) the slope and y-intercept 
B) the slope and x-intercept 
C) the x- and y-intercepts but not the slope 
D) only the slope 
E) only the y-intercept 
A) the slope and y-intercept 
B) the slope and x-intercept 
C) the x- and y-intercepts but not the slope 
D) only the slope 
E) only the y-intercept

Question 2

A change in income changes ________ of the budget line.

Accepted Answer

A) the slope and y-intercept 
B) the slope and x-intercept 
C) the x- and y-intercepts but not the slope 
D) only the slope 
E) only the y-intercept 
A) the slope and y-intercept 
B) the slope and x-intercept 
C) the x- and y-intercepts but not the slope 
D) only the slope 
E) only the y-intercept

Question 3

Larry consumes only beer (B)and chips (C).His real income in terms of chips is

Accepted Answer

A) PC/Y. 
B) PC × PB. 
C) Y/PC. 
D) Y/PB. 
E) PC/PB. 
A) PC/Y. 
B) PC × PB. 
C) Y/PC. 
D) Y/PB. 
E) PC/PB.

Question 4

What is a distinguishing characteristic of an inferior good?

Accepted Answer

A) a negative price effect 
B) a positive income effect 
C) a positive substitution effect 
D) a negative income effect 
E) an upward-sloping demand curve 
A) a negative price effect 
B) a positive income effect 
C) a positive substitution effect 
D) a negative income effect 
E) an upward-sloping demand curve

Question 5

Use the information below to answer the following questions.
Fact 9.3.1
Marc has an income of $20 and spends it on two goods,root beer (measured on the vertical axis)and chips (measured on the horizontal axis).The price of root beer is $1 a can.The price of chips is $0.50 a bag.Initially,Marc chooses to consume 10 cans of root beer and 20 bags of chips.Then the price of root beer rises to $1.50 per can and the price of chips falls to $0.25 a bag.
-Refer to Fact 9.3.1.Marc's initial marginal rate of substitution was

Accepted Answer

A) not calculable with the information given. 
B) equal to 2 cans of root beer given up for each bag of chips gained. 
C) equal to 1 can of root beer given up for each bag of chips gained. 
D) equal to 10 cans of root beer given up for each bag of chips gained. 
E) equal to 1/2 can of root beer given up for each bag of chips gained. 
A) not calculable with the information given. 
B) equal to 2 cans of root beer given up for each bag of chips gained. 
C) equal to 1 can of root beer given up for each bag of chips gained. 
D) equal to 10 cans of root beer given up for each bag of chips gained. 
E) equal to 1/2 can of root beer given up for each bag of chips gained.

Question 6

Use the figure below to answer the following questions.   Figure 9.1.1
-Shelly's budget line is shown in Figure 9.1.1.Which points are affordable given her income and current prices?

Accepted Answer

A) A only 
B) B only 
C) C only 
D) D only 
E) A,C,and D 
A) A only 
B) B only 
C) C only 
D) D only 
E) A,C,and D

Question 7

The number of pizza slices is plotted on the horizontal axis and number of hot dogs is plotted on the vertical axis.If the price of a hot dog rises,the

Accepted Answer

A) x-intercept and the slope of the budget line increase. 
B) y-intercept and the slope of the budget line increase. 
C) x-intercept and the slope of the budget line decrease. 
D) y-intercept decreases and the slope of the budget line does not change. 
E) y-intercept and the slope of the budget line decrease. 
A) x-intercept and the slope of the budget line increase. 
B) y-intercept and the slope of the budget line increase. 
C) x-intercept and the slope of the budget line decrease. 
D) y-intercept decreases and the slope of the budget line does not change. 
E) y-intercept and the slope of the budget line decrease.

Question 8

Use the information below to answer the following questions.
Fact 9.3.2 Hamptons Glamour Finds a Humbler Home
Lucy Martin collected and sold vintage clothing in the wealthy Hamptons,but in the recession of 2008,her sales fell.She eventually moved her shop to Tannersville,N.Y. ,where her expenses are 70 percent less than they were in the Hamptons.
Source: The New York Times,December 22,2016
-Refer to Fact 9.3.2.If the price of vintage clothing falls and income remains the same,the substitution effect ________ the quantity of used clothing bought and the income effect ________ the quantity of used clothing bought.

Accepted Answer

A) increases;decreases 
B) increases;increases 
C) decreases;increases 
D) decreases;decreases 
E) does not change;increases 
A) increases;decreases 
B) increases;increases 
C) decreases;increases 
D) decreases;decreases 
E) does not change;increases

Question 9

A rise in the price of gasoline,everything else remaining the same,________ the relative price of a restaurant meal and ________ real income in terms of restaurant meals.

Accepted Answer

A) increases;does not change 
B) does not change;decreases 
C) decreases;does not change 
D) does not change;increases 
E) decreases;decreases 
A) increases;does not change 
B) does not change;decreases 
C) decreases;does not change 
D) does not change;increases 
E) decreases;decreases

Question 10

A preference map is

Accepted Answer

A) a series of points that represent levels of equal satisfaction. 
B) a series of demand curves. 
C) a series of supply curves. 
D) a map that shows contour lines. 
E) a series of indifference curves. 
A) a series of points that represent levels of equal satisfaction. 
B) a series of demand curves. 
C) a series of supply curves. 
D) a map that shows contour lines. 
E) a series of indifference curves.

Question 11

Which one of the following statements is true about the indifference curves for two goods that are perfect substitutes?

Accepted Answer

A) The indifference curves are negatively-sloped straight lines. 
B) The indifference curves are L-shaped. 
C) The marginal rate of substitution is zero. 
D) The indifference curves are positively-sloped straight lines. 
E) The marginal rate of substitution is infinity. 
A) The indifference curves are negatively-sloped straight lines. 
B) The indifference curves are L-shaped. 
C) The marginal rate of substitution is zero. 
D) The indifference curves are positively-sloped straight lines. 
E) The marginal rate of substitution is infinity.

Question 12

If the price of a normal good rises,the income effect

Accepted Answer

A) will increase consumption of the good and the substitution effect will decrease consumption. 
B) will decrease consumption of the good and the substitution effect will increase consumption. 
C) and the substitution effect will both increase consumption of the good. 
D) and the substitution effect will both decrease consumption of the good. 
E) is always larger than the substitution effect. 
A) will increase consumption of the good and the substitution effect will decrease consumption. 
B) will decrease consumption of the good and the substitution effect will increase consumption. 
C) and the substitution effect will both increase consumption of the good. 
D) and the substitution effect will both decrease consumption of the good. 
E) is always larger than the substitution effect.

Question 13

A change in the price of the good measured on the horizontal axis changes ________ of the budget line.

Accepted Answer

A) the slope and y-intercept 
B) the slope and x-intercept 
C) the x- and y-intercepts but not the slope 
D) only the slope 
E) only the x-intercept 
A) the slope and y-intercept 
B) the slope and x-intercept 
C) the x- and y-intercepts but not the slope 
D) only the slope 
E) only the x-intercept

Question 14

Use the figure below to answer the following questions.   Figure 9.3.4
Original equilibrium at A,new equilibrium at B
-Refer to Figure 9.3.4.Which graphs show the case where good Y is an inferior good?

Accepted Answer

A) (a)and (b) 
B) (c)and (d) 
C) (a)and (c) 
D) (b)and (d) 
E) none of the graphs 
A) (a)and (b) 
B) (c)and (d) 
C) (a)and (c) 
D) (b)and (d) 
E) none of the graphs

Question 15

Martha consumes cake and muffins.Suppose Martha's income doubles and the prices of cake and muffins also double.Martha's budget line

Accepted Answer

A) shifts leftward but the slope does not change. 
B) remains unchanged. 
C) shifts rightward but the slope does not change. 
D) shifts rightward and becomes steeper. 
E) shifts rightward and becomes flatter. 
A) shifts leftward but the slope does not change. 
B) remains unchanged. 
C) shifts rightward but the slope does not change. 
D) shifts rightward and becomes steeper. 
E) shifts rightward and becomes flatter.

Question 16

The substitution effect is the effect of

Accepted Answer

A) a change in income on the quantity bought. 
B) a change in price on the quantity bought when the consumer moves to a higher indifference curve. 
C) a change in income on the quantity bought when the consumer moves to a higher indifference curve. 
D) a change in the best affordable point. 
E) a change in price on the quantity bought when the consumer hypothetically remains on the same indifference curve. 
A) a change in income on the quantity bought. 
B) a change in price on the quantity bought when the consumer moves to a higher indifference curve. 
C) a change in income on the quantity bought when the consumer moves to a higher indifference curve. 
D) a change in the best affordable point. 
E) a change in price on the quantity bought when the consumer hypothetically remains on the same indifference curve.

Question 17

A consumer's best affordable point occurs

Accepted Answer

A) inside the budget line. 
B) outside the budget line. 
C) on the budget line. 
D) at a point that cannot be determined. 
E) at a corner on the budget line,with only one good consumed. 
A) inside the budget line. 
B) outside the budget line. 
C) on the budget line. 
D) at a point that cannot be determined. 
E) at a corner on the budget line,with only one good consumed.

Question 18

Guy has an income (Y)of $50 with which he can purchase DVDs (D)at $10 each and haircuts (H)at $20 each.Which one of the following represents Guy's budget line?

Accepted Answer

A) Y = 10QD - 20QH 
B) 50 = QD + QH 
C) Y = 50 + QD + QH 
D) 20Y = QD + 10QH 
E) 50 = 10QD + 20QH 
A) Y = 10QD - 20QH 
B) 50 = QD + QH 
C) Y = 50 + QD + QH 
D) 20Y = QD + 10QH 
E) 50 = 10QD + 20QH

Question 19

Leah consumes at a point on her budget line where her marginal rate of substitution is less than the magnitude of the slope of her budget line.As Leah moves along her budget line toward her best affordable point,she will move

Accepted Answer

A) down and left. 
B) down and right. 
C) up and left. 
D) up and right. 
E) straight up. 
A) down and left. 
B) down and right. 
C) up and left. 
D) up and right. 
E) straight up.

Question 20

Which one of the following statements about the budget line is false? The budget line

Accepted Answer

A) separates affordable consumption points from unaffordable consumption points. 
B) is based on fixed prices. 
C) is based on fixed income. 
D) is based on fixed quantities. 
E) constrains consumer choices. 
A) separates affordable consumption points from unaffordable consumption points. 
B) is based on fixed prices. 
C) is based on fixed income. 
D) is based on fixed quantities. 
E) constrains consumer choices.

A change in the price of the good measured on the vertical axis changes ________ of the budget line.

A change in income changes ________ of the budget line.

Larry consumes only beer (B)and chips (C).His real income in terms of chips is

What is a distinguishing characteristic of an inferior good?

Use the figure below to answer the following questions. Figure 9.1.1 -Shelly's budget line is shown in Figure 9.1.1.Which points are affordable given her income and current prices?

The number of pizza slices is plotted on the horizontal axis and number of hot dogs is plotted on the vertical axis.If the price of a hot dog rises,the

A rise in the price of gasoline,everything else remaining the same, the relative price of a restaurant meal and real income in terms of restaurant meals.

A preference map is

Which one of the following statements is true about the indifference curves for two goods that are perfect substitutes?

If the price of a normal good rises,the income effect

A change in the price of the good measured on the horizontal axis changes ________ of the budget line.

Use the figure below to answer the following questions. Figure 9.3.4 Original equilibrium at A,new equilibrium at B -Refer to Figure 9.3.4.Which graphs show the case where good Y is an inferior good?

Martha consumes cake and muffins.Suppose Martha's income doubles and the prices of cake and muffins also double.Martha's budget line

The substitution effect is the effect of

A consumer's best affordable point occurs

Guy has an income (Y)of $50 with which he can purchase DVDs (D)at $10 each and haircuts (H)at $20 each.Which one of the following represents Guy's budget line?

Leah consumes at a point on her budget line where her marginal rate of substitution is less than the magnitude of the slope of her budget line.As Leah moves along her budget line toward her best affordable point,she will move

Which one of the following statements about the budget line is false? The budget line

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Exam 9: Possibilities, preferences, and Choices

A change in the price of the good measured on the vertical axis changes ________ of the budget line.

A change in income changes ________ of the budget line.

Larry consumes only beer (B)and chips (C).His real income in terms of chips is

What is a distinguishing characteristic of an inferior good?

Use the figure below to answer the following questions. Figure 9.1.1 -Shelly's budget line is shown in Figure 9.1.1.Which points are affordable given her income and current prices?

The number of pizza slices is plotted on the horizontal axis and number of hot dogs is plotted on the vertical axis.If the price of a hot dog rises,the

A rise in the price of gasoline,everything else remaining the same,________ the relative price of a restaurant meal and ________ real income in terms of restaurant meals.

A preference map is

Which one of the following statements is true about the indifference curves for two goods that are perfect substitutes?

If the price of a normal good rises,the income effect

A change in the price of the good measured on the horizontal axis changes ________ of the budget line.

Use the figure below to answer the following questions. Figure 9.3.4 Original equilibrium at A,new equilibrium at B -Refer to Figure 9.3.4.Which graphs show the case where good Y is an inferior good?

Martha consumes cake and muffins.Suppose Martha's income doubles and the prices of cake and muffins also double.Martha's budget line

The substitution effect is the effect of

A consumer's best affordable point occurs

Guy has an income (Y)of $50 with which he can purchase DVDs (D)at $10 each and haircuts (H)at $20 each.Which one of the following represents Guy's budget line?

Leah consumes at a point on her budget line where her marginal rate of substitution is less than the magnitude of the slope of her budget line.As Leah moves along her budget line toward her best affordable point,she will move

Which one of the following statements about the budget line is false? The budget line

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

A rise in the price of gasoline,everything else remaining the same, the relative price of a restaurant meal and real income in terms of restaurant meals.