Question 1

-In the above figure, Mark's monthly budget line for movies and plays changed, as shown by the arrow. Responding to this change, Mark probably will see

Accepted Answer

A)  fewer movies and fewer plays. 
B)  fewer movies and more plays. 
C)  more movies and fewer plays. 
D)  more movies and more plays. 
A)  fewer movies and fewer plays. 
B)  fewer movies and more plays. 
C)  more movies and fewer plays. 
D)  more movies and more plays.

Question 2

The concept of inferior goods can be used to show that

Accepted Answer

A)  lower prices signal poorer quality. 
B)  indifference curves can have positive slopes. 
C)  being able to consume more of all goods does not mean that a person will consume more of every good. 
D)  consumers will always buy more of all products if their incomes increase. 
A)  lower prices signal poorer quality. 
B)  indifference curves can have positive slopes. 
C)  being able to consume more of all goods does not mean that a person will consume more of every good. 
D)  consumers will always buy more of all products if their incomes increase.

Question 3

What does the slope of the budget line equal?

Accepted Answer

The slope of the budget line equals an o

Question 4

-In the above figure, as Brendan's income rises his consumption bundle moves from point A to point C. This implies that for Brendan, compact discs are ________ good and haircuts are ________ good.

Accepted Answer

A)  a normal; an inferior 
B)  a normal; a normal 
C)  an inferior; an inferior 
D)  an inferior; a normal 
A)  a normal; an inferior 
B)  a normal; a normal 
C)  an inferior; an inferior 
D)  an inferior; a normal

Question 5

-Given the budget line in the above figure, what is the household's real income in terms of pizzas per month?

Accepted Answer

A)  5 pizzas per month 
B)  4 pizzas per month 
C)  3 pizzas per month 
D)  All of above represent the household's real income. 
A)  5 pizzas per month 
B)  4 pizzas per month 
C)  3 pizzas per month 
D)  All of above represent the household's real income.

Question 6

-Nadya spends $200 a year to buy computer games and Barbie dolls. The price of a computer game is $40 and the price of a Barbie doll is $10. The figure above illustrates Nadya's preferences. What combination of computer games and Barbie dolls does Nadya buy?

Accepted Answer

@#IMG-DLM& The figure above sh

Question 7

-Lizzie's preferences are shown in the figure above. Lizzie definitely prefers consuming ________ to consuming ________.

Accepted Answer

A)  2 comic books and 12 cookies; 8 comic books and 8 cookies 
B)  8 comic books and 8 cookies; 10 comic books and 4 cookies 
C)  2 comic books and 12 cookies; 4 comic books and 8 cookies 
D)  8 comic books and 16 cookies; 10 comic books and 4 cookies 
A)  2 comic books and 12 cookies; 8 comic books and 8 cookies 
B)  8 comic books and 8 cookies; 10 comic books and 4 cookies 
C)  2 comic books and 12 cookies; 4 comic books and 8 cookies 
D)  8 comic books and 16 cookies; 10 comic books and 4 cookies

Question 8

Suppose that Dave has $200 to spend per week and he buys only magazines and pizza. The price of a pizza is $10 and the price of a magazine is $5. If Dave buys 15 pizza each week, what is the maximum number of magazines can he buy?

Accepted Answer

A)  40 
B)  20 
C)  10 
D)  200 
A)  40 
B)  20 
C)  10 
D)  200

Question 9

-Which of the following results in a "parallel" shift outward of your indifference curves between gasoline and movie rentals?

Accepted Answer

A)  any decrease in the prices of gasoline and movie rentals 
B)  an equal percentage decrease in the prices of gasoline and movie rentals 
C)  an increase in your income 
D)  none of the above 
A)  any decrease in the prices of gasoline and movie rentals 
B)  an equal percentage decrease in the prices of gasoline and movie rentals 
C)  an increase in your income 
D)  none of the above

Question 10

-Which of the following factors is NOT part of the budget equation?

Accepted Answer

A)  relative prices 
B)  real income 
C)  quantities of goods 
D)  preferences 
A)  relative prices 
B)  real income 
C)  quantities of goods 
D)  preferences

Question 11

-The magnitude of the slope of an indifference curve is the marginal

Accepted Answer

A)  rate of substitution. 
B)  rate of relative prices. 
C)  utility of substitution. 
D)  rate of utility of income. 
A)  rate of substitution. 
B)  rate of relative prices. 
C)  utility of substitution. 
D)  rate of utility of income.

Question 12

If two goods are perfect complements, the shapes of the indifference curves are

Accepted Answer

A)  bowed toward the origin. 
B)  bowed away from the origin. 
C)  straight lines. 
D)  right-angled lines. 
A)  bowed toward the origin. 
B)  bowed away from the origin. 
C)  straight lines. 
D)  right-angled lines.

Question 13

During October and November 2008, gasoline prices were falling dramatically, making travel by car less expensive but air travel prices were as high as ever. What is true about consumer preferences, possibilities, or choices?

Accepted Answer

A)  The relative price of air travel in terms of travelling by car decreases. 
B)  If travelling by car is a normal good, both the substitution and income effects would lead to a decrease in travelling by car. 
C)  The consumers' budget line would shift outward and its slope would not change. 
D)  If air travel is a normal good, both the substitution and income effects would lead to an increase in air travel. 
A)  The relative price of air travel in terms of travelling by car decreases. 
B)  If travelling by car is a normal good, both the substitution and income effects would lead to a decrease in travelling by car. 
C)  The consumers' budget line would shift outward and its slope would not change. 
D)  If air travel is a normal good, both the substitution and income effects would lead to an increase in air travel.

Question 14

-Suppose the price of coffee is $3, the price of a bagel is $2 and a person's budget is $40. The budget line's equation is

Accepted Answer

A)  $2/Qbagel + $3/Qcoffee = $40. 
B)  $2(Qbagel ) + $3(Qcoffee ) = $40. 
C)  Qbagel /$2 + Qcoffee /$3 = $40. 
D)  Qbagel + Qcoffee = $40/($3 + $2). 
A)  $2/Qbagel + $3/Qcoffee = $40. 
B)  $2(Qbagel ) + $3(Qcoffee ) = $40. 
C)  Qbagel /$2 + Qcoffee /$3 = $40. 
D)  Qbagel + Qcoffee = $40/($3 + $2).

Question 15

-The income effect from a fall in the price of a gallon of gasoline is shown in the above figure by the movement from

Accepted Answer

A)  point A to point C. 
B)  point A to point B. 
C)  point B to point C. 
D)  point A to point B and then to point C. 
A)  point A to point C. 
B)  point A to point B. 
C)  point B to point C. 
D)  point A to point B and then to point C.

Question 16

-To draw your budget line between steak and lobster, all you need to know is the price of a steak and the price of a lobster.

Accepted Answer

A) True 
 B)False

Question 17

-The price effect is equal to the

Accepted Answer

A)  substitution effect. 
B)  substitution effect plus the income effect. 
C)  marginal rate of substitution minus relative prices. 
D)  substitution effect minus the income effect. 
A)  substitution effect. 
B)  substitution effect plus the income effect. 
C)  marginal rate of substitution minus relative prices. 
D)  substitution effect minus the income effect.

Question 18

If an indifference map for a consumer is made up of straight, negatively sloped lines, the marginal rate of substitution ________ as more of the good on the horizontal axis is consumed.

Accepted Answer

A)  does not diminish 
B)  diminishes 
C)  increases 
D)  More information is needed to answer the question. 
A)  does not diminish 
B)  diminishes 
C)  increases 
D)  More information is needed to answer the question.

Question 19

If all prices rise by 5 percent and money income remains constant, the new budget line will have

Accepted Answer

A)  a steeper slope. 
B)  a flatter slope. 
C)  a positive slope. 
D)  the same slope. 
A)  a steeper slope. 
B)  a flatter slope. 
C)  a positive slope. 
D)  the same slope.

Question 20

-In the figure above, Sam originally selects his consumption bundle at point A with 3 pounds of olives and 4 pounds of pickles a year. Then the price of pickles rises and the price of olives falls so that his budget line rotates but it still goes through point A. Sam's consumption of olives

Accepted Answer

A)  definitely will rise. 
B)  definitely will fall. 
C)  definitely will stay the same. 
D)  could rise, fall, or stay the same. 
A)  definitely will rise. 
B)  definitely will fall. 
C)  definitely will stay the same. 
D)  could rise, fall, or stay the same.

Exam 9: Possibilities, Preferences, and Choices

-In the above figure, Mark's monthly budget line for movies and plays changed, as shown by the arrow. Responding to this change, Mark probably will see

The concept of inferior goods can be used to show that

What does the slope of the budget line equal?

-In the above figure, as Brendan's income rises his consumption bundle moves from point A to point C. This implies that for Brendan, compact discs are ________ good and haircuts are ________ good.

-Given the budget line in the above figure, what is the household's real income in terms of pizzas per month?

-Nadya spends $200 a year to buy computer games and Barbie dolls. The price of a computer game is $40 and the price of a Barbie doll is $10. The figure above illustrates Nadya's preferences. What combination of computer games and Barbie dolls does Nadya buy?

-Lizzie's preferences are shown in the figure above. Lizzie definitely prefers consuming ________ to consuming ________.

Suppose that Dave has $200 to spend per week and he buys only magazines and pizza. The price of a pizza is $10 and the price of a magazine is $5. If Dave buys 15 pizza each week, what is the maximum number of magazines can he buy?

-Which of the following results in a "parallel" shift outward of your indifference curves between gasoline and movie rentals?

-Which of the following factors is NOT part of the budget equation?

-The magnitude of the slope of an indifference curve is the marginal

If two goods are perfect complements, the shapes of the indifference curves are

During October and November 2008, gasoline prices were falling dramatically, making travel by car less expensive but air travel prices were as high as ever. What is true about consumer preferences, possibilities, or choices?

-Suppose the price of coffee is $3, the price of a bagel is $2 and a person's budget is $40. The budget line's equation is

-The income effect from a fall in the price of a gallon of gasoline is shown in the above figure by the movement from

-To draw your budget line between steak and lobster, all you need to know is the price of a steak and the price of a lobster.

-The price effect is equal to the

If an indifference map for a consumer is made up of straight, negatively sloped lines, the marginal rate of substitution ________ as more of the good on the horizontal axis is consumed.

If all prices rise by 5 percent and money income remains constant, the new budget line will have

-In the figure above, Sam originally selects his consumption bundle at point A with 3 pounds of olives and 4 pounds of pickles a year. Then the price of pickles rises and the price of olives falls so that his budget line rotates but it still goes through point A. Sam's consumption of olives

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

-In the above figure, as Brendan's income rises his consumption bundle moves from point A to point C. This implies that for Brendan, compact discs are good and haircuts are good.

-Lizzie's preferences are shown in the figure above. Lizzie definitely prefers consuming to consuming .