Question 1

-The above figure gives your budget line between CDs and magazines. What would allow you to buy more CDs?

Accepted Answer

A)  a decrease in the relative price of CDs 
B)  an increase in income 
C)  a decrease in the price of magazines with no change in the price of CDs. 
D)  All of the above changes would allow you to buy more CDs. 
A)  a decrease in the relative price of CDs 
B)  an increase in income 
C)  a decrease in the price of magazines with no change in the price of CDs. 
D)  All of the above changes would allow you to buy more CDs.

Question 2

Lily is a college student who likes to buy only two goods: Cheetos and Pepsi. To determine Lily's budget line, you need to know I. Lily's preferences for Cheetos and Pepsi.
II) The prices of Cheetos and Pepsi.
III) Lily's income.

Accepted Answer

A)  II only 
B)  I and II 
C)  II and III 
D)  I, II and III 
A)  II only 
B)  I and II 
C)  II and III 
D)  I, II and III

Question 3

The combinations of gasoline and coffee along one of Sam's indifference curves are combinations

Accepted Answer

A)  which require the same total expenditure. 
B)  that he can afford with his $60.00 income. 
C)  among which he is "indifferent." 
D)  that give him the same marginal rate of substitution. 
A)  which require the same total expenditure. 
B)  that he can afford with his $60.00 income. 
C)  among which he is "indifferent." 
D)  that give him the same marginal rate of substitution.

Question 4

-Your weekly budget for gasoline and movie rentals is $45.00. Referring to the figure above, what is the price per movie rental?

Accepted Answer

A)  $2.00 
B)  $2.25 
C)  $2.50 
D)  $3.00 
A)  $2.00 
B)  $2.25 
C)  $2.50 
D)  $3.00

Question 5

-The figure above gives your budget line for magazine and CDs per month. Given that your income equals $60 per month, what is your real income in terms of CDs?

Accepted Answer

A)  3 CDs 
B)  5 CDs 
C)  6 CDs 
D)  $60/month 
A)  3 CDs 
B)  5 CDs 
C)  6 CDs 
D)  $60/month

Question 6

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. What is Dave's real income in terms of magazines?

Accepted Answer

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

Question 7

Samara's income is $30 a month and she spends all of it on music downloads and gasoline. The price of a music download is $1.50 and the price of a gallon of gasoline is $3. At Samara's best affordable point, her marginal rate of substitution is ________ per video tape.

Accepted Answer

A)  0.5 of a download 
B)  1 download 
C)  1.5 downloads 
D)  2 downloads 
A)  0.5 of a download 
B)  1 download 
C)  1.5 downloads 
D)  2 downloads

Question 8

If the combination of goods consumed at point C is preferred to combination D then

Accepted Answer

A)  point C is on a higher indifference curve. 
B)  point C is on the same indifference cure but at a point where the vertical axis value is greater than point D's vertical axis value. 
C)  point C is on a lower indifference curve. 
D)  point C is on the same indifference curve but at a point where the horizontal axis value is greater than point D's horizontal axis value. 
A)  point C is on a higher indifference curve. 
B)  point C is on the same indifference cure but at a point where the vertical axis value is greater than point D's vertical axis value. 
C)  point C is on a lower indifference curve. 
D)  point C is on the same indifference curve but at a point where the horizontal axis value is greater than point D's horizontal axis value.

Question 9

-Lizzie's budget line is shown in the figure above. If the price of a cookie rises, Lizzie's real income in terms of cookies ________ and her real income in terms of magazines ________.

Accepted Answer

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

Question 10

-The figure above gives your budget line for magazine and CDs per month. Given that your income equals $60 per month, what is the price of a magazine and the price of a CD?

Accepted Answer

A)  The price of a magazine is $12 per magazine and the price of a CD is $6 per CD. 
B)  The price of a magazine is $5 per magazine and the price of a CD is $10 per CD. 
C)  The price of a magazine is $4 per magazine and the price of a CD is $12 per CD. 
D)  It is impossible to tell from the information given. 
A)  The price of a magazine is $12 per magazine and the price of a CD is $6 per CD. 
B)  The price of a magazine is $5 per magazine and the price of a CD is $10 per CD. 
C)  The price of a magazine is $4 per magazine and the price of a CD is $12 per CD. 
D)  It is impossible to tell from the information given.

Question 11

-Jodie has indifference curves for CDs and colas, with CDs on the vertical axis. The flatter her indifference curves are, the

Accepted Answer

A)  smaller her average rate of substitution. 
B)  larger her average rate of substitution. 
C)  smaller her marginal rate of substitution. 
D)  larger her marginal rate of substitution. 
A)  smaller her average rate of substitution. 
B)  larger her average rate of substitution. 
C)  smaller her marginal rate of substitution. 
D)  larger her marginal rate of substitution.

Question 12

The price of one good divided by the price of another good is a

Accepted Answer

A)  money price. 
B)  relative price. 
C)  budget constraint. 
D)  divisible good. 
A)  money price. 
B)  relative price. 
C)  budget constraint. 
D)  divisible good.

Question 13

The ________ is the price of one good ________ the price of another good.

Accepted Answer

A)  relative price; times 
B)  relative price; divided by 
C)  budget; times 
D)  budget; divided by 
A)  relative price; times 
B)  relative price; divided by 
C)  budget; times 
D)  budget; divided by

Question 14

A curve/line that shows combinations of goods among which a consumer would not desire one combination of goods to another combination of goods on that curve/line is called

Accepted Answer

A)  a budget line. 
B)  an indifference curve. 
C)  a utility possibilities curve. 
D)  a demand curve. 
A)  a budget line. 
B)  an indifference curve. 
C)  a utility possibilities curve. 
D)  a demand curve.

Question 15

-The above figure shows Jane's budget line and two of her indifference curves. When Jane is consuming at her best affordable point, what is her marginal rate of substitution?

Accepted Answer

A)  2.0 lobster dinners per steak dinner 
B)  1.0 lobster dinners per steak dinner 
C)  0.5 lobster dinners per steak dinner 
D)  0.33 lobster dinners per steak dinner 
A)  2.0 lobster dinners per steak dinner 
B)  1.0 lobster dinners per steak dinner 
C)  0.5 lobster dinners per steak dinner 
D)  0.33 lobster dinners per steak dinner

Question 16

-The figure above shows Tanya's consumption possibilities when the price of a restaurant meal is $20. If the price of a restaurant meal falls to $10 and Tanya buys 12 movie tickets, how many restaurant meals can she buy?

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  5 
A)  2 
B)  3 
C)  4 
D)  5

Question 17

-The rate at which Sam is willing to give up a gallon of gasoline to get one more pound of coffee, and remain on the same indifference curve is called his

Accepted Answer

A)  opportunity cost of coffee. 
B)  opportunity cost of gasoline. 
C)  personal price of coffee. 
D)  marginal rate of substitution. 
A)  opportunity cost of coffee. 
B)  opportunity cost of gasoline. 
C)  personal price of coffee. 
D)  marginal rate of substitution.

Question 18

-The figure above shows Ilene's budget line. The price of a can of cat food is $2. The price of a can of dog food

Accepted Answer

A)  is $1.60. 
B)  is $4.00. 
C)  is $5.00. 
D)  cannot be determined without more information. 
A)  is $1.60. 
B)  is $4.00. 
C)  is $5.00. 
D)  cannot be determined without more information.

Question 19

The magnitude of the slope of the budget line is determined by

Accepted Answer

A)  the marginal rate of substitution. 
B)  the level of income. 
C)  the consumer's preferences for the goods. 
D)  relative prices. 
A)  the marginal rate of substitution. 
B)  the level of income. 
C)  the consumer's preferences for the goods. 
D)  relative prices.

Question 20

An indifference curve will become ________ the origin the more that the consumer considers the two goods as substitutes.

Accepted Answer

A)  less bowed-in towards 
B)  more bowed-in towards 
C)  less bowed-out from 
D)  more bowed-out from 
A)  less bowed-in towards 
B)  more bowed-in towards 
C)  less bowed-out from 
D)  more bowed-out from

Exam 9: Possibilities, Preferences, and Choices

-The above figure gives your budget line between CDs and magazines. What would allow you to buy more CDs?

Lily is a college student who likes to buy only two goods: Cheetos and Pepsi. To determine Lily's budget line, you need to know I. Lily's preferences for Cheetos and Pepsi. II) The prices of Cheetos and Pepsi. III) Lily's income.

The combinations of gasoline and coffee along one of Sam's indifference curves are combinations

-Your weekly budget for gasoline and movie rentals is $45.00. Referring to the figure above, what is the price per movie rental?

-The figure above gives your budget line for magazine and CDs per month. Given that your income equals $60 per month, what is your real income in terms of CDs?

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. What is Dave's real income in terms of magazines?

Samara's income is $30 a month and she spends all of it on music downloads and gasoline. The price of a music download is $1.50 and the price of a gallon of gasoline is $3. At Samara's best affordable point, her marginal rate of substitution is ________ per video tape.

If the combination of goods consumed at point C is preferred to combination D then

-Lizzie's budget line is shown in the figure above. If the price of a cookie rises, Lizzie's real income in terms of cookies ________ and her real income in terms of magazines ________.

-The figure above gives your budget line for magazine and CDs per month. Given that your income equals $60 per month, what is the price of a magazine and the price of a CD?

-Jodie has indifference curves for CDs and colas, with CDs on the vertical axis. The flatter her indifference curves are, the

The price of one good divided by the price of another good is a

The ________ is the price of one good ________ the price of another good.

A curve/line that shows combinations of goods among which a consumer would not desire one combination of goods to another combination of goods on that curve/line is called

-The above figure shows Jane's budget line and two of her indifference curves. When Jane is consuming at her best affordable point, what is her marginal rate of substitution?

-The figure above shows Tanya's consumption possibilities when the price of a restaurant meal is $20. If the price of a restaurant meal falls to $10 and Tanya buys 12 movie tickets, how many restaurant meals can she buy?

-The rate at which Sam is willing to give up a gallon of gasoline to get one more pound of coffee, and remain on the same indifference curve is called his

-The figure above shows Ilene's budget line. The price of a can of cat food is $2. The price of a can of dog food

The magnitude of the slope of the budget line is determined by

An indifference curve will become ________ the origin the more that the consumer considers the two goods as substitutes.

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

-Lizzie's budget line is shown in the figure above. If the price of a cookie rises, Lizzie's real income in terms of cookies and her real income in terms of magazines .

The is the price of one good the price of another good.