Question 1

Perfect complements will have

Accepted Answer

A)  straight line indifference curves. 
B)  reverse L-shaped indifference curves. 
C)  L-shaped indifference curves. 
D)  curved indifference curves, bowed in from the origin. 
E)  curved indifference curve, bowed out from the origin. 
A)  straight line indifference curves. 
B)  reverse L-shaped indifference curves. 
C)  L-shaped indifference curves. 
D)  curved indifference curves, bowed in from the origin. 
E)  curved indifference curve, bowed out from the origin.

Question 2

An indifference curve

Accepted Answer

A)  connects a set of consumption bundles among which the consumer is indifferent. 
B)  is only useful in analyzing apathetic consumers. 
C)  connects a set of consumers who each have the same preferences. 
D)  is only useful in microeconomics. 
E)  connects a set of consumption and income bundles among which the consumer is indifferent. 
A)  connects a set of consumption bundles among which the consumer is indifferent. 
B)  is only useful in analyzing apathetic consumers. 
C)  connects a set of consumers who each have the same preferences. 
D)  is only useful in microeconomics. 
E)  connects a set of consumption and income bundles among which the consumer is indifferent.

Question 3

The real wage denotes

Accepted Answer

A)  the number of units of consumption goods that can be exchanged for one unit of labour time. 
B)  the number of units of labour time that can be exchanged for one unit of consumption goods. 
C)  the number of units of labour time that can be exchanged for one unit of leisure time. 
D)  the number of units of leisure time that can be exchanged for one unit of labour time. 
E)  the purchasing power of income earned after taxes are paid. 
A)  the number of units of consumption goods that can be exchanged for one unit of labour time. 
B)  the number of units of labour time that can be exchanged for one unit of consumption goods. 
C)  the number of units of labour time that can be exchanged for one unit of leisure time. 
D)  the number of units of leisure time that can be exchanged for one unit of labour time. 
E)  the purchasing power of income earned after taxes are paid.

Question 4

Suppose Ford could triple production of Mustangs by tripling its production facilities for those cars. This is an example of

Accepted Answer

A)  constant returns to scale. 
B)  increasing returns to scale. 
C)  decreasing returns to scale. 
D)  the law of diminishing returns. 
E)  diminishing marginal rate of substitution. 
A)  constant returns to scale. 
B)  increasing returns to scale. 
C)  decreasing returns to scale. 
D)  the law of diminishing returns. 
E)  diminishing marginal rate of substitution.

Question 5

The slope of the indifference curve is defined as

Accepted Answer

A)  the marginal rate of substitution. 
B)  the marginal rate of transformation. 
C)  the marginal propensity to consume. 
D)  the marginal propensity to substitute. 
E)  the relative price of good Y. 
A)  the marginal rate of substitution. 
B)  the marginal rate of transformation. 
C)  the marginal propensity to consume. 
D)  the marginal propensity to substitute. 
E)  the relative price of good Y.

Question 6

The consumer's work-leisure choice problem focuses on how a consumer's work-leisure decision is affected by the consumer's

Accepted Answer

A)  preferences and productivity. 
B)  productivity and psychology. 
C)  psychology and preferences. 
D)  preferences and constraints. 
E)  preferences and psychology. 
A)  preferences and productivity. 
B)  productivity and psychology. 
C)  psychology and preferences. 
D)  preferences and constraints. 
E)  preferences and psychology.

Question 7

A consumer is said to be indifferent between two consumption bundles

Accepted Answer

A)  when the consumer doesn't care about his or her consumption bundle. 
B)  when the two bundles provide equal amounts of utility. 
C)  when the consumer chooses the bundles equally often. 
D)  when the consumer is indecisive. 
E)  when the consumption bundles contain normal goods. 
A)  when the consumer doesn't care about his or her consumption bundle. 
B)  when the two bundles provide equal amounts of utility. 
C)  when the consumer chooses the bundles equally often. 
D)  when the consumer is indecisive. 
E)  when the consumption bundles contain normal goods.

Question 8

Moving down the indifference curve, the marginal rate of substitution

Accepted Answer

A)  is constant. 
B)  is rising. 
C)  diminishes. 
D)  is highly volatile. 
E)  depends on household income. 
A)  is constant. 
B)  is rising. 
C)  diminishes. 
D)  is highly volatile. 
E)  depends on household income.

Question 9

As the quantity of capital increases, the marginal product of labour

Accepted Answer

A)  is constant. 
B)  increases. 
C)  decreases. 
D)  may either increase or decrease. 
E)  gets more expensive. 
A)  is constant. 
B)  increases. 
C)  decreases. 
D)  may either increase or decrease. 
E)  gets more expensive.

Question 10

When consumers act as price-takers, we say that they behave

Accepted Answer

A)  cooperatively. 
B)  competitively. 
C)  monopolistically. 
D)  irrationally. 
E)  rationally. 
A)  cooperatively. 
B)  competitively. 
C)  monopolistically. 
D)  irrationally. 
E)  rationally.

Question 11

An increase in the real wage

Accepted Answer

A)  unambiguously increases consumption and increases labour supply. 
B)  increases consumption and has an ambiguous effect on labour supply. 
C)  has an ambiguous effect on consumption and increases labour supply. 
D)  has an ambiguous effect on both consumption and labour supply. 
E)  increases consumption and decreases labour supply. 
A)  unambiguously increases consumption and increases labour supply. 
B)  increases consumption and has an ambiguous effect on labour supply. 
C)  has an ambiguous effect on consumption and increases labour supply. 
D)  has an ambiguous effect on both consumption and labour supply. 
E)  increases consumption and decreases labour supply.

Question 12

The marginal product of the fourth Gizmo worker hired is

Accepted Answer

A)  1. 
B)  3. 
C)  5. 
D)  10. 
E)  12. 
A)  1. 
B)  3. 
C)  5. 
D)  10. 
E)  12.

Question 13

As the quantity of capital increases, the marginal product of capital

Accepted Answer

A)  is constant. 
B)  increases. 
C)  decreases. 
D)  may either increase or decrease. 
E)  gets more expensive. 
A)  is constant. 
B)  increases. 
C)  decreases. 
D)  may either increase or decrease. 
E)  gets more expensive.

Question 14

The preferences of the representative consumer over consumption and leisure are represented by use of a

Accepted Answer

A)  production function. 
B)  utility function. 
C)  benefit function. 
D)  preference function. 
E)  dynamic function. 
A)  production function. 
B)  utility function. 
C)  benefit function. 
D)  preference function. 
E)  dynamic function.

Perfect complements will have

An indifference curve

The real wage denotes

Suppose Ford could triple production of Mustangs by tripling its production facilities for those cars. This is an example of

The slope of the indifference curve is defined as

The consumer's work-leisure choice problem focuses on how a consumer's work-leisure decision is affected by the consumer's

A consumer is said to be indifferent between two consumption bundles

Moving down the indifference curve, the marginal rate of substitution

As the quantity of capital increases, the marginal product of labour

When consumers act as price-takers, we say that they behave

An increase in the real wage

The marginal product of the fourth Gizmo worker hired is

As the quantity of capital increases, the marginal product of capital

The preferences of the representative consumer over consumption and leisure are represented by use of a

Introduction

Measurement

Business Cycle Measurement

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters

Exam 4: Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

Perfect complements will have

An indifference curve

The real wage denotes

Suppose Ford could triple production of Mustangs by tripling its production facilities for those cars. This is an example of

The slope of the indifference curve is defined as

The consumer's work-leisure choice problem focuses on how a consumer's work-leisure decision is affected by the consumer's

A consumer is said to be indifferent between two consumption bundles

Moving down the indifference curve, the marginal rate of substitution

As the quantity of capital increases, the marginal product of labour

When consumers act as price-takers, we say that they behave

An increase in the real wage

The marginal product of the fourth Gizmo worker hired is

As the quantity of capital increases, the marginal product of capital

The preferences of the representative consumer over consumption and leisure are represented by use of a

Introduction

Measurement

Business Cycle Measurement

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters