Question 1

When two goods are perfect complements, the indifference curves will

Accepted Answer

A) have a positive slope. 
B) be right angles. 
C) have a constant marginal rate of substitution. 
D) Both b and c are correct. 
A) have a positive slope. 
B) be right angles. 
C) have a constant marginal rate of substitution. 
D) Both b and c are correct.

Question 2

Bundle L contains 10 units of good X and 20 units of good Y. Bundle M contains 8 units of good X and 21 units of good Y. The consumer is indifferent between bundle L and bundle M. Assume that the consumer's preferences satisfy the four properties of indifference curves. Which of the following correctly expresses the marginal rate of substitution of good X for good Y between these two points?

Accepted Answer

A) The consumer will give up 1 unit of good X to gain 2 units of good Y. 
B) The consumer will give up 2 units of good X to gain 1 unit of good Y. 
C) The price of good X is twice as large as the price of good Y. 
D) The price of good X is half as large as the price of good Y. 
A) The consumer will give up 1 unit of good X to gain 2 units of good Y. 
B) The consumer will give up 2 units of good X to gain 1 unit of good Y. 
C) The price of good X is twice as large as the price of good Y. 
D) The price of good X is half as large as the price of good Y.

Question 3

Figure 21-32 The figure shows three indifference curves and a budget constraint for a consumer named Hannah. When young, Hannah works and earns income. When old, she is retired and earns no income.  
-Refer to Figure 21-32. At two of the four labeled points, Hannah is equally happy. Identify those two points.

Accepted Answer

Hannah is

Question 4

Bill consumes two goods: iced tea and spaghetti. The price of iced tea is $2 per bottle, and the price of spaghetti is $8 per serving. His income is $1,000 per month. He spends all of his income each month. He purchases 200 bottles of iced tea. How many servings of spaghetti does he purchase?

Accepted Answer

A) 125 
B) 75 
C) 50 
D) 10 
A) 125 
B) 75 
C) 50 
D) 10

Question 5

Figure 21-4
In each case, the budget constraint moves from BC-1 to BC-2.        
-Refer to Figure 21-4. Which of the graphs in the figure could reflect an increase in income?

Accepted Answer

A) graph a 
B) graph b 
C) graph d 
D) None of the above is correct. 
A) graph a 
B) graph b 
C) graph d 
D) None of the above is correct.

Question 6

Suppose Caroline is indifferent between tea and coffee as long as she consumes an equivalent amount of caffeine. Suppose that coffee has twice as much caffeine as tea. Which graph would illustrate a representative indifference curve?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 7

Figure 21-20
The following graph illustrates a representative consumer's preferences for marshmallows and chocolate chip cookies:  
-Refer to Figure 21-20. Assume that the consumer has an income of $100 and currently optimizes at bundle A. When the price of marshmallows decreases to $5, which bundle will the optimizing consumer choose?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 8

Utility measures the

Accepted Answer

A) income a consumer receives from consuming a bundle of goods. 
B) satisfaction a consumer receives from consuming a bundle of goods. 
C) satisfaction a consumer places on her budget constraint. 
D) All of the above are correct. 
A) income a consumer receives from consuming a bundle of goods. 
B) satisfaction a consumer receives from consuming a bundle of goods. 
C) satisfaction a consumer places on her budget constraint. 
D) All of the above are correct.

Question 9

Figure 21-5
(a)
(b)    
-Refer to Figure 21-5. In graph (a), if income is equal to $200, then the price of good X is

Accepted Answer

A) $12. 
B) $16. 
C) $20. 
D) $24. 
A) $12. 
B) $16. 
C) $20. 
D) $24.

Question 10

The consumer's optimal choice is the one in which the marginal utility per dollar spent on good X is

Accepted Answer

A) equal to the marginal utility per dollar saved on good X. 
B) greater than the marginal utility per dollar spent on good Y. 
C) equal to the marginal utility per dollar spent on good Y. 
D) less than the marginal utility per dollar spent on good Y. 
A) equal to the marginal utility per dollar saved on good X. 
B) greater than the marginal utility per dollar spent on good Y. 
C) equal to the marginal utility per dollar spent on good Y. 
D) less than the marginal utility per dollar spent on good Y.

Question 11

Pete consumes two goods, rice and fish. When the price of fish rises, he consumes less fish. When the price of rice rises, he consumes more rice. For Pete,

Accepted Answer

A) fish is not a Giffen good but rice is. 
B) rice is not a Giffen good but fish is. 
C) both fish and rice are normal goods. 
D) both fish and rice are Giffen goods. 
A) fish is not a Giffen good but rice is. 
B) rice is not a Giffen good but fish is. 
C) both fish and rice are normal goods. 
D) both fish and rice are Giffen goods.

Question 12

A consumer chooses an optimal consumption point where the

Accepted Answer

A) marginal rate of substitution equals the relative price ratio. 
B) slope of the indifference curve exceeds the slope of the budget constraint. 
C) ratios of all the marginal utilities are equal. 
D) All of the above are correct. 
A) marginal rate of substitution equals the relative price ratio. 
B) slope of the indifference curve exceeds the slope of the budget constraint. 
C) ratios of all the marginal utilities are equal. 
D) All of the above are correct.

Question 13

Which of the following is not a property of a typical indifference curve?

Accepted Answer

A) downward sloping 
B) bowed away from the origin 
C) does not intersect another indifference curve 
D) a higher one is preferred to a lower one 
A) downward sloping 
B) bowed away from the origin 
C) does not intersect another indifference curve 
D) a higher one is preferred to a lower one

Question 14

Figure 21-14      
-Refer to Figure 21-14. Which of the graphs illustrates indifference curves for which the marginal rate of substitution is constant?

Accepted Answer

A) graph a 
B) graph b 
C) graph c 
D) All of the above are correct. 
A) graph a 
B) graph b 
C) graph c 
D) All of the above are correct.

Question 15

The marginal rate of substitution is equal to the

Accepted Answer

A) slope of the indifference curve. 
B) ratio of the prices of the two goods. 
C) slope of the budget constraint. 
D) All of the above are correct. 
A) slope of the indifference curve. 
B) ratio of the prices of the two goods. 
C) slope of the budget constraint. 
D) All of the above are correct.

Question 16

The goal of the consumer is to

Accepted Answer

A) maximize utility. 
B) be on the highest indifference curve. 
C) maximize satisfaction. 
D) All of the above are the goals of the consumer. 
A) maximize utility. 
B) be on the highest indifference curve. 
C) maximize satisfaction. 
D) All of the above are the goals of the consumer.

Question 17

Which of the following does not represent a tradeoff facing a consumer?

Accepted Answer

A) choosing to purchase more of all goods 
B) choosing to spend more time on leisure and less time on work 
C) choosing to spend more now and consume less in the future 
D) choosing to purchase less of one good in order to purchase more of another good 
A) choosing to purchase more of all goods 
B) choosing to spend more time on leisure and less time on work 
C) choosing to spend more now and consume less in the future 
D) choosing to purchase less of one good in order to purchase more of another good

Question 18

A consumer's preferences provide a ranking of

Accepted Answer

A) all possible consumption bundles. 
B) only the consumption bundles that fall on the same indifference curve. 
C) consumption bundles based their prices. 
D) consumption bundles based on the consumer's income. 
A) all possible consumption bundles. 
B) only the consumption bundles that fall on the same indifference curve. 
C) consumption bundles based their prices. 
D) consumption bundles based on the consumer's income.

Question 19

​Suppose Raul has budgeted $100 of his monthly income towards two good: t-shirts and jeans. If the price of a pair of jeans is $20 and last month he spent his $100 on a bundle containing 2 pairs of jeans and 12 t-shirts, which of the following is another point on Raul's budget line?

Accepted Answer

A) ​3 pairs of jeans and 16 t-shirts 
B) ​1 pair of jeans and 15 t-shirts 
C) ​3 pairs of jeans and 6 t-shirts 
D) ​0 pairs of jeans and 20 t-shirts 
A) ​3 pairs of jeans and 16 t-shirts 
B) ​1 pair of jeans and 15 t-shirts 
C) ​3 pairs of jeans and 6 t-shirts 
D) ​0 pairs of jeans and 20 t-shirts

Question 20

Figure 21-10  
-Refer to Figure 21-10. Which of the following statements is correct?

Accepted Answer

A) If a consumer moves from bundle C to bundle A, her loss of cake cannot be compensated for by an increase in donuts. 
B) Bundle E is preferred to all other points identified in the figure. 
C) Because more is preferred to less, bundle C may be preferred to bundle E in some circumstances for this consumer. 
D) Even though bundle E has more of both goods than bundle B, we could draw a different set of indifference curves in which bundle B is preferred to bundle E. 
A) If a consumer moves from bundle C to bundle A, her loss of cake cannot be compensated for by an increase in donuts. 
B) Bundle E is preferred to all other points identified in the figure. 
C) Because more is preferred to less, bundle C may be preferred to bundle E in some circumstances for this consumer. 
D) Even though bundle E has more of both goods than bundle B, we could draw a different set of indifference curves in which bundle B is preferred to bundle E.

Exam 21: The Theory of Consumer Choice

When two goods are perfect complements, the indifference curves will

Bill consumes two goods: iced tea and spaghetti. The price of iced tea is $2 per bottle, and the price of spaghetti is $8 per serving. His income is $1,000 per month. He spends all of his income each month. He purchases 200 bottles of iced tea. How many servings of spaghetti does he purchase?

Figure 21-4 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-4. Which of the graphs in the figure could reflect an increase in income?

Suppose Caroline is indifferent between tea and coffee as long as she consumes an equivalent amount of caffeine. Suppose that coffee has twice as much caffeine as tea. Which graph would illustrate a representative indifference curve?

Utility measures the

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a), if income is equal to $200, then the price of good X is

The consumer's optimal choice is the one in which the marginal utility per dollar spent on good X is

Pete consumes two goods, rice and fish. When the price of fish rises, he consumes less fish. When the price of rice rises, he consumes more rice. For Pete,

A consumer chooses an optimal consumption point where the

Which of the following is not a property of a typical indifference curve?

Figure 21-14 -Refer to Figure 21-14. Which of the graphs illustrates indifference curves for which the marginal rate of substitution is constant?

The marginal rate of substitution is equal to the

The goal of the consumer is to

Which of the following does not represent a tradeoff facing a consumer?

A consumer's preferences provide a ranking of

​Suppose Raul has budgeted $100 of his monthly income towards two good: t-shirts and jeans. If the price of a pair of jeans is $20 and last month he spent his $100 on a bundle containing 2 pairs of jeans and 12 t-shirts, which of the following is another point on Raul's budget line?

Figure 21-10 -Refer to Figure 21-10. Which of the following statements is correct?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Suppose Raul has budgeted $100 of his monthly income towards two good: t-shirts and jeans. If the price of a pair of jeans is $20 and last month he spent his $100 on a bundle containing 2 pairs of jeans and 12 t-shirts, which of the following is another point on Raul's budget line?