Question 1

A good is an inferior good if the consumer buys less of it when

Accepted Answer

A) his income rises. 
B) the price of the good rises. 
C) the price of a substitute good falls. 
D) his income falls. 
A) his income rises. 
B) the price of the good rises. 
C) the price of a substitute good falls. 
D) his income falls.

Question 2

Assume that a college student purchases only Ramen noodles and textbooks. If Ramen noodles are an inferior good and textbooks are a normal good, then the substitution effect associated with a decrease in the price of Ramen noodles, by itself, will result in

Accepted Answer

A) a decrease in the consumption of textbooks and a decrease in the consumption of Ramen noodles. 
B) a decrease in the consumption of textbooks and an increase in the consumption of Ramen noodles. 
C) an increase in the consumption of textbooks and an increase in the consumption of Ramen noodles. 
D) an increase in the consumption of textbooks and a decrease in the consumption of Ramen noodles. 
A) a decrease in the consumption of textbooks and a decrease in the consumption of Ramen noodles. 
B) a decrease in the consumption of textbooks and an increase in the consumption of Ramen noodles. 
C) an increase in the consumption of textbooks and an increase in the consumption of Ramen noodles. 
D) an increase in the consumption of textbooks and a decrease in the consumption of Ramen noodles.

Question 3

Giffen goods are

Accepted Answer

A) normal goods for which the income effect dominates the substitution effect. 
B) normal goods for which the substitution effect dominates the income effect. 
C) inferior goods for which the income effect dominates the substitution effect. 
D) inferior goods for which the substitution effect dominates the income effect. 
A) normal goods for which the income effect dominates the substitution effect. 
B) normal goods for which the substitution effect dominates the income effect. 
C) inferior goods for which the income effect dominates the substitution effect. 
D) inferior goods for which the substitution effect dominates the income effect.

Question 4

The indifference curves for left shoes and right shoes are right angles.

Accepted Answer

A) True 
 B)False

Question 5

Figure 21-29
The figure below illustrates the preferences of a representative consumer, Nathaniel.  
-Refer to Figure 21-29. A change in Nathaniel's optimum from point A to point B results from

Accepted Answer

A) a change in Nathaniel's preferences. 
B) an increase in the income Nathaniel receives when he is young. 
C) an increase in the interest rate. 
D) a decrease in the interest rate. 
A) a change in Nathaniel's preferences. 
B) an increase in the income Nathaniel receives when he is young. 
C) an increase in the interest rate. 
D) a decrease in the interest rate.

Question 6

The theory of consumer choice illustrates the

Accepted Answer

A) importance of property rights in creating efficient markets. 
B) ability of a single economic actor to have a substantial influence on market prices. 
C) the trade-offs that people face in their role as purchasers. 
D) All of the above are correct. 
A) importance of property rights in creating efficient markets. 
B) ability of a single economic actor to have a substantial influence on market prices. 
C) the trade-offs that people face in their role as purchasers. 
D) All of the above are correct.

Question 7

Suppose Dave always uses two lemon wedges with his glass of iced tea. Dave's indifference curves for lemon wedges and iced tea are

Accepted Answer

A) bowed inward. 
B) bowed outward. 
C) straight lines. 
D) L shaped. 
A) bowed inward. 
B) bowed outward. 
C) straight lines. 
D) L shaped.

Question 8

Consumer will always consume more of a good if their income increases.

Accepted Answer

A) True 
 B)False

Question 9

Figure 21-7  
-Refer to Figure 21-7. Suppose a consumer has $200 in income, the price of a book is $5, and the price of a DVD is $10. What is the value of A?

Accepted Answer

A) 40 
B) 20 
C) 10 
D) 2 
A) 40 
B) 20 
C) 10 
D) 2

Question 10

A consumer consumes two normal goods, popcorn and Pepsi. The price of Pepsi rises. The substitution effect, by itself, suggests that the consumer will consume

Accepted Answer

A) more popcorn and more Pepsi. 
B) less popcorn and less Pepsi. 
C) more popcorn and less Pepsi. 
D) less popcorn and more Pepsi. 
A) more popcorn and more Pepsi. 
B) less popcorn and less Pepsi. 
C) more popcorn and less Pepsi. 
D) less popcorn and more Pepsi.

Question 11

Jack and Diane each buy pizza and paperback novels. Pizza costs $3 per slice, and paperback novels cost $5 each. Jack has a budget of $30, and Diane has a budget of $15 to spend on pizza and paperback novels. Which consumer(s) can afford to purchase 5 slices of pizza and 5 paperback novels?

Accepted Answer

A) Jack only 
B) Diane only 
C) both Jack and Diane 
D) neither Jack nor Diane 
A) Jack only 
B) Diane only 
C) both Jack and Diane 
D) neither Jack nor Diane

Question 12

​A decrease in the price of the good on the horizontal axis rotates the budget constraint counterclockwise.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a property of a typical indifference curve?

Accepted Answer

A) upward 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) upward 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 21-24 The figure shows three indifference curves and a budget constraint for a certain consumer named Steve.  
-Refer to Figure 21-24. If Steve's income is $12.60, then the price of a pound of apples is

Accepted Answer

A) $4.50. 
B) $3.85. 
C) $3.00. 
D) $2.80. 
A) $4.50. 
B) $3.85. 
C) $3.00. 
D) $2.80.

Question 15

A consumer's budget constraint for goods X and Y is determined by how much the consumer likes good X relative to good Y.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) $3. 
B) $5. 
C) $7. 
D) $10. 
A) $3. 
B) $5. 
C) $7. 
D) $10.

Question 17

Figure 21-11  
-Refer to Figure 21-11. What is the consumer's marginal rate of substitution?

Accepted Answer

A) 12 
B) 4 
C) 1 
D) We do not have enough information to answer the question because the MRS varies along the graph. 
A) 12 
B) 4 
C) 1 
D) We do not have enough information to answer the question because the MRS varies along the graph.

Question 18

Figure 21-9  
-Refer to Figure 21-9. If the consumer has $600 in income, what is the price of good Y?

Accepted Answer

A) $20 
B) $6 
C) $3 
D) $0.33 
A) $20 
B) $6 
C) $3 
D) $0.33

Question 19

Figure 21-7  
-Refer to Figure 21-7. Suppose the price of a book is $15, the price of a DVD is $10, the value of A is 5, and the value of B is 7.5. How much income does the consumer have?

Accepted Answer

A) $150 
B) $100 
C) $75 
D) $37.50 
A) $150 
B) $100 
C) $75 
D) $37.50

Question 20

Prince is currently consuming some of good X and some of good Y. If good Y is a normal good for Prince, then an increase in his income will definitely cause him to

Accepted Answer

A) increase his consumption of X. 
B) increase his consumption of Y. 
C) decrease his consumption of X. 
D) decrease his consumption of Y. 
A) increase his consumption of X. 
B) increase his consumption of Y. 
C) decrease his consumption of X. 
D) decrease his consumption of Y.

Exam 21: The Theory of Consumer Choice

A good is an inferior good if the consumer buys less of it when

Assume that a college student purchases only Ramen noodles and textbooks. If Ramen noodles are an inferior good and textbooks are a normal good, then the substitution effect associated with a decrease in the price of Ramen noodles, by itself, will result in

Giffen goods are

The indifference curves for left shoes and right shoes are right angles.

Figure 21-29 The figure below illustrates the preferences of a representative consumer, Nathaniel. -Refer to Figure 21-29. A change in Nathaniel's optimum from point A to point B results from

The theory of consumer choice illustrates the

Suppose Dave always uses two lemon wedges with his glass of iced tea. Dave's indifference curves for lemon wedges and iced tea are

Consumer will always consume more of a good if their income increases.

Figure 21-7 -Refer to Figure 21-7. Suppose a consumer has $200 in income, the price of a book is $5, and the price of a DVD is $10. What is the value of A?

A consumer consumes two normal goods, popcorn and Pepsi. The price of Pepsi rises. The substitution effect, by itself, suggests that the consumer will consume

Jack and Diane each buy pizza and paperback novels. Pizza costs $3 per slice, and paperback novels cost $5 each. Jack has a budget of $30, and Diane has a budget of $15 to spend on pizza and paperback novels. Which consumer(s) can afford to purchase 5 slices of pizza and 5 paperback novels?

​A decrease in the price of the good on the horizontal axis rotates the budget constraint counterclockwise.

Which of the following is a property of a typical indifference curve?

Figure 21-24 The figure shows three indifference curves and a budget constraint for a certain consumer named Steve. -Refer to Figure 21-24. If Steve's income is $12.60, then the price of a pound of apples is

A consumer's budget constraint for goods X and Y is determined by how much the consumer likes good X relative to good Y.

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

Figure 21-11 -Refer to Figure 21-11. What is the consumer's marginal rate of substitution?

Figure 21-9 -Refer to Figure 21-9. If the consumer has $600 in income, what is the price of good Y?

Figure 21-7 -Refer to Figure 21-7. Suppose the price of a book is $15, the price of a DVD is $10, the value of A is 5, and the value of B is 7.5. How much income does the consumer have?

Prince is currently consuming some of good X and some of good Y. If good Y is a normal good for Prince, then an increase in his income will definitely cause him to

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

A decrease in the price of the good on the horizontal axis rotates the budget constraint counterclockwise.