Question 1

A consumer is said to be indifferent between two consumption bundles

Accepted Answer

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

Question 2

Convexity of the indifference curve follows from

Accepted Answer

A) the fact that income plays a significant role in consumption and leisure decisions. 
B) the fact that more is preferred to less. 
C) the fact that consumers are indifferent to consumption and leisure goods. 
D) the fact that consumers prefer diversity. 
E) the fact that consumption and leisure are normal goods. 
A) the fact that income plays a significant role in consumption and leisure decisions. 
B) the fact that more is preferred to less. 
C) the fact that consumers are indifferent to consumption and leisure goods. 
D) the fact that consumers prefer diversity. 
E) the fact that consumption and leisure are normal goods.

Question 3

An increase in the real wage

Accepted Answer

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

Question 4

The vertical intercept of the consumer's budget line is equal to

Accepted Answer

A)  $\pi - \mathrm { T }$. 
B)  $w h + \pi - T$. 
C)  $h + \frac { \pi - T } { w }$. 
D)  $w h - T$. 
E)  $c + w ( l - h )$. 
A)  $\pi - \mathrm { T }$. 
B)  $w h + \pi - T$. 
C)  $h + \frac { \pi - T } { w }$. 
D)  $w h - T$. 
E)  $c + w ( l - h )$.

Question 5

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 6

We assume that the representative consumer's preferences exhibit the properties that

Accepted Answer

A) they evolve over time and that more is always preferred to less. 
B) more is preferred to less and that the consumer prefers diversity. 
C) less consumption is preferred to more leisure and that consumption and leisure are both normal goods. 
D) more is sometimes preferred to less and that consumption and leisure are both normal goods. 
E) the consumer likes diversity and that more is sometimes preferred to less. 
A) they evolve over time and that more is always preferred to less. 
B) more is preferred to less and that the consumer prefers diversity. 
C) less consumption is preferred to more leisure and that consumption and leisure are both normal goods. 
D) more is sometimes preferred to less and that consumption and leisure are both normal goods. 
E) the consumer likes diversity and that more is sometimes preferred to less.

Question 7

The following question(s)deal with The Gizmo Company, which has the following production function: $$\begin{array} { | c | c | } 
\hline \text { Number of Workers } & \text { Number of Gizmos Produced } \
\hline 0 & 0 \
\hline 1 & 10 \
\hline 2 & 19 \
\hline 3 & 26 \
\hline 4 & 31 \
\hline 5 & 34 \
\hline
\end{array}$$
-The marginal product of the fourth Gizmo worker hired is

Accepted Answer

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

Question 8

A consumption bundle

Accepted Answer

A) only measures a quantity of goods and services, but not the amount of leisure. 
B) measures the quality of a particular good. 
C) is a method of bringing home consumption goods. 
D) is a particular combination of consumption and leisure. 
E) is a particular combination of work and leisure. 
A) only measures a quantity of goods and services, but not the amount of leisure. 
B) measures the quality of a particular good. 
C) is a method of bringing home consumption goods. 
D) is a particular combination of consumption and leisure. 
E) is a particular combination of work and leisure.

Question 9

The following question(s)deal with The Widget Company, which produces widgets. Widgets are produced according to: $$\begin{array} { | c | c | } 
\hline \text { Number of Widget Workers } & \text { Number of Widgets Produced } \
\hline 0 & 0 \
\hline 1 & 12 \
\hline 2 & 22 \
\hline 3 & 30 \
\hline 4 & 36 \
\hline 5 & 40 \
\hline
\end{array}$$
-If the real wage is equal to 7 widgets, and only an integer number of workers can be hired, The Widget Company should hire

Accepted Answer

A) 2 workers. 
B) 3 workers. 
C) 4 workers. 
D) 5 workers. 
E) 6 workers. 
A) 2 workers. 
B) 3 workers. 
C) 4 workers. 
D) 5 workers. 
E) 6 workers.

Question 10

Moving down the indifference curve, the marginal rate of substitution

Accepted Answer

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

Question 11

The real wage denotes

Accepted Answer

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

Question 12

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 13

In the goal of consumer optimization, it is assumed that

Accepted Answer

A) savings are positive. 
B) the consumer is rational. 
C) the consumer consumes more than his or her disposable income. 
D) consumption equals disposable income. 
E) more is preferred to less. 
A) savings are positive. 
B) the consumer is rational. 
C) the consumer consumes more than his or her disposable income. 
D) consumption equals disposable income. 
E) more is preferred to less.

Question 14

The time constraint for the consumer is

Accepted Answer

A) a result of consumers' busy work schedule. 
B) expressed as leisure time + time spent working = total time available. 
C) the amount of time for decision making. 
D) expressed as leisure time - time spent working = total time available. 
E) expressed as leisure time - sleep time = time spent working. 
A) a result of consumers' busy work schedule. 
B) expressed as leisure time + time spent working = total time available. 
C) the amount of time for decision making. 
D) expressed as leisure time - time spent working = total time available. 
E) expressed as leisure time - sleep time = time spent working.

A consumer is said to be indifferent between two consumption bundles

Convexity of the indifference curve follows from

An increase in the real wage

The vertical intercept of the consumer's budget line is equal to

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

We assume that the representative consumer's preferences exhibit the properties that

The following question(s)deal with The Gizmo Company, which has the following production function: Number of Workers Number of Gizmos Produced 0 0 1 10 2 19 3 26 4 31 5 34 -The marginal product of the fourth Gizmo worker hired is

A consumption bundle

Moving down the indifference curve, the marginal rate of substitution

The real wage denotes

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

In the goal of consumer optimization, it is assumed that

The time constraint for the consumer is

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 Consumptionsavings Decision and Credit Markets

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

A Real Intertemporal Model With Investment

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 Behavior: the Workleisure Decision and Profit Maximization

A consumer is said to be indifferent between two consumption bundles

Convexity of the indifference curve follows from

An increase in the real wage

The vertical intercept of the consumer's budget line is equal to

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

We assume that the representative consumer's preferences exhibit the properties that

The following question(s)deal with The Gizmo Company, which has the following production function: Number of Workers Number of Gizmos Produced 0 0 1 10 2 19 3 26 4 31 5 34 -The marginal product of the fourth Gizmo worker hired is

A consumption bundle

Moving down the indifference curve, the marginal rate of substitution

The real wage denotes

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

In the goal of consumer optimization, it is assumed that

The time constraint for the consumer is

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 Consumptionsavings Decision and Credit Markets

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

A Real Intertemporal Model With Investment

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