Question 1

Figure 21-12
  
-Refer to Figure 21-12.Which of the following statements is correct?

Accepted Answer

A)  The consumer prefers bundle Y to bundle Z. 
B)  The consumer is indifference between bundle X and bundle V. 
C)  The consumer prefers bundle Y to bundle X. 
D)  The consumer prefers bundle Z to bundle V. 
A)  The consumer prefers bundle Y to bundle Z. 
B)  The consumer is indifference between bundle X and bundle V. 
C)  The consumer prefers bundle Y to bundle X. 
D)  The consumer prefers bundle Z to bundle V.

Question 2

How are the following three questions related: 1)Do all demand curves slope downward? 2)How do wages affect labor supply? 3)How do interest rates affect household saving?

Accepted Answer

A)  They all relate to macroeconomics. 
B)  They all relate to monetary economics. 
C)  They all relate to the theory of consumer choice. 
D)  They are not related to each other in any way. 
A)  They all relate to macroeconomics. 
B)  They all relate to monetary economics. 
C)  They all relate to the theory of consumer choice. 
D)  They are not related to each other in any way.

Question 3

Suppose Caroline will only drink a cup of coffee if she can add two packets of sugar to it.Which graph would illustrate a representative indifference curve?

Accepted Answer

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

Question 4

Which of the following examples would illustrate a backward-sloping labor supply-curve?

Accepted Answer

A)  An increase in a person's wages results in the person working fewer hours per week. 
B)  A decrease in a person's wages results in the person working more hours per week. 
C)  An increase in a person's wages results in the person working more hours per week. 
D)  Both a and b are correct. 
A)  An increase in a person's wages results in the person working fewer hours per week. 
B)  A decrease in a person's wages results in the person working more hours per week. 
C)  An increase in a person's wages results in the person working more hours per week. 
D)  Both a and b are correct.

Question 5

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 6

A consumer is currently spending all of her available income on two goods: music CDs and DVDs.At her current consumption bundle,she is spending twice as much on CDs as she is on DVDs.If the consumer has $120 of income and is consuming 10 CDs and 2 DVDs,what is the price of a CD?

Accepted Answer

A)  $4 
B)  $8 
C)  $12 
D)  $20 
A)  $4 
B)  $8 
C)  $12 
D)  $20

Question 7

Suppose that Jake likes to consume one glass of milk with every three chocolate chip cookies.For Jake,an additional cookie has no value unless he can consume it with the appropriate proportion of milk.Jake's indifference curves for milk and cookies are

Accepted Answer

A)  right angles. 
B)  bowed inward. 
C)  bowed outward. 
D)  downward-sloping straight lines. 
A)  right angles. 
B)  bowed inward. 
C)  bowed outward. 
D)  downward-sloping straight lines.

Question 8

Answer the following questions based on the table.A consumer is able to consume the following bundles of rice and beans when the price of rice is $2 and the price of beans is $3.
   a.How much is this consumer's income?
b.Draw a budget constraint given this information.Label it B.
c.Construct a new budget constraint showing the change if the price of rice falls $1.Label this C.
d.Given the original prices for rice ($2)and beans ($3),construct a new budget constraint if this consumer's income increased to $48.Label this D.

Accepted Answer

The answer of Answer the following questions based on the...

Question 9

When Jamar has an income of $2,000,he consumes 30 units of good A and 50 units of good B.After Jamar's income decreases to $1,500,he consumes 33 units of good A and 45 units of good B.Which of the following statements is correct?

Accepted Answer

A)  Both goods A and B are normal goods. 
B)  Both goods A and B are inferior goods. 
C)  Good A is a normal good, and good B is an inferior good. 
D)  Good A is an inferior good, and good B is a normal good. 
A)  Both goods A and B are normal goods. 
B)  Both goods A and B are inferior goods. 
C)  Good A is a normal good, and good B is an inferior good. 
D)  Good A is an inferior good, and good B is a normal good.

Question 10

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 11

If goods A and B are perfect substitutes,then the marginal rate of substitution of good A for good B is constant.

Accepted Answer

A) True 
 B)False

Question 12

Kristi spends all of her income on tank tops and running shoes,and the price of a pair of running shoes is four times the price of a tank top.In order to maximize total utility,Kristi should buy

Accepted Answer

A)  four times as many tank tops as pairs of running shoes. 
B)  four times as many pairs of running shoes as tank tops. 
C)  both items until the marginal utility of a pair of running shoes is four times the marginal utility of a tank top. 
D)  both items until the marginal utility of a tank top is four times the marginal utility of a pair of running shoes. 
A)  four times as many tank tops as pairs of running shoes. 
B)  four times as many pairs of running shoes as tank tops. 
C)  both items until the marginal utility of a pair of running shoes is four times the marginal utility of a tank top. 
D)  both items until the marginal utility of a tank top is four times the marginal utility of a pair of running shoes.

Question 13

Suppose a consumer has an income of $800 per month and that she spends her entire income each month on beer and bratwurst.The price of a pint of beer is $5,and the price of a bratwurst is $4.Which of the following combinations of beers and bratwursts represents a point that would lie directly on the consumer's budget constraint?

Accepted Answer

A)  160 beers and 200 bratwursts 
B)  40 beers and 50 bratwursts 
C)  80 beers and 100 bratwursts 
D)  80 beers and 0 bratwursts 
A)  160 beers and 200 bratwursts 
B)  40 beers and 50 bratwursts 
C)  80 beers and 100 bratwursts 
D)  80 beers and 0 bratwursts

Question 14

A rational person can have a negatively-sloped labor supply curve.

Accepted Answer

A) True 
 B)False

Question 15

An optimizing consumer will select a consumption bundle in which

Accepted Answer

A)  income is maximized, and prices are minimized. 
B)  utility is maximized, and prices are minimized. 
C)  utility is maximized, subject to budget constraints. 
D)  utility is maximized, and indifference curves are linear. 
A)  income is maximized, and prices are minimized. 
B)  utility is maximized, and prices are minimized. 
C)  utility is maximized, subject to budget constraints. 
D)  utility is maximized, and indifference curves are linear.

Question 16

The following diagram shows two budget lines: A and B.  
Which of the following could explain the change in the budget line from A to B?

Accepted Answer

A)  a simultaneous decrease in the price of X and the price of Y 
B)  an increase in income 
C)  a decrease in income and a decrease in the price of Y 
D)  Both a and b are correct. 
A)  a simultaneous decrease in the price of X and the price of Y 
B)  an increase in income 
C)  a decrease in income and a decrease in the price of Y 
D)  Both a and b are correct.

Question 17

Assume that a person consumes two goods,Coke and Snickers.Use a graph to demonstrate how the consumer adjusts his/her optimal consumption bundle when the price of Coke decreases.Carefully label all curves and axes.What will happen to consumption if Coke is a normal good? What will happen to consumption if Coke is an inferior good? (Remember to explain the possible change when the income effect dominates and when the substitution effect dominates.)

Accepted Answer

@#IMG-DLM& If Coke is a normal good,the consumptio

Question 18

The substitution effect of an increase in the interest rate will result in an increase in

Accepted Answer

A)  consumption when young and increase in savings when young. 
B)  consumption when old and an increase in savings when young. 
C)  consumption when young and an increase in savings when old. 
D)  savings when old and an increase in consumption when old. 
A)  consumption when young and increase in savings when young. 
B)  consumption when old and an increase in savings when young. 
C)  consumption when young and an increase in savings when old. 
D)  savings when old and an increase in consumption when old.

Question 19

When the indifference curve is tangent to the budget constraint,

Accepted Answer

A)  a consumer cannot be made better off without an increase in her income or a price decrease in one of the goods she consumes. 
B)  the consumer is likely to be at a sub-optimal level of consumption. 
C)  income is at its optimum for a consumer. 
D)  indifference curves are likely to intersect. 
A)  a consumer cannot be made better off without an increase in her income or a price decrease in one of the goods she consumes. 
B)  the consumer is likely to be at a sub-optimal level of consumption. 
C)  income is at its optimum for a consumer. 
D)  indifference curves are likely to intersect.

Question 20

All of the following are properties of typical indifference curves except

Accepted Answer

A)  higher indifference curves are preferred to lower ones. 
B)  indifference curves are downward sloping. 
C)  indifference curves do not cross. 
D)  indifference curves are bowed outward. 
A)  higher indifference curves are preferred to lower ones. 
B)  indifference curves are downward sloping. 
C)  indifference curves do not cross. 
D)  indifference curves are bowed outward.

Figure 21-12 -Refer to Figure 21-12.Which of the following statements is correct?

How are the following three questions related: 1)Do all demand curves slope downward? 2)How do wages affect labor supply? 3)How do interest rates affect household saving?

Suppose Caroline will only drink a cup of coffee if she can add two packets of sugar to it.Which graph would illustrate a representative indifference curve?

Which of the following examples would illustrate a backward-sloping labor supply-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?

A consumer is currently spending all of her available income on two goods: music CDs and DVDs.At her current consumption bundle,she is spending twice as much on CDs as she is on DVDs.If the consumer has $120 of income and is consuming 10 CDs and 2 DVDs,what is the price of a CD?

Suppose that Jake likes to consume one glass of milk with every three chocolate chip cookies.For Jake,an additional cookie has no value unless he can consume it with the appropriate proportion of milk.Jake's indifference curves for milk and cookies are

When Jamar has an income of $2,000,he consumes 30 units of good A and 50 units of good B.After Jamar's income decreases to $1,500,he consumes 33 units of good A and 45 units of good B.Which of the following statements is correct?

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

If goods A and B are perfect substitutes,then the marginal rate of substitution of good A for good B is constant.

Kristi spends all of her income on tank tops and running shoes,and the price of a pair of running shoes is four times the price of a tank top.In order to maximize total utility,Kristi should buy

A rational person can have a negatively-sloped labor supply curve.

An optimizing consumer will select a consumption bundle in which

The following diagram shows two budget lines: A and B. Which of the following could explain the change in the budget line from A to B?

The substitution effect of an increase in the interest rate will result in an increase in

When the indifference curve is tangent to the budget constraint,

All of the following are properties of typical indifference curves except

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.

Application: 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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

Frontiers in Microeconomics.

Filters

Exam 21: The Theory of Consumer Choice.

Figure 21-12 -Refer to Figure 21-12.Which of the following statements is correct?

How are the following three questions related: 1)Do all demand curves slope downward? 2)How do wages affect labor supply? 3)How do interest rates affect household saving?

Suppose Caroline will only drink a cup of coffee if she can add two packets of sugar to it.Which graph would illustrate a representative indifference curve?

Which of the following examples would illustrate a backward-sloping labor supply-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?

A consumer is currently spending all of her available income on two goods: music CDs and DVDs.At her current consumption bundle,she is spending twice as much on CDs as she is on DVDs.If the consumer has $120 of income and is consuming 10 CDs and 2 DVDs,what is the price of a CD?

Suppose that Jake likes to consume one glass of milk with every three chocolate chip cookies.For Jake,an additional cookie has no value unless he can consume it with the appropriate proportion of milk.Jake's indifference curves for milk and cookies are

When Jamar has an income of $2,000,he consumes 30 units of good A and 50 units of good B.After Jamar's income decreases to $1,500,he consumes 33 units of good A and 45 units of good B.Which of the following statements is correct?

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

If goods A and B are perfect substitutes,then the marginal rate of substitution of good A for good B is constant.

Kristi spends all of her income on tank tops and running shoes,and the price of a pair of running shoes is four times the price of a tank top.In order to maximize total utility,Kristi should buy

A rational person can have a negatively-sloped labor supply curve.

An optimizing consumer will select a consumption bundle in which

The following diagram shows two budget lines: A and B. Which of the following could explain the change in the budget line from A to B?

The substitution effect of an increase in the interest rate will result in an increase in

When the indifference curve is tangent to the budget constraint,

All of the following are properties of typical indifference curves except

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.

Application: 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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

Frontiers in Microeconomics.

Filters