Question 1

What is the marginal rate of substitution and how does it relate to an indifference curve?

Accepted Answer

The marginal rate of substitution is the

Question 2

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each,steaks cost $10 each.If Reb purchases 124 lures per week,how many steaks can he buy?

Accepted Answer

A)  620 
B)  38 
C)  123 
D)  380 
E)  100 
A)  620 
B)  38 
C)  123 
D)  380 
E)  100

Question 3

The figure above shows three budget lines.
-Based on the figure above,which of the following would lead the consumer's budget line to shift from BL₀ to BL₁?

Accepted Answer

A)  A rise in the price of water. 
B)  A fall in the price of water. 
C)  A rise in the price of water and the price of gum. 
D)  A decrease in the consumer's budget. 
E)  An increase in the consumer's budget. 
A)  A rise in the price of water. 
B)  A fall in the price of water. 
C)  A rise in the price of water and the price of gum. 
D)  A decrease in the consumer's budget. 
E)  An increase in the consumer's budget.

Question 4

Consider an indifference curve for sodas and pizza,drawn in a figure with sodas measured along the horizontal axis.Moving downward along the indifference curve,the

Accepted Answer

A)  marginal utility per dollar for sodas must increase. 
B)  marginal utility per dollar for pizza must increase. 
C)  consumer remains indifferent among the different combinations of soda and pizza. 
D)  the level of total utility must change. 
E)  marginal rate of substitution is constant. 
A)  marginal utility per dollar for sodas must increase. 
B)  marginal utility per dollar for pizza must increase. 
C)  consumer remains indifferent among the different combinations of soda and pizza. 
D)  the level of total utility must change. 
E)  marginal rate of substitution is constant.

Question 5

-The table above gives Matt's utility from consuming slices of pizza.His marginal utility from the 4th slice is

Accepted Answer

A)  30 units. 
B)  3 units. 
C)  94 units. 
D)  23.5 units. 
E)  7.5 units. 
A)  30 units. 
B)  3 units. 
C)  94 units. 
D)  23.5 units. 
E)  7.5 units.

Question 6

An increase in the price of a good

Accepted Answer

A)  rotates the budget line inward and changes its slope. 
B)  rotates the budget line outward and changes its slope. 
C)  results in a movement downward along the budget line. 
D)  results in a movement upward along the budget line. 
E)  shifts the budget line inward and does not change its slope. 
A)  rotates the budget line inward and changes its slope. 
B)  rotates the budget line outward and changes its slope. 
C)  results in a movement downward along the budget line. 
D)  results in a movement upward along the budget line. 
E)  shifts the budget line inward and does not change its slope.

Question 7

Which of the following describes what happens to a consumer's budget line if that consumer's budget increases? The budget line

Accepted Answer

A)  becomes steeper. 
B)  becomes more horizontal. 
C)  shifts farther away from the origin of the graph. 
D)  shifts closer to the origin of the graph. 
E)  does not change. 
A)  becomes steeper. 
B)  becomes more horizontal. 
C)  shifts farther away from the origin of the graph. 
D)  shifts closer to the origin of the graph. 
E)  does not change.

Question 8

As a consumer moves away from the origin onto higher indifference curves,what happens?

Accepted Answer

A)  Nothing 
B)  The consumer reaches more preferred combinations of goods. 
C)  The consumer reaches less preferred combinations of goods. 
D)  The consumer reaches more affordable combinations of goods. 
E)  None of the above because it is impossible to move from one indifference curve to another. 
A)  Nothing 
B)  The consumer reaches more preferred combinations of goods. 
C)  The consumer reaches less preferred combinations of goods. 
D)  The consumer reaches more affordable combinations of goods. 
E)  None of the above because it is impossible to move from one indifference curve to another.

Question 9

-Give the data in the above table,what is the marginal utility of the fourth quart of ice cream?

Accepted Answer

A)  210 
B)  50 
C)  60 
D)  65 
E)  260 
A)  210 
B)  50 
C)  60 
D)  65 
E)  260

Question 10

Utility is the

Accepted Answer

A)  benefit or satisfaction that a person gets from the consumption of a good or service. 
B)  measure of how useful a resource is in the production process. 
C)  measure of productivity associated with a good or service. 
D)  economic term for consumption possibilities. 
E)  economic term for how changes in price affect a consumer's purchases. 
A)  benefit or satisfaction that a person gets from the consumption of a good or service. 
B)  measure of how useful a resource is in the production process. 
C)  measure of productivity associated with a good or service. 
D)  economic term for consumption possibilities. 
E)  economic term for how changes in price affect a consumer's purchases.

Question 11

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.The marginal utility of which clove of garlic is the largest?

Accepted Answer

A)  the first clove 
B)  the second clove 
C)  the fifth clove 
D)  the third clove 
E)  The marginal utility of all cloves is the same. 
A)  the first clove 
B)  the second clove 
C)  the fifth clove 
D)  the third clove 
E)  The marginal utility of all cloves is the same.

Question 12

-Suppose that you consume only pizza,which costs $4 per slice,and Diet Pepsi,which costs $2 each.The table above gives your utility from consuming these two goods.If your income is $20,which of the following consumption combinations will you choose?

Accepted Answer

A)  5 slices of pizza and no Diet Pepsi 
B)  4 slices of pizza and 2 Diet Pepsis 
C)  3 slices of pizza and 4 Diet Pepsis 
D)  2 slice of pizza and 6 Diet Pepsis 
E)  None of the above answers are correct. 
A)  5 slices of pizza and no Diet Pepsi 
B)  4 slices of pizza and 2 Diet Pepsis 
C)  3 slices of pizza and 4 Diet Pepsis 
D)  2 slice of pizza and 6 Diet Pepsis 
E)  None of the above answers are correct.

Question 13

Gertrude has a $15 budget to spend on soda and crackers.Soda costs $1 per bottle and crackers cost 50¢ each.If the price of soda increases to $2 per bottle,the ________ rotates inward and there is a movement along the ________.

Accepted Answer

A)  budget line; demand curve for crackers 
B)  demand curve; indifference curve for crackers 
C)  budget line; demand curve for soda 
D)  demand curve; indifference curve for soda 
E)  indifference curves; demand curve for soda 
A)  budget line; demand curve for crackers 
B)  demand curve; indifference curve for crackers 
C)  budget line; demand curve for soda 
D)  demand curve; indifference curve for soda 
E)  indifference curves; demand curve for soda

Question 14

An indifference curve is a line that shows

Accepted Answer

A)  combinations of goods among which a consumer is indifferent. 
B)  different combinations of goods a consumer is able to buy. 
C)  the indifference of consumers for the budget constraint. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct. 
A)  combinations of goods among which a consumer is indifferent. 
B)  different combinations of goods a consumer is able to buy. 
C)  the indifference of consumers for the budget constraint. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct.

Question 15

A budget line shows the

Accepted Answer

A)  limits to production possibilities. 
B)  limits to production opportunities. 
C)  slope of the demand curve. 
D)  limits to consumption possibilities. 
E)  way the demand curve shifts if the consumer's budget changes. 
A)  limits to production possibilities. 
B)  limits to production opportunities. 
C)  slope of the demand curve. 
D)  limits to consumption possibilities. 
E)  way the demand curve shifts if the consumer's budget changes.

Question 16

-"Every point on a demand curve represents a consumer equilibrium in the indifference curve model." Explain why the previous statement is correct or not.

Accepted Answer

The statement is correct.The demand curv

Question 17

Bottles of Soda Slices of Pizza
  
-The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.The price of pizza is $2 per slice and the price of soda is $1 per bottle.Ali has $14 in his budget.When Ali maximizes his utility,his total utility equals

Accepted Answer

A)  6. 
B)  9. 
C)  69. 
D)  61. 
E)  None of the above answers is correct. 
A)  6. 
B)  9. 
C)  69. 
D)  61. 
E)  None of the above answers is correct.

Question 18

-The table above has different combinations of hamburgers and hot dogs that Alex can buy.After labeling the axes,graph Alex's budget line in the figure,putting hot dogs on the x-axis.
   
a.Alex's income is $8 per day.What is the price of a hot dog? Of a hamburger?
b.What is the slope of the budget line?

Accepted Answer

@#IMG-DLM& 
The figure above has Alex's

Question 19

Moving along an indifference curve,if a consumer requires a small amount of the good measured along the y-axis to make up for one unit less of the good measured on the x-axis,then

Accepted Answer

A)  total utility is increasing. 
B)  the marginal rate of substitution is low and the indifference curve is flat. 
C)  the marginal rate of substitution is low and the indifference curve is steep. 
D)  the marginal rate of substitution is high and the indifference curve is steep. 
E)  the marginal rate of substitution is high and the indifference curve is flat. 
A)  total utility is increasing. 
B)  the marginal rate of substitution is low and the indifference curve is flat. 
C)  the marginal rate of substitution is low and the indifference curve is steep. 
D)  the marginal rate of substitution is high and the indifference curve is steep. 
E)  the marginal rate of substitution is high and the indifference curve is flat.

Question 20

What is the difference between a budget line and an indifference curve?

Accepted Answer

A)  One is measured in dollars while the other in units of goods. 
B)  One shows what is possible while the other shows what is preferred. 
C)  One shows a positive relationship and the other shows a negative relationship. 
D)  The budget line is bowed in toward the origin and the indifference curves are linear. 
E)  There is no difference. 
A)  One is measured in dollars while the other in units of goods. 
B)  One shows what is possible while the other shows what is preferred. 
C)  One shows a positive relationship and the other shows a negative relationship. 
D)  The budget line is bowed in toward the origin and the indifference curves are linear. 
E)  There is no difference.

What is the marginal rate of substitution and how does it relate to an indifference curve?

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each,steaks cost $10 each.If Reb purchases 124 lures per week,how many steaks can he buy?

The figure above shows three budget lines. -Based on the figure above,which of the following would lead the consumer's budget line to shift from BL₀ to BL₁?

Consider an indifference curve for sodas and pizza,drawn in a figure with sodas measured along the horizontal axis.Moving downward along the indifference curve,the

-The table above gives Matt's utility from consuming slices of pizza.His marginal utility from the 4th slice is

An increase in the price of a good

Which of the following describes what happens to a consumer's budget line if that consumer's budget increases? The budget line

As a consumer moves away from the origin onto higher indifference curves,what happens?

-Give the data in the above table,what is the marginal utility of the fourth quart of ice cream?

Utility is the

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.The marginal utility of which clove of garlic is the largest?

-Suppose that you consume only pizza,which costs $4 per slice,and Diet Pepsi,which costs $2 each.The table above gives your utility from consuming these two goods.If your income is $20,which of the following consumption combinations will you choose?

Gertrude has a $15 budget to spend on soda and crackers.Soda costs $1 per bottle and crackers cost 50¢ each.If the price of soda increases to $2 per bottle,the rotates inward and there is a movement along the .

An indifference curve is a line that shows

A budget line shows the

-"Every point on a demand curve represents a consumer equilibrium in the indifference curve model." Explain why the previous statement is correct or not.

Bottles of Soda Slices of Pizza -The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.The price of pizza is $2 per slice and the price of soda is $1 per bottle.Ali has $14 in his budget.When Ali maximizes his utility,his total utility equals

Moving along an indifference curve,if a consumer requires a small amount of the good measured along the y-axis to make up for one unit less of the good measured on the x-axis,then

What is the difference between a budget line and an indifference curve?

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 13: Consumer Choice and Demand

What is the marginal rate of substitution and how does it relate to an indifference curve?

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each,steaks cost $10 each.If Reb purchases 124 lures per week,how many steaks can he buy?

The figure above shows three budget lines. -Based on the figure above,which of the following would lead the consumer's budget line to shift from BL₀ to BL₁?

Consider an indifference curve for sodas and pizza,drawn in a figure with sodas measured along the horizontal axis.Moving downward along the indifference curve,the

-The table above gives Matt's utility from consuming slices of pizza.His marginal utility from the 4th slice is

An increase in the price of a good

Which of the following describes what happens to a consumer's budget line if that consumer's budget increases? The budget line

As a consumer moves away from the origin onto higher indifference curves,what happens?

-Give the data in the above table,what is the marginal utility of the fourth quart of ice cream?

Utility is the

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.The marginal utility of which clove of garlic is the largest?

-Suppose that you consume only pizza,which costs $4 per slice,and Diet Pepsi,which costs $2 each.The table above gives your utility from consuming these two goods.If your income is $20,which of the following consumption combinations will you choose?

Gertrude has a $15 budget to spend on soda and crackers.Soda costs $1 per bottle and crackers cost 50¢ each.If the price of soda increases to $2 per bottle,the ________ rotates inward and there is a movement along the ________.

An indifference curve is a line that shows

A budget line shows the

-"Every point on a demand curve represents a consumer equilibrium in the indifference curve model." Explain why the previous statement is correct or not.

Bottles of Soda Slices of Pizza -The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.The price of pizza is $2 per slice and the price of soda is $1 per bottle.Ali has $14 in his budget.When Ali maximizes his utility,his total utility equals

Moving along an indifference curve,if a consumer requires a small amount of the good measured along the y-axis to make up for one unit less of the good measured on the x-axis,then

What is the difference between a budget line and an indifference curve?

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Gertrude has a $15 budget to spend on soda and crackers.Soda costs $1 per bottle and crackers cost 50¢ each.If the price of soda increases to $2 per bottle,the rotates inward and there is a movement along the .