Question 1

A budget line

Accepted Answer

A)  represents combinations of goods a consumer desires. 
B)  marks the boundary between what a consumer can afford and cannot afford. 
C)  has a positive slope. 
D)  is the same as the production possibilities frontier. 
E)  is the same as a demand curve. 
A)  represents combinations of goods a consumer desires. 
B)  marks the boundary between what a consumer can afford and cannot afford. 
C)  has a positive slope. 
D)  is the same as the production possibilities frontier. 
E)  is the same as a demand curve.

Question 2

Reb buys fishing lures and steaks.If his budget does not change and the price of a fishing lure decreases,the maximum number of fishing lures he can purchase ________ and the maximum number of steaks he can purchase ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  increases; does not change 
D)  decreases; increases 
E)  does not change; does not change 
A)  increases; increases 
B)  increases; decreases 
C)  increases; does not change 
D)  decreases; increases 
E)  does not change; does not change

Question 3

In an indifference curve/budget line diagram,at the consumer equilibrium the slope of the budget line

Accepted Answer

A)  equals the slope of the indifference curve. 
B)  is greater than the slope of the indifference curve. 
C)  is less than the slope of the indifference curve. 
D)  may be greater than, equal to, or less than the slope of the indifference curve. 
E)  has nothing to do with the equilibrium. 
A)  equals the slope of the indifference curve. 
B)  is greater than the slope of the indifference curve. 
C)  is less than the slope of the indifference curve. 
D)  may be greater than, equal to, or less than the slope of the indifference curve. 
E)  has nothing to do with the equilibrium.

Question 4

Joe has $100 a week to purchase either computer online service or film for his other hobby,photography.The price of on-line service is $5 an hour while the price of film is $10 a roll.Draw Joe's budget line in the figure below.

Accepted Answer

@#IMG-DLM& Joe's budget line i

Question 5

The budget line is the boundary between

Accepted Answer

A)  preferred and nonpreferred consumption combinations. 
B)  affordable and unaffordable consumption combinations. 
C)  goods and bads. 
D)  income and expenditure. 
E)  income and consumption. 
A)  preferred and nonpreferred consumption combinations. 
B)  affordable and unaffordable consumption combinations. 
C)  goods and bads. 
D)  income and expenditure. 
E)  income and consumption.

Question 6

A consumer's demand for tuna can be found from an indifference curve diagram by doing which of the following?

Accepted Answer

A)  observing what happens to the consumption of tuna for different income levels 
B)  finding where the budget line is tangent to an indifference curve for one price of tuna 
C)  allowing the price of tuna to change and observing the different best, affordable levels of tuna 
D)  changing the indifference curves and seeing the changes in the quantity of tuna the consumer demands 
E)  it is impossible to derive a demand curve from an indifference curve graph 
A)  observing what happens to the consumption of tuna for different income levels 
B)  finding where the budget line is tangent to an indifference curve for one price of tuna 
C)  allowing the price of tuna to change and observing the different best, affordable levels of tuna 
D)  changing the indifference curves and seeing the changes in the quantity of tuna the consumer demands 
E)  it is impossible to derive a demand curve from an indifference curve graph

Question 7

-The table above gives Sam's marginal utility schedule for bananas and apples.Sam's fruit budget is $10.
a.If bananas cost $1 per pound and apples cost $2 per bag,what is Sam's marginal utility per dollar for all quantities of both goods?
b.What is the utility maximizing combination of bananas and apples for Sam?
c.If the price of bananas increases to $2 per pound,how does Sam's marginal utility per dollar for bananas change?
d.At the banana price of $2 per pound,what is the new utility maximizing combination of bananas and apples for Sam?
e.List two points on Sam's demand curve for bananas.

Accepted Answer

@#IMG-DLM& 
a.The table above has Sam's marginal u

Question 8

If a budget line rotates inward and becomes steeper,then the

Accepted Answer

A)  consumer's budget decreased. 
B)  consumer's budget increased. 
C)  price of one of the goods decreased. 
D)  price of one of the goods increased. 
E)  price of both of the goods must have decreased. 
A)  consumer's budget decreased. 
B)  consumer's budget increased. 
C)  price of one of the goods decreased. 
D)  price of one of the goods increased. 
E)  price of both of the goods must have decreased.

Question 9

Suppose Alice spends her budget on books and downloaded movies.If her budget does not change and the price of a book stays the same but the price of a downloaded movie falls,her budget line

Accepted Answer

A)  shifts outward and its slope does not change. 
B)  shifts inward and its slope does not change. 
C)  rotates inward and its slope changes. 
D)  rotates outward and its slope changes. 
E)  does not change because her budget has not changed. 
A)  shifts outward and its slope does not change. 
B)  shifts inward and its slope does not change. 
C)  rotates inward and its slope changes. 
D)  rotates outward and its slope changes. 
E)  does not change because her budget has not changed.

Question 10

The slope of the budget line represents an opportunity cost because,moving along the line,

Accepted Answer

A)  income is increasing. 
B)  income is decreasing. 
C)  additional income must be earned in order to purchase more of one good. 
D)  a consumer must give up some of one good in order to get more of the other. 
E)  it is possible to consume more of both goods. 
A)  income is increasing. 
B)  income is decreasing. 
C)  additional income must be earned in order to purchase more of one good. 
D)  a consumer must give up some of one good in order to get more of the other. 
E)  it is possible to consume more of both goods.

Question 11

For a consumer,the marginal utility of good A is 25 and its price is $5.The marginal utility of good B is 60 and its price is $12.The consumer has allocated his entire budget.Is this consumer maximizing his total utility? Explain your answer.

Accepted Answer

Yes,the consumer is maximizing his utili

Question 12

If the slope of the budget line changes,there must have been

Accepted Answer

A)  a change in the consumer's preferences. 
B)  an increase in the consumer's income. 
C)  a change in the price of at least one good. 
D)  a change in the price of both goods. 
E)  None of these could cause a change in the slope of the budget line. 
A)  a change in the consumer's preferences. 
B)  an increase in the consumer's income. 
C)  a change in the price of at least one good. 
D)  a change in the price of both goods. 
E)  None of these could cause a change in the slope of the budget line.

Question 13

A preference map is a set of

Accepted Answer

A)  indifference curves. 
B)  budget lines. 
C)  demand curves. 
D)  substitution curves. 
E)  marginal rate of substitution curves. 
A)  indifference curves. 
B)  budget lines. 
C)  demand curves. 
D)  substitution curves. 
E)  marginal rate of substitution curves.

Question 14

The point where an indifference curve just touches the budget line at one point

Accepted Answer

A)  is the best affordable point. 
B)  is where the marginal rate of substitution exceeds the relative price by as much as possible. 
C)  is a point on the consumer's supply of spending curve. 
D)  cannot be possible because indifference curves always cross the budget line at two points. 
E)  None of the above answers is correct. 
A)  is the best affordable point. 
B)  is where the marginal rate of substitution exceeds the relative price by as much as possible. 
C)  is a point on the consumer's supply of spending curve. 
D)  cannot be possible because indifference curves always cross the budget line at two points. 
E)  None of the above answers is correct.

Question 15

Does the fact that diamonds are so expensive imply that the demand curve for diamonds has a positive slope? Use marginal utility theory to answer the question.

Accepted Answer

No.In order for the demand curve for dia

Question 16

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,how many bottles of soda does he buy?

Accepted Answer

A)  fewer than 3 
B)  3 
C)  4 
D)  5 
E)  more than 5 
A)  fewer than 3 
B)  3 
C)  4 
D)  5 
E)  more than 5

Question 17

Points on a demand curve

Accepted Answer

A)  reflect best affordable points along indifference curves. 
B)  show diminishing marginal rate of substitution. 
C)  show increasing marginal rate of substitution. 
D)  show combinations of goods among which a consumer is indifferent. 
E)  show all the combinations of affordable goods the consumer can buy. 
A)  reflect best affordable points along indifference curves. 
B)  show diminishing marginal rate of substitution. 
C)  show increasing marginal rate of substitution. 
D)  show combinations of goods among which a consumer is indifferent. 
E)  show all the combinations of affordable goods the consumer can buy.

Question 18

A point where the budget line is just touching an indifference curve at one point is

Accepted Answer

A)  the least affordable point. 
B)  the best affordable point. 
C)  on the lowest attainable indifference curve. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct. 
A)  the least affordable point. 
B)  the best affordable point. 
C)  on the lowest attainable indifference curve. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct.

Question 19

-Which of the above figures reflects an increase in the price of chicken?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
E)  Both Figure B and Figure C 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
E)  Both Figure B and Figure C

Question 20

-The above table shows Homer's utility from boxes of doughnuts.As Homer's consumption of doughnuts increases,his

Accepted Answer

A)  marginal utility is positive and increasing. 
B)  marginal utility is positive but decreasing. 
C)  marginal utility is negative but increasing. 
D)  marginal utility is negative and decreasing. 
E)  total utility is not related to his marginal utility. 
A)  marginal utility is positive and increasing. 
B)  marginal utility is positive but decreasing. 
C)  marginal utility is negative but increasing. 
D)  marginal utility is negative and decreasing. 
E)  total utility is not related to his marginal utility.

A budget line

Reb buys fishing lures and steaks.If his budget does not change and the price of a fishing lure decreases,the maximum number of fishing lures he can purchase and the maximum number of steaks he can purchase .

In an indifference curve/budget line diagram,at the consumer equilibrium the slope of the budget line

Joe has $100 a week to purchase either computer online service or film for his other hobby,photography.The price of on-line service is $5 an hour while the price of film is $10 a roll.Draw Joe's budget line in the figure below.

The budget line is the boundary between

A consumer's demand for tuna can be found from an indifference curve diagram by doing which of the following?

If a budget line rotates inward and becomes steeper,then the

Suppose Alice spends her budget on books and downloaded movies.If her budget does not change and the price of a book stays the same but the price of a downloaded movie falls,her budget line

The slope of the budget line represents an opportunity cost because,moving along the line,

For a consumer,the marginal utility of good A is 25 and its price is $5.The marginal utility of good B is 60 and its price is $12.The consumer has allocated his entire budget.Is this consumer maximizing his total utility? Explain your answer.

If the slope of the budget line changes,there must have been

A preference map is a set of

The point where an indifference curve just touches the budget line at one point

Does the fact that diamonds are so expensive imply that the demand curve for diamonds has a positive slope? Use marginal utility theory to answer the question.

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,how many bottles of soda does he buy?

Points on a demand curve

A point where the budget line is just touching an indifference curve at one point is

-Which of the above figures reflects an increase in the price of chicken?

-The above table shows Homer's utility from boxes of doughnuts.As Homer's consumption of doughnuts increases,his

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

A budget line

Reb buys fishing lures and steaks.If his budget does not change and the price of a fishing lure decreases,the maximum number of fishing lures he can purchase ________ and the maximum number of steaks he can purchase ________.

In an indifference curve/budget line diagram,at the consumer equilibrium the slope of the budget line

Joe has $100 a week to purchase either computer online service or film for his other hobby,photography.The price of on-line service is $5 an hour while the price of film is $10 a roll.Draw Joe's budget line in the figure below.

The budget line is the boundary between

A consumer's demand for tuna can be found from an indifference curve diagram by doing which of the following?

If a budget line rotates inward and becomes steeper,then the

Suppose Alice spends her budget on books and downloaded movies.If her budget does not change and the price of a book stays the same but the price of a downloaded movie falls,her budget line

The slope of the budget line represents an opportunity cost because,moving along the line,

For a consumer,the marginal utility of good A is 25 and its price is $5.The marginal utility of good B is 60 and its price is $12.The consumer has allocated his entire budget.Is this consumer maximizing his total utility? Explain your answer.

If the slope of the budget line changes,there must have been

A preference map is a set of

The point where an indifference curve just touches the budget line at one point

Does the fact that diamonds are so expensive imply that the demand curve for diamonds has a positive slope? Use marginal utility theory to answer the question.

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,how many bottles of soda does he buy?

Points on a demand curve

A point where the budget line is just touching an indifference curve at one point is

-Which of the above figures reflects an increase in the price of chicken?

-The above table shows Homer's utility from boxes of doughnuts.As Homer's consumption of doughnuts increases,his

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

Reb buys fishing lures and steaks.If his budget does not change and the price of a fishing lure decreases,the maximum number of fishing lures he can purchase and the maximum number of steaks he can purchase .