Question 1

If food is measured on the horizontal axis of a budget line diagram,and clothing is measured on the vertical axis,the slope of the budget line

Accepted Answer

A) may be positive if the price of clothing is high enough 
B) may be positive if the price of food is high enough 
C) may be positive if income is large enough 
D) equals the maximum consumption of food divided by the maximum consumption of clothing times -1 
E) equals the maximum consumption of clothing divided by the maximum consumption of food times -1 
A) may be positive if the price of clothing is high enough 
B) may be positive if the price of food is high enough 
C) may be positive if income is large enough 
D) equals the maximum consumption of food divided by the maximum consumption of clothing times -1 
E) equals the maximum consumption of clothing divided by the maximum consumption of food times -1

Question 2

The theory of consumer demand

Accepted Answer

A) can be used to explain how an individual allocates time between two competing uses 
B) is valid only for choices among various physical goods 
C) is valid only for goods and services purchased for cash 
D) is valid only if consumers are perfectly rational 
E) can explain the demand for normal goods,but not the demand for inferior goods 
A) can be used to explain how an individual allocates time between two competing uses 
B) is valid only for choices among various physical goods 
C) is valid only for goods and services purchased for cash 
D) is valid only if consumers are perfectly rational 
E) can explain the demand for normal goods,but not the demand for inferior goods

Question 3

If the price of bread were zero,a budget line between bread (on the vertical axis)and cheese (on the horizontal axis)would

Accepted Answer

A) not exist 
B) be vertical 
C) coincide with the vertical axis 
D) be horizontal 
E) coincide with the horizontal axis 
A) not exist 
B) be vertical 
C) coincide with the vertical axis 
D) be horizontal 
E) coincide with the horizontal axis

Question 4

A rational consumer who prefers one apple to two oranges,and two oranges to one orange,

Accepted Answer

A) must prefer two oranges to one apple 
B) must prefer one apple to one orange 
C) must prefer two oranges to two apples 
D) must be indifferent between two oranges and two apples 
E) might prefer one orange to one apple 
A) must prefer two oranges to one apple 
B) must prefer one apple to one orange 
C) must prefer two oranges to two apples 
D) must be indifferent between two oranges and two apples 
E) might prefer one orange to one apple

Question 5

For an inferior good,a rise in price causes

Accepted Answer

A) negative income and substitution effects 
B) positive income and substitution effects 
C) a negative income effect and a positive substitution effect 
D) a positive income effect and a negative substitution effect 
E) a positive income effect,but no substitution effect 
A) negative income and substitution effects 
B) positive income and substitution effects 
C) a negative income effect and a positive substitution effect 
D) a positive income effect and a negative substitution effect 
E) a positive income effect,but no substitution effect

Question 6

The change in total utility arising from a one-unit increase in consumption of a good is referred to as

Accepted Answer

A) average utility 
B) the principle of diminishing marginal utility 
C) real income 
D) marginal utility 
E) price 
A) average utility 
B) the principle of diminishing marginal utility 
C) real income 
D) marginal utility 
E) price

Question 7

-Suppose that a consumer used to be at point R on budget line AA' in Figure 6-5,and is now at point S on line BB'.Which of the following is true if the consumer enjoys both goods?

Accepted Answer

A) The utility level at point S is higher than at point R. 
B) Good X is an inferior good. 
C) The consumer's income fell. 
D) The price of X rose. 
E) The utility level at point S is lower than at point R. 
A) The utility level at point S is higher than at point R. 
B) Good X is an inferior good. 
C) The consumer's income fell. 
D) The price of X rose. 
E) The utility level at point S is lower than at point R.

Question 8

Steve buys Pepsi at $.60 per can and orange juice at $1.20 per can.In consumer equilibrium,

Accepted Answer

A) orange juice would yield a higher marginal utility per dollar spent than Pepsi would 
B) he will consume twice as much Pepsi as orange juice 
C) he will consume more orange juice than Pepsi 
D) total utility from orange juice is twice that from Pepsi 
E) his last can of orange juice would generate a higher marginal utility than his last can of Pepsi 
A) orange juice would yield a higher marginal utility per dollar spent than Pepsi would 
B) he will consume twice as much Pepsi as orange juice 
C) he will consume more orange juice than Pepsi 
D) total utility from orange juice is twice that from Pepsi 
E) his last can of orange juice would generate a higher marginal utility than his last can of Pepsi

Question 9

The market demand curve for a good is found by

Accepted Answer

A) adding up the quantities demanded by all consumers at different prices of that good 
B) adding up the quantities demanded by all consumers at different incomes 
C) adding up the maximum price each consumer is willing to pay for each possible quantity of the good 
D) varying consumers' total income and determining what prices they are willing to pay 
E) vertically summing the individual consumers' demand curves 
A) adding up the quantities demanded by all consumers at different prices of that good 
B) adding up the quantities demanded by all consumers at different incomes 
C) adding up the maximum price each consumer is willing to pay for each possible quantity of the good 
D) varying consumers' total income and determining what prices they are willing to pay 
E) vertically summing the individual consumers' demand curves

Question 10

The ratio of the prices of two goods multiplied by -1 is equal to the slope of the budget line.

Accepted Answer

A) True 
 B)False

Question 11

Lin is maximizing total utility while consuming food and clothing.Her marginal utilities of food and clothing are 50 utils and 25 utils,respectively.If clothing is priced at $10 per unit,the price of a unit of food

Accepted Answer

A) must be rising 
B) must be falling 
C) must equal $10 as well 
D) must equal $20 
E) cannot be determined without additional information. 
A) must be rising 
B) must be falling 
C) must equal $10 as well 
D) must equal $20 
E) cannot be determined without additional information.

Question 12

As Reba consumes four slices of pizza,her total utility rises from 0 to 18,to 24,to 28,and to 30,respectively.What is her marginal utility of the fourth slice of pizza?

Accepted Answer

A) 28 
B) 24 
C) 2 
D) 7 
E) 8 
A) 28 
B) 24 
C) 2 
D) 7 
E) 8

Question 13

Suppose that Trey spends all of his income on vacation trips and textbooks.If the price of a trip is $200 and the price of a textbook is $50,then the slope of his budget line (assuming vacation trips are measured on the vertical axis)would be

Accepted Answer

A) -4 
B) 4 
C) 0.25 
D) -1.75 
E) -0.25 
A) -4 
B) 4 
C) 0.25 
D) -1.75 
E) -0.25

Question 14

In allocating time between competing uses,

Accepted Answer

A) an individual will try to maximize marginal utility per hour spent on one activity 
B) time is considered a free good 
C) an individual will try to equate marginal utilities per hour spent on each activity 
D) time can be purchased for cash 
E) an individual will try to equate the marginal utilities derived from each activity 
A) an individual will try to maximize marginal utility per hour spent on one activity 
B) time is considered a free good 
C) an individual will try to equate marginal utilities per hour spent on each activity 
D) time can be purchased for cash 
E) an individual will try to equate the marginal utilities derived from each activity

Question 15

According to the assumption of consumer rationality,a consumer who prefers one head of broccoli to one head of cauliflower,one head of cauliflower to one package of brussel sprouts,and one

Accepted Answer

A) package of brussel sprouts to one head of cabbage,must prefer a head of cabbage to a head of cauliflower 
B) package of brussel sprouts to one head of cabbage,must prefer a head of broccoli to any other vegetable 
C) package of brussel sprouts to one head of cabbage,must prefer a package of brussel sprouts to a head of cauliflower 
D) package of brussel sprouts to one head of cabbage,must prefer a head of cauliflower to a head of cabbage 
E) head of cabbage to one package of brussel sprouts,must prefer the package of brussel sprouts to a head of broccoli 
A) package of brussel sprouts to one head of cabbage,must prefer a head of cabbage to a head of cauliflower 
B) package of brussel sprouts to one head of cabbage,must prefer a head of broccoli to any other vegetable 
C) package of brussel sprouts to one head of cabbage,must prefer a package of brussel sprouts to a head of cauliflower 
D) package of brussel sprouts to one head of cabbage,must prefer a head of cauliflower to a head of cabbage 
E) head of cabbage to one package of brussel sprouts,must prefer the package of brussel sprouts to a head of broccoli

Question 16

For dessert,Mac has the choice between cheesecake and apple pie.The cheesecake has a marginal utility of 50 and a price of $5,and the apple pie has a marginal utility of 30 and a price of $3.Therefore,Mac should buy

Accepted Answer

A) the cheesecake since the marginal utility is greater 
B) the apple pie because its price is lower 
C) two servings of apple pie and no cheesecake 
D) four servings of cheesecake 
E) either the apple pie or the cheesecake,it makes no difference 
A) the cheesecake since the marginal utility is greater 
B) the apple pie because its price is lower 
C) two servings of apple pie and no cheesecake 
D) four servings of cheesecake 
E) either the apple pie or the cheesecake,it makes no difference

Question 17

Budget constraints exist for consumers because

Accepted Answer

A) their utility from consuming goods eventually reaches a maximum level 
B) even with unlimited incomes,they have to pay for each good they consume 
C) they have to pay for goods and they have limited incomes 
D) prices and income are inversely related 
E) demand curves for goods generally slope downward 
A) their utility from consuming goods eventually reaches a maximum level 
B) even with unlimited incomes,they have to pay for each good they consume 
C) they have to pay for goods and they have limited incomes 
D) prices and income are inversely related 
E) demand curves for goods generally slope downward

Question 18

If income decreases,there will be a parallel inward shift of the budget line.

Accepted Answer

A) True 
 B)False

Question 19

A family on a trip budgets $800 for sit-down restaurant meals and fast food.If the price of a fast food meal for the family is $20,how many such meals can the family buy if they do not eat at restaurants?

Accepted Answer

A) 8 
B) 15 
C) 20 
D) 40 
E) 160 
A) 8 
B) 15 
C) 20 
D) 40 
E) 160

Question 20

If income doubles and the prices of all goods remain the same,the budget line will shift outward by 50 percent along each axis.

Accepted Answer

A) True 
 B)False

If food is measured on the horizontal axis of a budget line diagram,and clothing is measured on the vertical axis,the slope of the budget line

The theory of consumer demand

If the price of bread were zero,a budget line between bread (on the vertical axis)and cheese (on the horizontal axis)would

A rational consumer who prefers one apple to two oranges,and two oranges to one orange,

For an inferior good,a rise in price causes

The change in total utility arising from a one-unit increase in consumption of a good is referred to as

-Suppose that a consumer used to be at point R on budget line AA' in Figure 6-5,and is now at point S on line BB'.Which of the following is true if the consumer enjoys both goods?

Steve buys Pepsi at $.60 per can and orange juice at $1.20 per can.In consumer equilibrium,

The market demand curve for a good is found by

The ratio of the prices of two goods multiplied by -1 is equal to the slope of the budget line.

Lin is maximizing total utility while consuming food and clothing.Her marginal utilities of food and clothing are 50 utils and 25 utils,respectively.If clothing is priced at $10 per unit,the price of a unit of food

As Reba consumes four slices of pizza,her total utility rises from 0 to 18,to 24,to 28,and to 30,respectively.What is her marginal utility of the fourth slice of pizza?

Suppose that Trey spends all of his income on vacation trips and textbooks.If the price of a trip is $200 and the price of a textbook is $50,then the slope of his budget line (assuming vacation trips are measured on the vertical axis)would be

In allocating time between competing uses,

According to the assumption of consumer rationality,a consumer who prefers one head of broccoli to one head of cauliflower,one head of cauliflower to one package of brussel sprouts,and one

For dessert,Mac has the choice between cheesecake and apple pie.The cheesecake has a marginal utility of 50 and a price of $5,and the apple pie has a marginal utility of 30 and a price of $3.Therefore,Mac should buy

Budget constraints exist for consumers because

If income decreases,there will be a parallel inward shift of the budget line.

A family on a trip budgets $800 for sit-down restaurant meals and fast food.If the price of a fast food meal for the family is $20,how many such meals can the family buy if they do not eat at restaurants?

If income doubles and the prices of all goods remain the same,the budget line will shift outward by 50 percent along each axis.

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters

Exam 6: Consumer Choice

If food is measured on the horizontal axis of a budget line diagram,and clothing is measured on the vertical axis,the slope of the budget line

The theory of consumer demand

If the price of bread were zero,a budget line between bread (on the vertical axis)and cheese (on the horizontal axis)would

A rational consumer who prefers one apple to two oranges,and two oranges to one orange,

For an inferior good,a rise in price causes

The change in total utility arising from a one-unit increase in consumption of a good is referred to as

-Suppose that a consumer used to be at point R on budget line AA' in Figure 6-5,and is now at point S on line BB'.Which of the following is true if the consumer enjoys both goods?

Steve buys Pepsi at $.60 per can and orange juice at $1.20 per can.In consumer equilibrium,

The market demand curve for a good is found by

The ratio of the prices of two goods multiplied by -1 is equal to the slope of the budget line.

Lin is maximizing total utility while consuming food and clothing.Her marginal utilities of food and clothing are 50 utils and 25 utils,respectively.If clothing is priced at $10 per unit,the price of a unit of food

As Reba consumes four slices of pizza,her total utility rises from 0 to 18,to 24,to 28,and to 30,respectively.What is her marginal utility of the fourth slice of pizza?

Suppose that Trey spends all of his income on vacation trips and textbooks.If the price of a trip is $200 and the price of a textbook is $50,then the slope of his budget line (assuming vacation trips are measured on the vertical axis)would be

In allocating time between competing uses,

According to the assumption of consumer rationality,a consumer who prefers one head of broccoli to one head of cauliflower,one head of cauliflower to one package of brussel sprouts,and one

For dessert,Mac has the choice between cheesecake and apple pie.The cheesecake has a marginal utility of 50 and a price of $5,and the apple pie has a marginal utility of 30 and a price of $3.Therefore,Mac should buy

Budget constraints exist for consumers because

If income decreases,there will be a parallel inward shift of the budget line.

A family on a trip budgets $800 for sit-down restaurant meals and fast food.If the price of a fast food meal for the family is $20,how many such meals can the family buy if they do not eat at restaurants?

If income doubles and the prices of all goods remain the same,the budget line will shift outward by 50 percent along each axis.

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters