Question 1

Lisa eats both pizzas and burritos. If the price of a pizza increases, Lisa's opportunity set

Accepted Answer

A) becomes larger. 
B) becomes smaller. 
C) is unchanged. 
D) cannot be determined without more information. 
A) becomes larger. 
B) becomes smaller. 
C) is unchanged. 
D) cannot be determined without more information.

Question 2

If a consumer prefers apples to bananas and prefers bananas to citrus fruit, in order to satisfy assumptions about preferences she has to prefer

Accepted Answer

A) bananas to apples. 
B) citrus fruit to bananas. 
C) apples to citrus fruit. 
D) citrus fruit to apples. 
A) bananas to apples. 
B) citrus fruit to bananas. 
C) apples to citrus fruit. 
D) citrus fruit to apples.

Question 3

If Fred's marginal utility of pizza equals 10 and his marginal utility of salad equals 2, then

Accepted Answer

A) he would give up 5 pizzas to get the next salad. 
B) he would give up 5 salads to get the next pizza. 
C) he will eat five times as much pizza as salad. 
D) he will eat five times as much salad as pizza. 
A) he would give up 5 pizzas to get the next salad. 
B) he would give up 5 salads to get the next pizza. 
C) he will eat five times as much pizza as salad. 
D) he will eat five times as much salad as pizza.

Question 4

Bounded rationality suggests that

Accepted Answer

A) individuals might make "incorrect" decisions because they are unable to consider all possible options. 
B) individuals would rather have less choice to more choice. 
C) rational decisions can only be made when choices are restricted. 
D) individuals are happier when their choices are restricted or "bounded." 
A) individuals might make "incorrect" decisions because they are unable to consider all possible options. 
B) individuals would rather have less choice to more choice. 
C) rational decisions can only be made when choices are restricted. 
D) individuals are happier when their choices are restricted or "bounded."

Question 5

An indifference curve represents bundles of goods that a consumer

Accepted Answer

A) views as equally desirable. 
B) ranks from most preferred to least preferred. 
C) refers to any other bundle of goods. 
D) All of the above. 
A) views as equally desirable. 
B) ranks from most preferred to least preferred. 
C) refers to any other bundle of goods. 
D) All of the above.

Question 6

The indifference curves for left shoes and right shoes would most likely be

Accepted Answer

A) upward sloping and concave to the origin. 
B) downward sloping and convex to the origin. 
C) downward sloping and straight lines. 
D) L-shaped. 
A) upward sloping and concave to the origin. 
B) downward sloping and convex to the origin. 
C) downward sloping and straight lines. 
D) L-shaped.

Question 7

A consumer buys food (F)and shelter (S). If the consumer's income rises and there is no change in the prices of F or S, the marginal rate of transformation of F for S will

Accepted Answer

A) increase. 
B) decrease. 
C) stay the same. 
D) change, but there is not enough information to know how. 
A) increase. 
B) decrease. 
C) stay the same. 
D) change, but there is not enough information to know how.

Question 8

The assumption of completeness means that

Accepted Answer

A) the consumer can rank all possible consumption bundles. 
B) more of a good is always better. 
C) the consumers can rank all affordable consumption bundles. 
D) all preferences conditions are met. 
A) the consumer can rank all possible consumption bundles. 
B) more of a good is always better. 
C) the consumers can rank all affordable consumption bundles. 
D) all preferences conditions are met.

Question 9

The marginal rate of transformation of y for x represents

Accepted Answer

A) the slope of the budget constraint. 
B) the rate at which the consumer must give up y to get one more x. 
C) -Px/Py. 
D) All of the above. 
A) the slope of the budget constraint. 
B) the rate at which the consumer must give up y to get one more x. 
C) -Px/Py. 
D) All of the above.

Question 10

Assume the price of beer is $4, the price of pizza is $10 and the consumer's income is $250. Which consumption bundle will NOT be the consumers choice?

Accepted Answer

A) 5 beers, 5 pizzas 
B) 0 beers, 25 pizzas 
C) 25 beers, 15 pizzas 
D) None of the bundles will be chosen. 
A) 5 beers, 5 pizzas 
B) 0 beers, 25 pizzas 
C) 25 beers, 15 pizzas 
D) None of the bundles will be chosen.

Question 11

Joe's income is $500, the price of food (F, y-axis)is $2 per unit, and the price of shelter (S, x-axis)is $100. Which of the following represents his marginal rate of transformation of food for shelter?

Accepted Answer

A) -5 
B) -50 
C) -.02 
D) None of the above. 
A) -5 
B) -50 
C) -.02 
D) None of the above.

Question 12

If Isabella buys two goods and the prices of both goods decrease by 50%

Accepted Answer

A) the budget constraint will be unchanged. 
B) the slope of the budget constraint will increase. 
C) the slope of the budget constraint will decrease. 
D) the budget constraint will shift outward in a parallel fashion. 
A) the budget constraint will be unchanged. 
B) the slope of the budget constraint will increase. 
C) the slope of the budget constraint will decrease. 
D) the budget constraint will shift outward in a parallel fashion.

Question 13

By selecting a bundle where MRS = MRT, the consumer is saying

Accepted Answer

A) "I value my last unit of each good equally." 
B) "I am willing to trade one good for the other at the same rate that I am required to do so." 
C) "I will equate the amounts spent on all goods consumed." 
D) All of the above. 
A) "I value my last unit of each good equally." 
B) "I am willing to trade one good for the other at the same rate that I am required to do so." 
C) "I will equate the amounts spent on all goods consumed." 
D) All of the above.

Question 14

There is an indifference curve through every bundle because of the assumption of

Accepted Answer

A) transitivity. 
B) completeness. 
C) rationality. 
D) nonsatiation. 
A) transitivity. 
B) completeness. 
C) rationality. 
D) nonsatiation.

Question 15

Which is a behavioral economics justification for limiting advertising directed towards children?

Accepted Answer

A) Children have no money. 
B) Children pester their parents too much. 
C) Children have no memory. 
D) Children do not always have transitive preferences. 
A) Children have no money. 
B) Children pester their parents too much. 
C) Children have no memory. 
D) Children do not always have transitive preferences.

Question 16

If more is better, how can you explain that more pollution doesn't violate this principle?

Accepted Answer

When dealing with a "bad," we recast it

Question 17

Joe's income is $500, the price of food (F, y-axis)is $2, and the price of shelter (S, x-axis)is $100. Which of the following bundles is in Joe's opportunity set?

Accepted Answer

A) 50 units of food, 5 units of shelter 
B) 200 units of food, 2 units of shelter 
C) 100 units of food, 1 unit of shelter 
D) 150 units of food, 3 units of shelter 
A) 50 units of food, 5 units of shelter 
B) 200 units of food, 2 units of shelter 
C) 100 units of food, 1 unit of shelter 
D) 150 units of food, 3 units of shelter

Question 18

If the consumer's income increases while the prices of both goods remain unchanged, what will happen to the budget line?

Accepted Answer

A) The budget line rotates inward from the intercept on the horizontal axis. 
B) The budget line rotates outward from the intercept on the vertical axis. 
C) The budget line shifts inward without a change in slope. 
D) The budget line shifts outward without a change in slope. 
A) The budget line rotates inward from the intercept on the horizontal axis. 
B) The budget line rotates outward from the intercept on the vertical axis. 
C) The budget line shifts inward without a change in slope. 
D) The budget line shifts outward without a change in slope.

Question 19

If two goods are perfect substitutes, then the indifference curves for those two goods would be

Accepted Answer

A) upward sloping and concave to the origin. 
B) downward sloping and convex to the origin. 
C) downward sloping and straight. 
D) L-shaped. 
A) upward sloping and concave to the origin. 
B) downward sloping and convex to the origin. 
C) downward sloping and straight. 
D) L-shaped.

Question 20

The consumer is in equilibrium when

Accepted Answer

A) MRT = MRS. 
B) Px/Py = MUx/MUy 
C) the budget line is tangent to the indifference curve at the bundle chosen. 
D) All of the above. 
A) MRT = MRS. 
B) Px/Py = MUx/MUy 
C) the budget line is tangent to the indifference curve at the bundle chosen. 
D) All of the above.

Lisa eats both pizzas and burritos. If the price of a pizza increases, Lisa's opportunity set

If a consumer prefers apples to bananas and prefers bananas to citrus fruit, in order to satisfy assumptions about preferences she has to prefer

If Fred's marginal utility of pizza equals 10 and his marginal utility of salad equals 2, then

Bounded rationality suggests that

An indifference curve represents bundles of goods that a consumer

The indifference curves for left shoes and right shoes would most likely be

A consumer buys food (F)and shelter (S). If the consumer's income rises and there is no change in the prices of F or S, the marginal rate of transformation of F for S will

The assumption of completeness means that

The marginal rate of transformation of y for x represents

Assume the price of beer is $4, the price of pizza is $10 and the consumer's income is $250. Which consumption bundle will NOT be the consumers choice?

Joe's income is $500, the price of food (F, y-axis)is $2 per unit, and the price of shelter (S, x-axis)is $100. Which of the following represents his marginal rate of transformation of food for shelter?

If Isabella buys two goods and the prices of both goods decrease by 50%

By selecting a bundle where MRS = MRT, the consumer is saying

There is an indifference curve through every bundle because of the assumption of

Which is a behavioral economics justification for limiting advertising directed towards children?

If more is better, how can you explain that more pollution doesn't violate this principle?

Joe's income is $500, the price of food (F, y-axis)is $2, and the price of shelter (S, x-axis)is $100. Which of the following bundles is in Joe's opportunity set?

If the consumer's income increases while the prices of both goods remain unchanged, what will happen to the budget line?

If two goods are perfect substitutes, then the indifference curves for those two goods would be

The consumer is in equilibrium when

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 4: Consumer Choice

Lisa eats both pizzas and burritos. If the price of a pizza increases, Lisa's opportunity set

If a consumer prefers apples to bananas and prefers bananas to citrus fruit, in order to satisfy assumptions about preferences she has to prefer

If Fred's marginal utility of pizza equals 10 and his marginal utility of salad equals 2, then

Bounded rationality suggests that

An indifference curve represents bundles of goods that a consumer

The indifference curves for left shoes and right shoes would most likely be

A consumer buys food (F)and shelter (S). If the consumer's income rises and there is no change in the prices of F or S, the marginal rate of transformation of F for S will

The assumption of completeness means that

The marginal rate of transformation of y for x represents

Assume the price of beer is $4, the price of pizza is $10 and the consumer's income is $250. Which consumption bundle will NOT be the consumers choice?

Joe's income is $500, the price of food (F, y-axis)is $2 per unit, and the price of shelter (S, x-axis)is $100. Which of the following represents his marginal rate of transformation of food for shelter?

If Isabella buys two goods and the prices of both goods decrease by 50%

By selecting a bundle where MRS = MRT, the consumer is saying

There is an indifference curve through every bundle because of the assumption of

Which is a behavioral economics justification for limiting advertising directed towards children?

If more is better, how can you explain that more pollution doesn't violate this principle?

Joe's income is $500, the price of food (F, y-axis)is $2, and the price of shelter (S, x-axis)is $100. Which of the following bundles is in Joe's opportunity set?

If the consumer's income increases while the prices of both goods remain unchanged, what will happen to the budget line?

If two goods are perfect substitutes, then the indifference curves for those two goods would be

The consumer is in equilibrium when

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters