Question 1

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

Question 2

Betty consumes good x and good y.If the price of x = $3 and the price of y = $4,then

Accepted Answer

A)  an extra unit of x costs 4/3 units of y. 
B)  an extra unit of y costs 4/3 units of x. 
C)  an extra unit of x costs 3/4 units of y. 
D)  Both B and C. 
A)  an extra unit of x costs 4/3 units of y. 
B)  an extra unit of y costs 4/3 units of x. 
C)  an extra unit of x costs 3/4 units of y. 
D)  Both B and C.

Question 3

Clifford lives by the motto "Eat drink and be merry today,for tomorrow doesn't matter." If today's consumption is represented by "x" and tomorrow's consumption is represented by "y," then which of the following best represents Clifford's utility function?

Accepted Answer

A)  U = x - y 
B)  U = x/y 
C)  U = x 
D)  U = y 
A)  U = x - y 
B)  U = x/y 
C)  U = x 
D)  U = y

Question 4

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 5

Behavioral economics extends traditional economic models by

Accepted Answer

A)  including insights from psychology and human cognition models. 
B)  modeling behavior rather than prices. 
C)  admitting that individuals are irrational. 
D)  admitting that incentives are very important. 
A)  including insights from psychology and human cognition models. 
B)  modeling behavior rather than prices. 
C)  admitting that individuals are irrational. 
D)  admitting that incentives are very important.

Question 6

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 budget constraint?

Accepted Answer

A)  500 = 100F + 2S 
B)  500 = 2F + 100S 
C)  S = 500 - 2F 
D)  All of the above. 
A)  500 = 100F + 2S 
B)  500 = 2F + 100S 
C)  S = 500 - 2F 
D)  All of the above.

Question 7

Measuring "y" on the vertical axis and "x" on the horizontal axis,convexity of indifference curves implies that the MRS of "y" for "x"

Accepted Answer

A)  is decreasing as "x" increases. 
B)  is increasing as "x" increases. 
C)  is constant as "x" increases. 
D)  cannot be calculated for large levels of "x." 
A)  is decreasing as "x" increases. 
B)  is increasing as "x" increases. 
C)  is constant as "x" increases. 
D)  cannot be calculated for large levels of "x."

Question 8

An optimum that occurs as a corner solution

Accepted Answer

A)  includes only one good. 
B)  cannot be an equilibrium. 
C)  cannot exhaust the budget constraint. 
D)  includes the exact same amounts of each good. 
A)  includes only one good. 
B)  cannot be an equilibrium. 
C)  cannot exhaust the budget constraint. 
D)  includes the exact same amounts of each good.

Question 9

Adrian's total utilities of two consumption bundles are 50 and 100.This implies that

Accepted Answer

A)  the consumer prefers the first bundle. 
B)  the consumer prefers the second bundle. 
C)  the consumer likes the second bundle twice as much. 
D)  the consumer likes the first bundle twice as much. 
A)  the consumer prefers the first bundle. 
B)  the consumer prefers the second bundle. 
C)  the consumer likes the second bundle twice as much. 
D)  the consumer likes the first bundle twice as much.

Question 10

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 11

In behavioral economics,salience is best exemplified by

Accepted Answer

A)  consumers responding differently when posted prices increase rather than when prices increase because of sales tax increases. 
B)  consumers responding the same regardless of how prices change. 
C)  the end of a controlled experiment. 
D)  consumers responding differently when income increases permanently rather than temporarily. 
A)  consumers responding differently when posted prices increase rather than when prices increase because of sales tax increases. 
B)  consumers responding the same regardless of how prices change. 
C)  the end of a controlled experiment. 
D)  consumers responding differently when income increases permanently rather than temporarily.

Question 12

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 13

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

Accepted Answer

A)  achieving a corner solution. 
B)  reaching the highest possible indifference curve she can afford. 
C)  not behaving in an optimal way. 
D)  All of the above. 
A)  achieving a corner solution. 
B)  reaching the highest possible indifference curve she can afford. 
C)  not behaving in an optimal way. 
D)  All of the above.

Question 14

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 beer, 5 pizza 
B)  0 beer, 25 pizza 
C)  25 beer, 15 pizza 
D)  None of the bundle will be chosen. 
A)  5 beer, 5 pizza 
B)  0 beer, 25 pizza 
C)  25 beer, 15 pizza 
D)  None of the bundle will be chosen.

Question 15

If Fred's marginal rate of substitution of salad for pizza equals 5,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 16

Perfect substitutes

Accepted Answer

A)  always have indifference curves with slopes of -1. 
B)  always have indifference curves with slopes of 1. 
C)  have fixed rates of trading off one good for another. 
D)  have horizontal indifference curves. 
A)  always have indifference curves with slopes of -1. 
B)  always have indifference curves with slopes of 1. 
C)  have fixed rates of trading off one good for another. 
D)  have horizontal indifference curves.

Question 17

4.5 Deriving Demand Curves
  
-The above figure shows Bobby's indifference map for juice and snacks.Also shown are three budget lines resulting from different prices for snacks assuming he has $20 to spend on these goods.Which of the following points are on Bobby's demand curve for snacks?

Accepted Answer

A)  p = 2, q = 10 
B)  p = 2, q = 13 
C)  p = 2, q = 5 
D)  p = 1, q = 20 
A)  p = 2, q = 10 
B)  p = 2, q = 13 
C)  p = 2, q = 5 
D)  p = 1, q = 20

Question 18

Utility is the set of numerical values that

Accepted Answer

A)  yields an absolute level of pleasure from a bundle of goods. 
B)  reflects the relative ranking of various bundles of goods. 
C)  describes how much more a consumer prefers one bundle to another. 
D)  yields a cardinal ranking of bundles. 
A)  yields an absolute level of pleasure from a bundle of goods. 
B)  reflects the relative ranking of various bundles of goods. 
C)  describes how much more a consumer prefers one bundle to another. 
D)  yields a cardinal ranking of bundles.

Question 19

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 budget constraint?

Accepted Answer

A)  500 = 2F + 100S 
B)  F = 250 - 50S 
C)  S = 5 - .02F 
D)  All of the above. 
A)  500 = 2F + 100S 
B)  F = 250 - 50S 
C)  S = 5 - .02F 
D)  All of the above.

Question 20

If both prices decreases by 50%

Accepted Answer

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

The marginal rate of transformation of y for x represents

Betty consumes good x and good y.If the price of x = $3 and the price of y = $4,then

Clifford lives by the motto "Eat drink and be merry today,for tomorrow doesn't matter." If today's consumption is represented by "x" and tomorrow's consumption is represented by "y," then which of the following best represents Clifford's utility function?

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

Behavioral economics extends traditional economic models by

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 budget constraint?

Measuring "y" on the vertical axis and "x" on the horizontal axis,convexity of indifference curves implies that the MRS of "y" for "x"

An optimum that occurs as a corner solution

Adrian's total utilities of two consumption bundles are 50 and 100.This implies that

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

In behavioral economics,salience is best exemplified by

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?

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

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?

If Fred's marginal rate of substitution of salad for pizza equals 5,then

Perfect substitutes

4.5 Deriving Demand Curves -The above figure shows Bobby's indifference map for juice and snacks.Also shown are three budget lines resulting from different prices for snacks assuming he has $20 to spend on these goods.Which of the following points are on Bobby's demand curve for snacks?

Utility is the set of numerical values that

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 budget constraint?

If both prices decreases by 50%

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

The marginal rate of transformation of y for x represents

Betty consumes good x and good y.If the price of x = $3 and the price of y = $4,then

Clifford lives by the motto "Eat drink and be merry today,for tomorrow doesn't matter." If today's consumption is represented by "x" and tomorrow's consumption is represented by "y," then which of the following best represents Clifford's utility function?

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

Behavioral economics extends traditional economic models by

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 budget constraint?

Measuring "y" on the vertical axis and "x" on the horizontal axis,convexity of indifference curves implies that the MRS of "y" for "x"

An optimum that occurs as a corner solution

Adrian's total utilities of two consumption bundles are 50 and 100.This implies that

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

In behavioral economics,salience is best exemplified by

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?

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

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?

If Fred's marginal rate of substitution of salad for pizza equals 5,then

Perfect substitutes

4.5 Deriving Demand Curves -The above figure shows Bobby's indifference map for juice and snacks.Also shown are three budget lines resulting from different prices for snacks assuming he has $20 to spend on these goods.Which of the following points are on Bobby's demand curve for snacks?

Utility is the set of numerical values that

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 budget constraint?

If both prices decreases by 50%

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