Question 1

The price effect is the effect of a ________ on the quantity of the good ________.

Accepted Answer

A)  decrease in the price; demanded 
B)  change in the price; supplied 
C)  change in price and income; consumed 
D)  change in the price; consumed 
A)  decrease in the price; demanded 
B)  change in the price; supplied 
C)  change in price and income; consumed 
D)  change in the price; consumed

Question 2

Real income equals a household's income

Accepted Answer

A)  in terms of the quantity of goods the household can buy. 
B)  multiplied by the prices of the goods it buys. 
C)  divided by the prices of the goods it buys. 
D)  multiplied by the relative prices of the goods it buys. 
A)  in terms of the quantity of goods the household can buy. 
B)  multiplied by the prices of the goods it buys. 
C)  divided by the prices of the goods it buys. 
D)  multiplied by the relative prices of the goods it buys.

Question 3

"The marginal rate of substitution of the good measured along the x-axis increases as a consumer moves downward along an indifference curve." Is the previous statement correct or not?

Accepted Answer

The statement is incorrect bec

Question 4

Which two goods will most likely have indifference curves that are straight lines?

Accepted Answer

A)  blue and red balloons 
B)  left and right shoes 
C)  pizza and hair spray 
D)  beef and chicken 
A)  blue and red balloons 
B)  left and right shoes 
C)  pizza and hair spray 
D)  beef and chicken

Question 5

Real income is ________.

Accepted Answer

A)  equal to money income minus taxes 
B)  equal to the income earned legally 
C)  equal to money income plus benefits minus taxes 
D)  the maximum amount of goods and services that a household can afford 
A)  equal to money income minus taxes 
B)  equal to the income earned legally 
C)  equal to money income plus benefits minus taxes 
D)  the maximum amount of goods and services that a household can afford

Question 6

-Given the budget line in the above figure, what is the relative price of pizza?

Accepted Answer

A)  10 gallons of milk per pizza 
B)  6 gallons of milk per pizza 
C)  4 gallons of milk per pizza 
D)  2 gallons of milk per pizza 
A)  10 gallons of milk per pizza 
B)  6 gallons of milk per pizza 
C)  4 gallons of milk per pizza 
D)  2 gallons of milk per pizza

Question 7

If Rachel is at her best affordable point, then ________.

Accepted Answer

A)  her marginal rate of substitution equals 1 
B)  her marginal rate of substitution is maximized 
C)  the relative price of the goods she buys equals the marginal rate of substitution 
D)  she is indifferent among other points on her budget line 
A)  her marginal rate of substitution equals 1 
B)  her marginal rate of substitution is maximized 
C)  the relative price of the goods she buys equals the marginal rate of substitution 
D)  she is indifferent among other points on her budget line

Question 8

-The figure above gives your budget line for magazine and CDs per month. Given that your income equals $60 per month, what is your real income in terms of magazines?

Accepted Answer

A)  12 magazines 
B)  6 magazines 
C)  2 magazines 
D)  $60/month 
A)  12 magazines 
B)  6 magazines 
C)  2 magazines 
D)  $60/month

Question 9

-In the figure above, which budget line results in the most real income in terms of carrots?

Accepted Answer

A)  AD 
B)  BD 
C)  CD 
D)  Real income is equal for all three budget lines. 
A)  AD 
B)  BD 
C)  CD 
D)  Real income is equal for all three budget lines.

Question 10

Real income is equal to ________ and a relative price is given by ________.

Accepted Answer

A)  the dollar amount of income divided by the dollar price of a good; the dollar price of one good divided by the dollar price of the good whose relative price is being calculated 
B)  the dollar price of one good divided by the dollar price of the good whose relative price is being calculated; the dollar amount of income divided by the dollar price of a good 
C)  The dollar price of one good divided by the dollar price of another good; the dollar price of one good divided by the dollar price of the good whose relative price is being calculated 
D)  the dollar amount of income; real income divided by the dollar amount of income 
A)  the dollar amount of income divided by the dollar price of a good; the dollar price of one good divided by the dollar price of the good whose relative price is being calculated 
B)  the dollar price of one good divided by the dollar price of the good whose relative price is being calculated; the dollar amount of income divided by the dollar price of a good 
C)  The dollar price of one good divided by the dollar price of another good; the dollar price of one good divided by the dollar price of the good whose relative price is being calculated 
D)  the dollar amount of income; real income divided by the dollar amount of income

Question 11

In a budget line/indifference curve diagram, at the consumer equilibrium

Accepted Answer

A)  any movement upward or downward on the budget line will move the consumer to a less preferred point. 
B)  any movement to the northeast to higher indifference curves moves the consumer to a less preferred point. 
C)  the slope of the budget line is as much larger as possible than the marginal rate of substitution. 
D)  All of the above statements are correct. 
A)  any movement upward or downward on the budget line will move the consumer to a less preferred point. 
B)  any movement to the northeast to higher indifference curves moves the consumer to a less preferred point. 
C)  the slope of the budget line is as much larger as possible than the marginal rate of substitution. 
D)  All of the above statements are correct.

Question 12

Junkfood Jill spends all of her income on jellybeans and Jolt cola. Suppose that Jill's income is $30, the price of a bag of jellybeans is $6, and the price of a bottle of Jolt cola is $2. Which of the following combinations of jellybeans and Jolt cola lies inside of Jill's budget line?

Accepted Answer

A)  5 bags of jellybeans and 0 bottles of Jolt 
B)  4 bags of jellybeans and 4 bottles of Jolt 
C)  3 bags of jellybeans and 6 bottles of Jolt 
D)  2 bags of jellybeans and 8 bottles of Jolt 
A)  5 bags of jellybeans and 0 bottles of Jolt 
B)  4 bags of jellybeans and 4 bottles of Jolt 
C)  3 bags of jellybeans and 6 bottles of Jolt 
D)  2 bags of jellybeans and 8 bottles of Jolt

Question 13

-The figure above shows Tanya's consumption possibilities when the price of a restaurant meal is $20. If the price of a restaurant meal falls to $10 and Tanya buys 12 movie tickets, how many restaurant meals can she buy?

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  5 
A)  2 
B)  3 
C)  4 
D)  5

Question 14

-In the figure above, at point A the consumer is willing to give up ________ pounds of pickles to get one additional pound of olives.

Accepted Answer

A)  8 
B)  6 
C)  1 1/3 
D)  2 
A)  8 
B)  6 
C)  1 1/3 
D)  2

Question 15

Junkfood Jill spends all of her income on jellybeans and cola. Suppose that Jill's income is $30, the price of a bag of jellybeans is $6, and the price of a bottle of cola is $2. If bags of jellybeans are graphed along the vertical axis and bottles of cola are graphed along the horizontal axis, what is the slope of the budget line?

Accepted Answer

A)  3 
B)  -3 
C)  1/3 
D)  -1/3 
A)  3 
B)  -3 
C)  1/3 
D)  -1/3

Question 16

Barth Anderson states that the 2008 "downturn in the economy has really brought a lot of people home. They don't say, 'Well, we're going to order a pizza.' They actually cook." Assuming that restaurant meals and eating at home are substitutes for one another and only consumers' income decreases, what is TRUE?

Accepted Answer

A)  Restaurant meals are an inferior good and eating at home is a normal good. 
B)  Restaurant meals are a normal good and eating at home is an inferior good. 
C)  Restaurant meals are an inferior good and eating at home is an inferior good. 
D)  Restaurant meals are a normal good and eating at home is a normal good. 
A)  Restaurant meals are an inferior good and eating at home is a normal good. 
B)  Restaurant meals are a normal good and eating at home is an inferior good. 
C)  Restaurant meals are an inferior good and eating at home is an inferior good. 
D)  Restaurant meals are a normal good and eating at home is a normal good.

Question 17

If all prices rise by 5 percent and money income remains constant, the new budget line will have

Accepted Answer

A)  a steeper slope. 
B)  a flatter slope. 
C)  a positive slope. 
D)  the same slope. 
A)  a steeper slope. 
B)  a flatter slope. 
C)  a positive slope. 
D)  the same slope.

Question 18

An increase in income shift a person's budget line rightward and does not change its slope.

Accepted Answer

A) True 
 B)False

Question 19

-In the above figure, as Brendan's income rises his consumption bundle moves from point A to point C. This implies that for Brendan, compact discs are ________ good and haircuts are ________ good.

Accepted Answer

A)  a normal; an inferior 
B)  a normal; a normal 
C)  an inferior; an inferior 
D)  an inferior; a normal 
A)  a normal; an inferior 
B)  a normal; a normal 
C)  an inferior; an inferior 
D)  an inferior; a normal

Question 20

The magnitude of the slope of the budget line measures the

Accepted Answer

A)  opportunity cost of the good on the horizontal axis in terms of the good on the vertical axis. 
B)  opportunity cost of the good on the vertical axis in terms of the good on the horizontal axis. 
C)  price elasticity of demand. 
D)  price elasticity of supply. 
A)  opportunity cost of the good on the horizontal axis in terms of the good on the vertical axis. 
B)  opportunity cost of the good on the vertical axis in terms of the good on the horizontal axis. 
C)  price elasticity of demand. 
D)  price elasticity of supply.

The price effect is the effect of a on the quantity of the good .

Real income equals a household's income

"The marginal rate of substitution of the good measured along the x-axis increases as a consumer moves downward along an indifference curve." Is the previous statement correct or not?

Which two goods will most likely have indifference curves that are straight lines?

Real income is ________.

-Given the budget line in the above figure, what is the relative price of pizza?

If Rachel is at her best affordable point, then ________.

-The figure above gives your budget line for magazine and CDs per month. Given that your income equals $60 per month, what is your real income in terms of magazines?

-In the figure above, which budget line results in the most real income in terms of carrots?

Real income is equal to and a relative price is given by .

In a budget line/indifference curve diagram, at the consumer equilibrium

Junkfood Jill spends all of her income on jellybeans and Jolt cola. Suppose that Jill's income is $30, the price of a bag of jellybeans is $6, and the price of a bottle of Jolt cola is $2. Which of the following combinations of jellybeans and Jolt cola lies inside of Jill's budget line?

-The figure above shows Tanya's consumption possibilities when the price of a restaurant meal is $20. If the price of a restaurant meal falls to $10 and Tanya buys 12 movie tickets, how many restaurant meals can she buy?

-In the figure above, at point A the consumer is willing to give up ________ pounds of pickles to get one additional pound of olives.

If all prices rise by 5 percent and money income remains constant, the new budget line will have

An increase in income shift a person's budget line rightward and does not change its slope.

-In the above figure, as Brendan's income rises his consumption bundle moves from point A to point C. This implies that for Brendan, compact discs are good and haircuts are good.

The magnitude of the slope of the budget line measures the

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 9: Possibilities, Preferences, and Choices

The price effect is the effect of a ________ on the quantity of the good ________.

Real income equals a household's income

"The marginal rate of substitution of the good measured along the x-axis increases as a consumer moves downward along an indifference curve." Is the previous statement correct or not?

Which two goods will most likely have indifference curves that are straight lines?

Real income is ________.

-Given the budget line in the above figure, what is the relative price of pizza?

If Rachel is at her best affordable point, then ________.

-The figure above gives your budget line for magazine and CDs per month. Given that your income equals $60 per month, what is your real income in terms of magazines?

-In the figure above, which budget line results in the most real income in terms of carrots?

Real income is equal to ________ and a relative price is given by ________.

In a budget line/indifference curve diagram, at the consumer equilibrium

Junkfood Jill spends all of her income on jellybeans and Jolt cola. Suppose that Jill's income is $30, the price of a bag of jellybeans is $6, and the price of a bottle of Jolt cola is $2. Which of the following combinations of jellybeans and Jolt cola lies inside of Jill's budget line?

-The figure above shows Tanya's consumption possibilities when the price of a restaurant meal is $20. If the price of a restaurant meal falls to $10 and Tanya buys 12 movie tickets, how many restaurant meals can she buy?

-In the figure above, at point A the consumer is willing to give up ________ pounds of pickles to get one additional pound of olives.

If all prices rise by 5 percent and money income remains constant, the new budget line will have

An increase in income shift a person's budget line rightward and does not change its slope.

-In the above figure, as Brendan's income rises his consumption bundle moves from point A to point C. This implies that for Brendan, compact discs are ________ good and haircuts are ________ good.

The magnitude of the slope of the budget line measures the

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

The price effect is the effect of a on the quantity of the good .

Real income is equal to and a relative price is given by .

-In the above figure, as Brendan's income rises his consumption bundle moves from point A to point C. This implies that for Brendan, compact discs are good and haircuts are good.