Question 1

If an indifference curve is a straight line it will not show which of the following?

Accepted Answer

A)  any marginal rate of substitution 
B)  diminishing marginal rate of substitution 
C)  combinations of goods among which a consumer is indifferent 
D)  None of the above answers is correct. 
A)  any marginal rate of substitution 
B)  diminishing marginal rate of substitution 
C)  combinations of goods among which a consumer is indifferent 
D)  None of the above answers is correct.

Question 2

-Nadya spends $200 a year to buy computer games and Barbie dolls. The price of a computer game is $20 and the price of a Barbie doll is $10. The figure above illustrates Nadya's preferences. What combination of computer games and Barbie dolls does Nadya buy?

Accepted Answer

@#IMG-DLM& The figure above sh

Question 3

In order to draw an individual's budget line, we must know

Accepted Answer

A)  prices and preferences. 
B)  prices and income. 
C)  income and preferences. 
D)  prices, income, and preferences. 
A)  prices and preferences. 
B)  prices and income. 
C)  income and preferences. 
D)  prices, income, and preferences.

Question 4

-In the above figure, which of the following statements is TRUE? I. The consumer maximizes utility by consuming at point A.
II) The marginal rate of substitution at point B and point A are equal because they are on the same budget line.

Accepted Answer

A)  only I 
B)  only II 
C)  both I and II 
D)  neither I nor II 
A)  only I 
B)  only II 
C)  both I and II 
D)  neither I nor II

Question 5

-The figure above shows a preference map for Sarah, who likes hamburgers and milk shakes.
a) Which two combinations contain the same amount of hamburgers but different quantities of shakes?
b) Which combination(s) does Sarah most prefer? Why?
c) Which combination(s) does Sarah least prefer? Why?
d) Between which combinations is Sarah indifferent? Why?

Accepted Answer

a) Combinations a and b have the same am

Question 6

The magnitude of the slope of the budget line is equal to the ________ or ________ of the good plotted on the ________ in terms of the other good.

Accepted Answer

A)  relative price; marginal cost; y-axis 
B)  relative price; total cost; y-axis 
C)  relative price; opportunity cost; x-axis 
D)  price; opportunity cost; x-axis 
A)  relative price; marginal cost; y-axis 
B)  relative price; total cost; y-axis 
C)  relative price; opportunity cost; x-axis 
D)  price; opportunity cost; x-axis

Question 7

In an indifference curve/budget line framework, how does a consumer decide which of all possible combinations of goods to purchase?

Accepted Answer

The consumer will select the combination

Question 8

For a consumer, a budget line shows the boundary between

Accepted Answer

A)  what is desired and what is not desired. 
B)  what is needed and what is not needed. 
C)  what is affordable and what is not affordable. 
D)  what is available and what is not available. 
A)  what is desired and what is not desired. 
B)  what is needed and what is not needed. 
C)  what is affordable and what is not affordable. 
D)  what is available and what is not available.

Question 9

-Lizzie's budget line is shown in the figure above. If the price of a magazine rises, Lizzie's real income in terms of magazines books ________ and her real income in terms of cookies ________.

Accepted Answer

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

Question 10

-Lizzie's preferences are shown in the figure above. Lizzie definitely prefers consuming ________ to consuming ________.

Accepted Answer

A)  2 comic books and 12 cookies; 8 comic books and 8 cookies 
B)  8 comic books and 8 cookies; 10 comic books and 4 cookies 
C)  2 comic books and 12 cookies; 4 comic books and 8 cookies 
D)  8 comic books and 16 cookies; 10 comic books and 4 cookies 
A)  2 comic books and 12 cookies; 8 comic books and 8 cookies 
B)  8 comic books and 8 cookies; 10 comic books and 4 cookies 
C)  2 comic books and 12 cookies; 4 comic books and 8 cookies 
D)  8 comic books and 16 cookies; 10 comic books and 4 cookies

Question 11

A household's consumption choices cannot exceed limits created by

Accepted Answer

A)  only the household's income. 
B)  only the prices of the goods and services that it buys. 
C)  both the household's income and the prices of the goods and services that it buys. 
D)  neither the household's income nor the prices of the goods and services that it buys. 
A)  only the household's income. 
B)  only the prices of the goods and services that it buys. 
C)  both the household's income and the prices of the goods and services that it buys. 
D)  neither the household's income nor the prices of the goods and services that it buys.

Question 12

-Jane spends her monthly dining-out budget of $300.00 on either steak or lobster dinners. Using the above figure, what is the price of a steak dinner?

Accepted Answer

A)  $10.00 
B)  $15.00 
C)  $20.00 
D)  $30.00 
A)  $10.00 
B)  $15.00 
C)  $20.00 
D)  $30.00

Question 13

-Consider the indifference maps shown above. If eyeglass frames and eyeglass lenses were perfect complements, your indifference curves between them would look like those in

Accepted Answer

A)  Figure A. 
B)  Figure B. 
C)  Figure C. 
D)  Figure D. 
A)  Figure A. 
B)  Figure B. 
C)  Figure C. 
D)  Figure D.

Question 14

Indifference curves shift or rotate

Accepted Answer

A)  only when income changes. 
B)  only when prices change. 
C)  when either income or prices change. 
D)  with none of the above because changes in income and prices do not shift indifference curves. 
A)  only when income changes. 
B)  only when prices change. 
C)  when either income or prices change. 
D)  with none of the above because changes in income and prices do not shift indifference curves.

Question 15

-The above figure shows Jane's budget line and two of her indifference curves. If the price of a lobster dinner falls so that Jane can now purchase the combination represented by Point B, Jane would experience

Accepted Answer

A)  an increase in the opportunity cost of a lobster dinner. 
B)  no change in her marginal rate of substitution. 
C)  an income and a substitution effect. 
D)  Both answers B and C are correct. 
A)  an increase in the opportunity cost of a lobster dinner. 
B)  no change in her marginal rate of substitution. 
C)  an income and a substitution effect. 
D)  Both answers B and C are correct.

Question 16

-The above figure shows Katie's consumption possibilities. The relative price of a movie ticket is

Accepted Answer

A)  1 restaurant meal. 
B)  0.25 restaurant meals. 
C)  4 restaurant meals. 
D)  2 restaurant meals. 
A)  1 restaurant meal. 
B)  0.25 restaurant meals. 
C)  4 restaurant meals. 
D)  2 restaurant meals.

Question 17

Which of the following statements is TRUE?

Accepted Answer

A)  Every point on a budget line lies on an indifference curve. 
B)  To determine a consumer's best affordable point, we need only the budget line or the indifference curve. 
C)  The price effect is shown by moving up or down a fixed budget line. 
D)  Both A and B are true. 
A)  Every point on a budget line lies on an indifference curve. 
B)  To determine a consumer's best affordable point, we need only the budget line or the indifference curve. 
C)  The price effect is shown by moving up or down a fixed budget line. 
D)  Both A and B are true.

Question 18

-The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if there were an increase in her monthly dining-out budget?

Accepted Answer

A)  It would bend toward the origin, becoming more convex. 
B)  It would bend away from the origin, becoming more concave. 
C)  It would shift rightward and not change its slope. 
D)  It would shift leftward and not change its slope. 
A)  It would bend toward the origin, becoming more convex. 
B)  It would bend away from the origin, becoming more concave. 
C)  It would shift rightward and not change its slope. 
D)  It would shift leftward and not change its slope.

Question 19

-In the above figure, if the budget line shifts from RT to RS, the substitution effect is illustrated by the move from

Accepted Answer

A)  a to b. 
B)  a to c. 
C)  b to c. 
D)  T to S. 
A)  a to b. 
B)  a to c. 
C)  b to c. 
D)  T to S.

Question 20

The magnitude of the slope of the budget line

Accepted Answer

A)  is defined as marginal rate of substitution. 
B)  equals the relative price of the good measured along the horizontal axis. 
C)  increases when income increases. 
D)  decreases when income increases. 
A)  is defined as marginal rate of substitution. 
B)  equals the relative price of the good measured along the horizontal axis. 
C)  increases when income increases. 
D)  decreases when income increases.

If an indifference curve is a straight line it will not show which of the following?

-Nadya spends $200 a year to buy computer games and Barbie dolls. The price of a computer game is $20 and the price of a Barbie doll is $10. The figure above illustrates Nadya's preferences. What combination of computer games and Barbie dolls does Nadya buy?

In order to draw an individual's budget line, we must know

-In the above figure, which of the following statements is TRUE? I. The consumer maximizes utility by consuming at point A. II) The marginal rate of substitution at point B and point A are equal because they are on the same budget line.

The magnitude of the slope of the budget line is equal to the or of the good plotted on the in terms of the other good.

In an indifference curve/budget line framework, how does a consumer decide which of all possible combinations of goods to purchase?

For a consumer, a budget line shows the boundary between

-Lizzie's budget line is shown in the figure above. If the price of a magazine rises, Lizzie's real income in terms of magazines books and her real income in terms of cookies .

-Lizzie's preferences are shown in the figure above. Lizzie definitely prefers consuming to consuming .

A household's consumption choices cannot exceed limits created by

-Jane spends her monthly dining-out budget of $300.00 on either steak or lobster dinners. Using the above figure, what is the price of a steak dinner?

-Consider the indifference maps shown above. If eyeglass frames and eyeglass lenses were perfect complements, your indifference curves between them would look like those in

Indifference curves shift or rotate

-The above figure shows Jane's budget line and two of her indifference curves. If the price of a lobster dinner falls so that Jane can now purchase the combination represented by Point B, Jane would experience

-The above figure shows Katie's consumption possibilities. The relative price of a movie ticket is

Which of the following statements is TRUE?

-The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if there were an increase in her monthly dining-out budget?

-In the above figure, if the budget line shifts from RT to RS, the substitution effect is illustrated by the move from

The magnitude of the slope of the budget line

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

If an indifference curve is a straight line it will not show which of the following?

-Nadya spends $200 a year to buy computer games and Barbie dolls. The price of a computer game is $20 and the price of a Barbie doll is $10. The figure above illustrates Nadya's preferences. What combination of computer games and Barbie dolls does Nadya buy?

In order to draw an individual's budget line, we must know

-In the above figure, which of the following statements is TRUE? I. The consumer maximizes utility by consuming at point A. II) The marginal rate of substitution at point B and point A are equal because they are on the same budget line.

The magnitude of the slope of the budget line is equal to the ________ or ________ of the good plotted on the ________ in terms of the other good.

In an indifference curve/budget line framework, how does a consumer decide which of all possible combinations of goods to purchase?

For a consumer, a budget line shows the boundary between

-Lizzie's budget line is shown in the figure above. If the price of a magazine rises, Lizzie's real income in terms of magazines books ________ and her real income in terms of cookies ________.

-Lizzie's preferences are shown in the figure above. Lizzie definitely prefers consuming ________ to consuming ________.

A household's consumption choices cannot exceed limits created by

-Jane spends her monthly dining-out budget of $300.00 on either steak or lobster dinners. Using the above figure, what is the price of a steak dinner?

-Consider the indifference maps shown above. If eyeglass frames and eyeglass lenses were perfect complements, your indifference curves between them would look like those in

Indifference curves shift or rotate

-The above figure shows Jane's budget line and two of her indifference curves. If the price of a lobster dinner falls so that Jane can now purchase the combination represented by Point B, Jane would experience

-The above figure shows Katie's consumption possibilities. The relative price of a movie ticket is

Which of the following statements is TRUE?

-The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if there were an increase in her monthly dining-out budget?

-In the above figure, if the budget line shifts from RT to RS, the substitution effect is illustrated by the move from

The magnitude of the slope of the budget line

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 magnitude of the slope of the budget line is equal to the or of the good plotted on the in terms of the other good.

-Lizzie's budget line is shown in the figure above. If the price of a magazine rises, Lizzie's real income in terms of magazines books and her real income in terms of cookies .

-Lizzie's preferences are shown in the figure above. Lizzie definitely prefers consuming to consuming .