Question 1

"Consumption possibilities are limited by total utility." True or false? Explain.

Accepted Answer

False. Consumption possibilities are lim

Question 2

What will an indifference curve look like between two commodities that are perfect complements, such as right shoes and left shoes?

Accepted Answer

The indifference curve will be

Question 3

-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 the price of a lobster dinner fell?

Accepted Answer

A)  It would rotate inward around the vertical intercept, 10 lobster dinners. 
B)  It would rotate outward around the vertical intercept, 10 lobster dinners. 
C)  It would rotate inward around the horizontal intercept, 20 steak dinners. 
D)  It would rotate outward around the horizontal intercept, 20 steak dinners. 
A)  It would rotate inward around the vertical intercept, 10 lobster dinners. 
B)  It would rotate outward around the vertical intercept, 10 lobster dinners. 
C)  It would rotate inward around the horizontal intercept, 20 steak dinners. 
D)  It would rotate outward around the horizontal intercept, 20 steak dinners.

Question 4

-In the above figure, Mark's monthly budget line for movies and plays changed, as shown by the arrow. The change was caused by

Accepted Answer

A)  a decrease in Mark's income. 
B)  an increase in Mark's income. 
C)  a fall in the price of a play. 
D)  a rise in the price of a play. 
A)  a decrease in Mark's income. 
B)  an increase in Mark's income. 
C)  a fall in the price of a play. 
D)  a rise in the price of a play.

Question 5

-The above figure gives your budget line between CDs and magazines. The slope of the budget line is ________ CD per magazine.

Accepted Answer

A)  1/2 
B)  -1/2 
C)  -1 
D)  -2 
A)  1/2 
B)  -1/2 
C)  -1 
D)  -2

Question 6

Wendy spends $30 a week on movies and magazines. The price of a movie is $8, the price of a magazine is $2, and Wendy sees 3 movies a week and buys 3 magazines. The price of a magazine now increases to $4 and Wendy's brother gives her $6 a week so that she can still see 3 movies a week and buy 3 magazines. In this situation, Wendy will see ________ movies and buy ________ magazines.

Accepted Answer

A)  3; 3 
B)  less than 3; less than 3 
C)  more than 3; fewer than 3 
D)  less than 3; more than 3 
A)  3; 3 
B)  less than 3; less than 3 
C)  more than 3; fewer than 3 
D)  less than 3; more than 3

Question 7

The variables that determine a household's budget line are

Accepted Answer

A)  its preferences and income. 
B)  its preferences and prices. 
C)  prices and income. 
D)  None of the above are correct. 
A)  its preferences and income. 
B)  its preferences and prices. 
C)  prices and income. 
D)  None of the above are correct.

Question 8

The slope of the indifference curve between steak and lobster is always equal to the ratio of their prices.

Accepted Answer

A) True 
 B)False

Question 9

Shaniq consumes only magazine and CDs. Her income equals $60 per month. CDs are $12 each and magazines are $5 each. What is the equation for her budget line?

Accepted Answer

A)  $60 = Qm + QCD 
B)  $60 = $12Qm + $5QCD 
C)  12 = -2Qm + 6 
D)  $60 = 12QCD + 5Qm 
A)  $60 = Qm + QCD 
B)  $60 = $12Qm + $5QCD 
C)  12 = -2Qm + 6 
D)  $60 = 12QCD + 5Qm

Question 10

-The figure above shows Ilene's budget line. If Ilene's income rises, her budget line will

Accepted Answer

A)  rotate and become flatter. 
B)  rotate and become steeper. 
C)  shift rightward and its slope will not change. 
D)  shift leftward and its slope will not change. 
A)  rotate and become flatter. 
B)  rotate and become steeper. 
C)  shift rightward and its slope will not change. 
D)  shift leftward and its slope will not change.

Question 11

-In the above figure, if income is $8, the initial price of a soft drink is $1, and the initial price of a milkshake is $2, a decrease in the price of a milkshake to $1 will move the consumer from point ________ to point ________.

Accepted Answer

A)  a; b 
B)  b; c 
C)  a; d 
D)  a; c 
A)  a; b 
B)  b; c 
C)  a; d 
D)  a; c

Question 12

-The above figure shows Jane's budget line and two of her indifference curves. When Jane is consuming at her best affordable point, what is her marginal rate of substitution?

Accepted Answer

A)  2.0 lobster dinners per steak dinner 
B)  1.0 lobster dinners per steak dinner 
C)  0.5 lobster dinners per steak dinner 
D)  0.33 lobster dinners per steak dinner 
A)  2.0 lobster dinners per steak dinner 
B)  1.0 lobster dinners per steak dinner 
C)  0.5 lobster dinners per steak dinner 
D)  0.33 lobster dinners per steak dinner

Question 13

-In the above figure, Sheryl's monthly budget line for movies and plays shifted, as shown. The shift in the budget line is parallel, so the shift might be because

Accepted Answer

A)  the price of a movie fell and nothing else changed. 
B)  the price of a play fell and nothing else changed. 
C)  Sheryl's income decreased and nothing else changed. 
D)  Sheryl's income increased and nothing else changed. 
A)  the price of a movie fell and nothing else changed. 
B)  the price of a play fell and nothing else changed. 
C)  Sheryl's income decreased and nothing else changed. 
D)  Sheryl's income increased and nothing else changed.

Question 14

-In the above figure, when the price of a gallon of gasoline falls, which points in the above figure are used to derive points on the consumer's demand curve for gasoline?

Accepted Answer

A)  points A and B 
B)  points A and C 
C)  points B and C 
D)  points A, B, and C 
A)  points A and B 
B)  points A and C 
C)  points B and C 
D)  points A, B, and C

Question 15

The marginal rate of substitution is equal to the ________.

Accepted Answer

A)  marginal cost of each good 
B)  magnitude of the slope of the indifference curve 
C)  inverse of the slope of the budget line 
D)  relative price of the two goods 
A)  marginal cost of each good 
B)  magnitude of the slope of the indifference curve 
C)  inverse of the slope of the budget line 
D)  relative price of the two goods

Question 16

-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 the price of a lobster dinner increased?

Accepted Answer

A)  It would rotate inward around the vertical intercept, 10 lobster dinners. 
B)  It would rotate outward around the vertical intercept, 10 lobster dinners. 
C)  It would rotate inward around the horizontal intercept, 20 steak dinners. 
D)  It would rotate outward around the horizontal intercept, 20 steak dinners. 
A)  It would rotate inward around the vertical intercept, 10 lobster dinners. 
B)  It would rotate outward around the vertical intercept, 10 lobster dinners. 
C)  It would rotate inward around the horizontal intercept, 20 steak dinners. 
D)  It would rotate outward around the horizontal intercept, 20 steak dinners.

Question 17

Suppose that Dave has $200 to spend per week and he buys only magazines and pizza. The price of a pizza is $10 and the price of a magazine is $5. What is Dave's real income in terms of magazines?

Accepted Answer

A)  20 
B)  40 
C)  200 
D)  10 
A)  20 
B)  40 
C)  200 
D)  10

Question 18

The concept of inferior goods can be used to show that

Accepted Answer

A)  lower prices signal poorer quality. 
B)  indifference curves can have positive slopes. 
C)  being able to consume more of all goods does not mean that a person will consume more of every good. 
D)  consumers will always buy more of all products if their incomes increase. 
A)  lower prices signal poorer quality. 
B)  indifference curves can have positive slopes. 
C)  being able to consume more of all goods does not mean that a person will consume more of every good. 
D)  consumers will always buy more of all products if their incomes increase.

Question 19

-Inga's graph of her budget line has apples per week on the vertical axis and loaves of bread per week on the horizontal. A fall in the price of an apple shifts the

Accepted Answer

A)  horizontal intercept leftward. 
B)  horizontal intercept rightward. 
C)  vertical intercept downward. 
D)  vertical intercept upward. 
A)  horizontal intercept leftward. 
B)  horizontal intercept rightward. 
C)  vertical intercept downward. 
D)  vertical intercept upward.

Question 20

Mary has $10 to spend each week on coffee, Qc and magazines, Qm. The price of a coffee is $1, and the price of a magazine is $2. Mary's budget equation is ________.

Accepted Answer

A)  Qm = 10 - Qc 
B)  Qm + Qc = 20 
C)  $1 × Qc + $2 × Qm = $10 
D)  Qm = 10 - 2 × Qc 
A)  Qm = 10 - Qc 
B)  Qm + Qc = 20 
C)  $1 × Qc + $2 × Qm = $10 
D)  Qm = 10 - 2 × Qc

"Consumption possibilities are limited by total utility." True or false? Explain.

What will an indifference curve look like between two commodities that are perfect complements, such as right shoes and left shoes?

-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 the price of a lobster dinner fell?

-In the above figure, Mark's monthly budget line for movies and plays changed, as shown by the arrow. The change was caused by

-The above figure gives your budget line between CDs and magazines. The slope of the budget line is ________ CD per magazine.

The variables that determine a household's budget line are

The slope of the indifference curve between steak and lobster is always equal to the ratio of their prices.

Shaniq consumes only magazine and CDs. Her income equals $60 per month. CDs are $12 each and magazines are $5 each. What is the equation for her budget line?

-The figure above shows Ilene's budget line. If Ilene's income rises, her budget line will

-In the above figure, if income is $8, the initial price of a soft drink is $1, and the initial price of a milkshake is $2, a decrease in the price of a milkshake to $1 will move the consumer from point to point .

-The above figure shows Jane's budget line and two of her indifference curves. When Jane is consuming at her best affordable point, what is her marginal rate of substitution?

-In the above figure, Sheryl's monthly budget line for movies and plays shifted, as shown. The shift in the budget line is parallel, so the shift might be because

-In the above figure, when the price of a gallon of gasoline falls, which points in the above figure are used to derive points on the consumer's demand curve for gasoline?

The marginal rate of substitution is equal to the ________.

-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 the price of a lobster dinner increased?

Suppose that Dave has $200 to spend per week and he buys only magazines and pizza. The price of a pizza is $10 and the price of a magazine is $5. What is Dave's real income in terms of magazines?

The concept of inferior goods can be used to show that

-Inga's graph of her budget line has apples per week on the vertical axis and loaves of bread per week on the horizontal. A fall in the price of an apple shifts the

Mary has $10 to spend each week on coffee, Q_c and magazines, Q_m. The price of a coffee is $1, and the price of a magazine is $2. Mary's budget equation is ________.

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

"Consumption possibilities are limited by total utility." True or false? Explain.

What will an indifference curve look like between two commodities that are perfect complements, such as right shoes and left shoes?

-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 the price of a lobster dinner fell?

-In the above figure, Mark's monthly budget line for movies and plays changed, as shown by the arrow. The change was caused by

-The above figure gives your budget line between CDs and magazines. The slope of the budget line is ________ CD per magazine.

The variables that determine a household's budget line are

The slope of the indifference curve between steak and lobster is always equal to the ratio of their prices.

Shaniq consumes only magazine and CDs. Her income equals $60 per month. CDs are $12 each and magazines are $5 each. What is the equation for her budget line?

-The figure above shows Ilene's budget line. If Ilene's income rises, her budget line will

-In the above figure, if income is $8, the initial price of a soft drink is $1, and the initial price of a milkshake is $2, a decrease in the price of a milkshake to $1 will move the consumer from point ________ to point ________.

-The above figure shows Jane's budget line and two of her indifference curves. When Jane is consuming at her best affordable point, what is her marginal rate of substitution?

-In the above figure, Sheryl's monthly budget line for movies and plays shifted, as shown. The shift in the budget line is parallel, so the shift might be because

-In the above figure, when the price of a gallon of gasoline falls, which points in the above figure are used to derive points on the consumer's demand curve for gasoline?

The marginal rate of substitution is equal to the ________.

-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 the price of a lobster dinner increased?

Suppose that Dave has $200 to spend per week and he buys only magazines and pizza. The price of a pizza is $10 and the price of a magazine is $5. What is Dave's real income in terms of magazines?

The concept of inferior goods can be used to show that

-Inga's graph of her budget line has apples per week on the vertical axis and loaves of bread per week on the horizontal. A fall in the price of an apple shifts the

Mary has $10 to spend each week on coffee, Qc and magazines, Qm. The price of a coffee is $1, and the price of a magazine is $2. Mary's budget equation is ________.

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

-In the above figure, if income is $8, the initial price of a soft drink is $1, and the initial price of a milkshake is $2, a decrease in the price of a milkshake to $1 will move the consumer from point to point .

Mary has $10 to spend each week on coffee, Q_c and magazines, Q_m. The price of a coffee is $1, and the price of a magazine is $2. Mary's budget equation is ________.