Question 1

Which of the following will change the slopes of your indifference curves between gasoline and movie rentals?

Accepted Answer

A)  a change in your preferences for either of the two goods 
B)  only a change in the price of either of the two goods 
C)  only a change in your income 
D)  Both a change in the price of either good and a change in income will change the slopes of your indifference curves. 
A)  a change in your preferences for either of the two goods 
B)  only a change in the price of either of the two goods 
C)  only a change in your income 
D)  Both a change in the price of either good and a change in income will change the slopes of your indifference curves.

Question 2

If the price of a good rises and the consumer's budget remains the same, what happens to the consumer's consumption possibilities?

Accepted Answer

The consumer's consumption possibilities

Question 3

-In the figure above, an increase in income would result in the budget line

Accepted Answer

A)  making a parallel shift toward point a. 
B)  making a parallel shift toward point c. 
C)  becoming flatter. 
D)  becoming steeper. 
A)  making a parallel shift toward point a. 
B)  making a parallel shift toward point c. 
C)  becoming flatter. 
D)  becoming steeper.

Question 4

John has $40 to spend on pizza and tacos. Pizza costs $10 each and tacos are $1 per taco. John's real income ________.

Accepted Answer

A)  is $40 
B)  is 4 pizzas or 40 tacos 
C)  is 4 pizzas plus 40 tacos 
D)  depends only on his money wage 
A)  is $40 
B)  is 4 pizzas or 40 tacos 
C)  is 4 pizzas plus 40 tacos 
D)  depends only on his money wage

Question 5

When the price of a normal good decreases, people buy ________ of the good due to ________.

Accepted Answer

A)  more; the substitution effect only 
B)  more; the substitution and income effects 
C)  less; the substitution effect only 
D)  less; the income effect only 
A)  more; the substitution effect only 
B)  more; the substitution and income effects 
C)  less; the substitution effect only 
D)  less; the income effect only

Question 6

-The figure above shows Tanya's consumption possibilities. Tanya spends $100 per month on movies and restaurant meals. The price of a movie ticket is ________ and the price of a restaurant meal is ________.

Accepted Answer

A)  $7; $15 
B)  $10; $10 
C)  $20; $5 
D)  $5; $20 
A)  $7; $15 
B)  $10; $10 
C)  $20; $5 
D)  $5; $20

Question 7

The lower the price of the good measured on the vertical axis, other thing remaining the same, the flatter the budget line.

Accepted Answer

A) True 
 B)False

Question 8

-Kristen has an income of $450 per year to spend on music CDs and movies on DVDs. The price of a CD is $15 and the initial price of a DVD is $22.50. The indifference curves in the figure above (I1, I2, and I3) reflect Kristen's preferences. If the price of a DVD falls to $18, the income effect on Kristen's consumption of DVDs ________ the substitution effect, so a DVD is ________ good.

Accepted Answer

A)  partly offsets; an inferior 
B)  partly offsets; a normal 
C)  reinforces; an inferior 
D)  reinforces; a normal 
A)  partly offsets; an inferior 
B)  partly offsets; a normal 
C)  reinforces; an inferior 
D)  reinforces; a normal

Question 9

The point where the indifference curve is tangent to the budget line

Accepted Answer

A)  is the best affordable point. 
B)  is where the marginal rate of substitution exceeds the relative price by as much as possible. 
C)  is a point on consumer's demand curve. 
D)  All of the above answers are correct. 
A)  is the best affordable point. 
B)  is where the marginal rate of substitution exceeds the relative price by as much as possible. 
C)  is a point on consumer's demand curve. 
D)  All of the above answers are correct.

Question 10

Suppose the price of coffee is $3, the price of a bagel is $2 and a person's budget is $40. The budget line's equation is

Accepted Answer

A)  $2/Qbagel + $3/Qcoffee = $40. 
B)  $2(Qbagel) + $3(Qcoffee) = $40. 
C)  Qbagel /$2 + Qcoffee /$3 = $40. 
D)  Qbagel + Qcoffee = $40/($3 + $2). 
A)  $2/Qbagel + $3/Qcoffee = $40. 
B)  $2(Qbagel) + $3(Qcoffee) = $40. 
C)  Qbagel /$2 + Qcoffee /$3 = $40. 
D)  Qbagel + Qcoffee = $40/($3 + $2).

Question 11

The assumption of diminishing marginal rate of substitution means that

Accepted Answer

A)  the budget line has a negative slope. 
B)  the budget line does not shift when people's preferences change. 
C)  indifference curves might have a positive slope. 
D)  indifference curves will be concave. 
A)  the budget line has a negative slope. 
B)  the budget line does not shift when people's preferences change. 
C)  indifference curves might have a positive slope. 
D)  indifference curves will be concave.

Question 12

-Suppose you have a $20 budget per week, the price of soda is $1 per bottle, and the price of pizza is $4 per slice. In the above figure, draw a budget line for soda and pizza, placing soda on the horizontal axis. Correctly label the axes.

Accepted Answer

@#IMG-DLM& The budget line is

Question 13

-The figure above shows Sam's budget line. Which of the following combinations of gasoline and coffee are available to Sam?

Accepted Answer

A)  40 gallons of gasoline and 1 pound of coffee 
B)  1 gallon of gasoline and 20 pounds of coffee 
C)  16 gallons of gasoline and 12 pounds of coffee 
D)  12 gallons of gasoline and 16 pounds of coffee 
A)  40 gallons of gasoline and 1 pound of coffee 
B)  1 gallon of gasoline and 20 pounds of coffee 
C)  16 gallons of gasoline and 12 pounds of coffee 
D)  12 gallons of gasoline and 16 pounds of coffee

Question 14

-The figure above shows Sam's budget line. Which of the following would result in Sam's budget line shifting leftward and not changing its slope?

Accepted Answer

A)  a decline in his preferences for both gasoline and coffee 
B)  an equal percentage reduction in the prices of both a gallon of gasoline and a pound of coffee 
C)  a decrease in Sam's income 
D)  a fall in the ratio of the price of a gallon of gasoline to the price of a pound of coffee 
A)  a decline in his preferences for both gasoline and coffee 
B)  an equal percentage reduction in the prices of both a gallon of gasoline and a pound of coffee 
C)  a decrease in Sam's income 
D)  a fall in the ratio of the price of a gallon of gasoline to the price of a pound of coffee

Question 15

Which of the following statements is FALSE?

Accepted Answer

A)  A consumer has only one indifference curve. 
B)  A consumer possesses a preference map. 
C)  An indifference curve is a curve that shows the combination of goods among which a consumer is indifferent. 
D)  The marginal rate of substitution is the rate at which a consumer will give up good y to get more of good x and remain on the same indifference curve. 
A)  A consumer has only one indifference curve. 
B)  A consumer possesses a preference map. 
C)  An indifference curve is a curve that shows the combination of goods among which a consumer is indifferent. 
D)  The marginal rate of substitution is the rate at which a consumer will give up good y to get more of good x and remain on the same indifference curve.

Question 16

-Your weekly budget for gasoline and movie rentals is $45.00. Referring to the figure above, what is the price per gallon of gasoline?

Accepted Answer

A)  $1.00 
B)  $1.25 
C)  $1.50 
D)  $1.75 
A)  $1.00 
B)  $1.25 
C)  $1.50 
D)  $1.75

Question 17

Preferences can be described as

Accepted Answer

A)  what a person likes and dislikes. 
B)  the income opportunities of several activities. 
C)  feasible consumption combinations. 
D)  the relative prices of goods and services. 
A)  what a person likes and dislikes. 
B)  the income opportunities of several activities. 
C)  feasible consumption combinations. 
D)  the relative prices of goods and services.

Question 18

If consumers spend their money only on beef and vegetables, then the substitution effect of an increase in the price of beef would result in consuming ________ beef and ________ vegetables.

Accepted Answer

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

Question 19

Suppose the price of chocolate chip cookies is $4.00 per pound and the price of a slice of cake is $2.00 per slice. The relative price of cake in terms of cookies is

Accepted Answer

A)  1/2 pound of cookies per cake. 
B)  2 pounds of cookies per cake. 
C)  1/2 slice of cake per cookie. 
D)  2 slices of cake per cookie. 
A)  1/2 pound of cookies per cake. 
B)  2 pounds of cookies per cake. 
C)  1/2 slice of cake per cookie. 
D)  2 slices of cake per cookie.

Question 20

Holding your income and the price of lobster constant, you can derive your demand curve for steak from an indifference curve/budget line diagram by determining how your consumption of steak changes when the price of a steak changes.

Accepted Answer

A) True 
 B)False

Which of the following will change the slopes of your indifference curves between gasoline and movie rentals?

If the price of a good rises and the consumer's budget remains the same, what happens to the consumer's consumption possibilities?

-In the figure above, an increase in income would result in the budget line

John has $40 to spend on pizza and tacos. Pizza costs $10 each and tacos are $1 per taco. John's real income ________.

When the price of a normal good decreases, people buy of the good due to .

-The figure above shows Tanya's consumption possibilities. Tanya spends $100 per month on movies and restaurant meals. The price of a movie ticket is and the price of a restaurant meal is .

The lower the price of the good measured on the vertical axis, other thing remaining the same, the flatter the budget line.

The point where the indifference curve is tangent to the budget line

Suppose the price of coffee is $3, the price of a bagel is $2 and a person's budget is $40. The budget line's equation is

The assumption of diminishing marginal rate of substitution means that

-Suppose you have a $20 budget per week, the price of soda is $1 per bottle, and the price of pizza is $4 per slice. In the above figure, draw a budget line for soda and pizza, placing soda on the horizontal axis. Correctly label the axes.

-The figure above shows Sam's budget line. Which of the following combinations of gasoline and coffee are available to Sam?

-The figure above shows Sam's budget line. Which of the following would result in Sam's budget line shifting leftward and not changing its slope?

Which of the following statements is FALSE?

-Your weekly budget for gasoline and movie rentals is $45.00. Referring to the figure above, what is the price per gallon of gasoline?

Preferences can be described as

If consumers spend their money only on beef and vegetables, then the substitution effect of an increase in the price of beef would result in consuming beef and vegetables.

Suppose the price of chocolate chip cookies is $4.00 per pound and the price of a slice of cake is $2.00 per slice. The relative price of cake in terms of cookies is

Holding your income and the price of lobster constant, you can derive your demand curve for steak from an indifference curve/budget line diagram by determining how your consumption of steak changes when the price of a steak changes.

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

Which of the following will change the slopes of your indifference curves between gasoline and movie rentals?

If the price of a good rises and the consumer's budget remains the same, what happens to the consumer's consumption possibilities?

-In the figure above, an increase in income would result in the budget line

John has $40 to spend on pizza and tacos. Pizza costs $10 each and tacos are $1 per taco. John's real income ________.

When the price of a normal good decreases, people buy ________ of the good due to ________.

-The figure above shows Tanya's consumption possibilities. Tanya spends $100 per month on movies and restaurant meals. The price of a movie ticket is ________ and the price of a restaurant meal is ________.

The lower the price of the good measured on the vertical axis, other thing remaining the same, the flatter the budget line.

The point where the indifference curve is tangent to the budget line

Suppose the price of coffee is $3, the price of a bagel is $2 and a person's budget is $40. The budget line's equation is

The assumption of diminishing marginal rate of substitution means that

-Suppose you have a $20 budget per week, the price of soda is $1 per bottle, and the price of pizza is $4 per slice. In the above figure, draw a budget line for soda and pizza, placing soda on the horizontal axis. Correctly label the axes.

-The figure above shows Sam's budget line. Which of the following combinations of gasoline and coffee are available to Sam?

-The figure above shows Sam's budget line. Which of the following would result in Sam's budget line shifting leftward and not changing its slope?

Which of the following statements is FALSE?

-Your weekly budget for gasoline and movie rentals is $45.00. Referring to the figure above, what is the price per gallon of gasoline?

Preferences can be described as

If consumers spend their money only on beef and vegetables, then the substitution effect of an increase in the price of beef would result in consuming ________ beef and ________ vegetables.

Suppose the price of chocolate chip cookies is $4.00 per pound and the price of a slice of cake is $2.00 per slice. The relative price of cake in terms of cookies is

Holding your income and the price of lobster constant, you can derive your demand curve for steak from an indifference curve/budget line diagram by determining how your consumption of steak changes when the price of a steak changes.

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

When the price of a normal good decreases, people buy of the good due to .

-The figure above shows Tanya's consumption possibilities. Tanya spends $100 per month on movies and restaurant meals. The price of a movie ticket is and the price of a restaurant meal is .

If consumers spend their money only on beef and vegetables, then the substitution effect of an increase in the price of beef would result in consuming beef and vegetables.