Question 1

Moving along a given budget line

Accepted Answer

A)  prices and real income both decrease. 
B)  prices fall and real income is constant. 
C)  real income decreases and prices are constant. 
D)  prices and real income are constant. 
A)  prices and real income both decrease. 
B)  prices fall and real income is constant. 
C)  real income decreases and prices are constant. 
D)  prices and real income are constant.

Question 2

A consumer is in equilibrium when the consumption point is on

Accepted Answer

A)  the budget line. 
B)  an indifference curve. 
C)  the highest indifference curve that just touches the budget line. 
D)  none of the above. 
A)  the budget line. 
B)  an indifference curve. 
C)  the highest indifference curve that just touches the budget line. 
D)  none of the above.

Question 3

Except for perfect complements, an indifference curve has a ________ slope and becomes ________ moving to the right.

Accepted Answer

A)  negative; flatter 
B)  negative; steeper 
C)  positive; flatter 
D)  positive; steeper 
A)  negative; flatter 
B)  negative; steeper 
C)  positive; flatter 
D)  positive; steeper

Question 4

What does the slope of the budget line equal?

Accepted Answer

The slope of the budget line equals an o

Question 5

-In the above figure, the budget line would rotate in the direction indicated as a result of a

Accepted Answer

A)  rise in the price of a book. 
B)  fall in the price of a book. 
C)  rise in the price of a movie. 
D)  decrease in income. 
A)  rise in the price of a book. 
B)  fall in the price of a book. 
C)  rise in the price of a movie. 
D)  decrease in income.

Question 6

In order to determine a household's budget line, you must know the

Accepted Answer

A)  prices of the goods bought and the household's income. 
B)  prices of the goods bought, but not the household's income. 
C)  household's income, but not the prices of goods bought. 
D)  household's income, prices of the goods bought, and the household's preferences. 
A)  prices of the goods bought and the household's income. 
B)  prices of the goods bought, but not the household's income. 
C)  household's income, but not the prices of goods bought. 
D)  household's income, prices of the goods bought, and the household's preferences.

Question 7

An indifference curve will become ________ the origin the more that the consumer considers the two goods as substitutes.

Accepted Answer

A)  less bowed-in towards 
B)  more bowed-in towards 
C)  less bowed-out from 
D)  more bowed-out from 
A)  less bowed-in towards 
B)  more bowed-in towards 
C)  less bowed-out from 
D)  more bowed-out from

Question 8

An indifference curve shows

Accepted Answer

A)  the relationship between prices and a household's budget. 
B)  all possible prices and preferences for a good. 
C)  combinations of goods among which a household is indifferent. 
D)  budget lines among which a consumer is indifferent. 
A)  the relationship between prices and a household's budget. 
B)  all possible prices and preferences for a good. 
C)  combinations of goods among which a household is indifferent. 
D)  budget lines among which a consumer is indifferent.

Question 9

In a budget line/indifference curve figure, how do you identify the best affordable combination of any two goods?

Accepted Answer

Any combination of goods along the budge

Question 10

-Melissa has an income of $240 a month to spend on tennis lessons and concert tickets. The price of a tennis lesson is $20, and the price of a concert ticket is $40. If the price of a tennis lesson rises to $30, Melissa's budget line, with tennis lessons on the horizontal axis

Accepted Answer

A)  shifts rightward with no change in its slope. 
B)  shifts leftward with no change in its slope. 
C)  becomes flatter. 
D)  becomes steeper. 
A)  shifts rightward with no change in its slope. 
B)  shifts leftward with no change in its slope. 
C)  becomes flatter. 
D)  becomes steeper.

Question 11

The more closely substitutable are two goods, the

Accepted Answer

A)  more normal looking is the indifference curve for the two items. 
B)  more closely the indifference curve for these two items approximates a straight line. 
C)  more tightly curved is the indifference curve for these items. 
D)  None of the above answers is correct. 
A)  more normal looking is the indifference curve for the two items. 
B)  more closely the indifference curve for these two items approximates a straight line. 
C)  more tightly curved is the indifference curve for these items. 
D)  None of the above answers is correct.

Question 12

An indifference curve is a line that shows combinations of goods among which a consumer

Accepted Answer

A)  needs equally. 
B)  does not care which combination he or she receives. 
C)  can afford. 
D)  has readily available. 
A)  needs equally. 
B)  does not care which combination he or she receives. 
C)  can afford. 
D)  has readily available.

Question 13

The rate at which Sam is willing to give up a gallon of gasoline to get one more pound of coffee, and remain on the same indifference curve is called his

Accepted Answer

A)  opportunity cost of coffee. 
B)  opportunity cost of gasoline. 
C)  personal price of coffee. 
D)  marginal rate of substitution. 
A)  opportunity cost of coffee. 
B)  opportunity cost of gasoline. 
C)  personal price of coffee. 
D)  marginal rate of substitution.

Question 14

The rate at which a person is willing to give up a gallon of gasoline to get one more pound of coffee and remain on the same indifference curve is called his or her

Accepted Answer

A)  relative cost of coffee in terms of gasoline. 
B)  indifference cost of coffee. 
C)  personal price of coffee. 
D)  marginal rate of substitution. 
A)  relative cost of coffee in terms of gasoline. 
B)  indifference cost of coffee. 
C)  personal price of coffee. 
D)  marginal rate of substitution.

Question 15

Which of the following results in a "parallel" shift outward of your indifference curves between gasoline and movie rentals?

Accepted Answer

A)  any decrease in the prices of gasoline and movie rentals 
B)  an equal percentage decrease in the prices of gasoline and movie rentals 
C)  an increase in your income 
D)  none of the above 
A)  any decrease in the prices of gasoline and movie rentals 
B)  an equal percentage decrease in the prices of gasoline and movie rentals 
C)  an increase in your income 
D)  none of the above

Question 16

-In the above figure, income is $8, the price of a soft drink is $1, and the initial price of a milkshake is $2. If the price of a milkshake decreases to $1, milkshakes are revealed to be

Accepted Answer

A)  an inferior good. 
B)  a normal good. 
C)  less preferred than soft drinks. 
D)  None of the above answers is correct. 
A)  an inferior good. 
B)  a normal good. 
C)  less preferred than soft drinks. 
D)  None of the above answers is correct.

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. If Dave buys 20 magazines per week, which of the following amount of pizza is not affordable to him?

Accepted Answer

A)  10 
B)  20 
C)  9 
D)  All of the above answers are correct because none of the listed amounts of pizza are affordable. 
A)  10 
B)  20 
C)  9 
D)  All of the above answers are correct because none of the listed amounts of pizza are affordable.

Question 18

If the price of the good measured on the horizontal axis falls, a consumer's budget line

Accepted Answer

A)  becomes flatter. 
B)  becomes steeper. 
C)  shifts rightward and its slope does not change. 
D)  shifts leftward and its slope does not change. 
A)  becomes flatter. 
B)  becomes steeper. 
C)  shifts rightward and its slope does not change. 
D)  shifts leftward and its slope does not change.

Question 19

-Joe has $50, which he spends on movies and pizza. If the price of a pizza falls, Joe can

Accepted Answer

A)  consume more of both goods. 
B)  consume more pizza only if he gives up some movies. 
C)  consume more movies only if he gives up some pizza. 
D)  consume more pizza only. 
A)  consume more of both goods. 
B)  consume more pizza only if he gives up some movies. 
C)  consume more movies only if he gives up some pizza. 
D)  consume more pizza only.

Moving along a given budget line

A consumer is in equilibrium when the consumption point is on

Except for perfect complements, an indifference curve has a slope and becomes moving to the right.

What does the slope of the budget line equal?

-In the above figure, the budget line would rotate in the direction indicated as a result of a

In order to determine a household's budget line, you must know the

An indifference curve will become ________ the origin the more that the consumer considers the two goods as substitutes.

An indifference curve shows

In a budget line/indifference curve figure, how do you identify the best affordable combination of any two goods?

-Melissa has an income of $240 a month to spend on tennis lessons and concert tickets. The price of a tennis lesson is $20, and the price of a concert ticket is $40. If the price of a tennis lesson rises to $30, Melissa's budget line, with tennis lessons on the horizontal axis

The more closely substitutable are two goods, the

An indifference curve is a line that shows combinations of goods among which a consumer

The rate at which Sam is willing to give up a gallon of gasoline to get one more pound of coffee, and remain on the same indifference curve is called his

The rate at which a person is willing to give up a gallon of gasoline to get one more pound of coffee and remain on the same indifference curve is called his or her

Which of the following results in a "parallel" shift outward of your indifference curves between gasoline and movie rentals?

-In the above figure, income is $8, the price of a soft drink is $1, and the initial price of a milkshake is $2. If the price of a milkshake decreases to $1, milkshakes are revealed to be

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. If Dave buys 20 magazines per week, which of the following amount of pizza is not affordable to him?

If the price of the good measured on the horizontal axis falls, a consumer's budget line

-Joe has $50, which he spends on movies and pizza. If the price of a pizza falls, Joe can

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

Moving along a given budget line

A consumer is in equilibrium when the consumption point is on

Except for perfect complements, an indifference curve has a ________ slope and becomes ________ moving to the right.

What does the slope of the budget line equal?

-In the above figure, the budget line would rotate in the direction indicated as a result of a

In order to determine a household's budget line, you must know the

An indifference curve will become ________ the origin the more that the consumer considers the two goods as substitutes.

An indifference curve shows

In a budget line/indifference curve figure, how do you identify the best affordable combination of any two goods?

-Melissa has an income of $240 a month to spend on tennis lessons and concert tickets. The price of a tennis lesson is $20, and the price of a concert ticket is $40. If the price of a tennis lesson rises to $30, Melissa's budget line, with tennis lessons on the horizontal axis

The more closely substitutable are two goods, the

An indifference curve is a line that shows combinations of goods among which a consumer

The rate at which Sam is willing to give up a gallon of gasoline to get one more pound of coffee, and remain on the same indifference curve is called his

The rate at which a person is willing to give up a gallon of gasoline to get one more pound of coffee and remain on the same indifference curve is called his or her

Which of the following results in a "parallel" shift outward of your indifference curves between gasoline and movie rentals?

-In the above figure, income is $8, the price of a soft drink is $1, and the initial price of a milkshake is $2. If the price of a milkshake decreases to $1, milkshakes are revealed to be

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. If Dave buys 20 magazines per week, which of the following amount of pizza is not affordable to him?

If the price of the good measured on the horizontal axis falls, a consumer's budget line

-Joe has $50, which he spends on movies and pizza. If the price of a pizza falls, Joe can

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

Except for perfect complements, an indifference curve has a slope and becomes moving to the right.