Question 1

Sam buys gasoline and coffee each week. In order to draw his budget line between gasoline and coffee, Sam would have to know

Accepted Answer

A)  only how much income he has available to spend on gasoline and coffee. 
B)  only the prices of one gallon of gasoline and one pound of coffee. 
C)  only how much gasoline he wants to buy and how much coffee he wants to drink. 
D)  both how much income he has to spend and the prices of one gallon of gasoline and one pound of coffee. 
A)  only how much income he has available to spend on gasoline and coffee. 
B)  only the prices of one gallon of gasoline and one pound of coffee. 
C)  only how much gasoline he wants to buy and how much coffee he wants to drink. 
D)  both how much income he has to spend and the prices of one gallon of gasoline and one pound of coffee.

Question 2

The ________ is the price of one good ________ the price of another good.

Accepted Answer

A)  relative price; times 
B)  relative price; divided by 
C)  budget; times 
D)  budget; divided by 
A)  relative price; times 
B)  relative price; divided by 
C)  budget; times 
D)  budget; divided by

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 there were a decrease 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 4

How is a budget line similar to a production possibilities frontier? How do they differ?

Accepted Answer

Both the budget line and the production

Question 5

"If Bill's income increases from $80,000 per year to $91,000 per year and he consumes pickup trucks and lamb chops with his money, Bill's budget line shifts outward and the increase in income means he can consume more trucks and more lamb." Is this statement true or false? Briefly explain your answer.

Accepted Answer

The statement is True. The inc

Question 6

-Consider the budget line in the above figure. If the consumer has income of $240, what is the relative price of movies?

Accepted Answer

A) 0.42 books 
B)  2.4 books 
C)  $10 per movie 
D)  $24 per movie 
A) 0.42 books 
B)  2.4 books 
C)  $10 per movie 
D)  $24 per movie

Question 7

If an indifference map for a consumer is made up of straight, negatively sloped lines, the marginal rate of substitution ________ as more of the good on the horizontal axis is consumed.

Accepted Answer

A)  does not diminish 
B)  diminishes 
C)  increases 
D)  More information is needed to answer the question. 
A)  does not diminish 
B)  diminishes 
C)  increases 
D)  More information is needed to answer the question.

Question 8

-The figure above shows Ronald's budget line. He has a weekly income of $20, which he spends on hotdogs and hamburgers. Now Ronald's income decreases to $10 per week and the price of a hotdog doubles. Ronald's budget line becomes ________ and ________.

Accepted Answer

A)  flatter; shifts rightward 
B)  flatter; does not shift 
C)  steeper; shifts rightward 
D)  steeper; shifts leftward 
A)  flatter; shifts rightward 
B)  flatter; does not shift 
C)  steeper; shifts rightward 
D)  steeper; shifts leftward

Question 9

-The indifference curves in the above figure could represent your indifference curves between

Accepted Answer

A)  Coke and Pepsi, which you consider perfect substitutes. 
B)  eyeglass frames and eyeglass lenses, which you think are perfect complements. 
C)  hot dogs and textbooks, which you think are neither perfect substitutes nor perfect complements. 
D)  none of the above. 
A)  Coke and Pepsi, which you consider perfect substitutes. 
B)  eyeglass frames and eyeglass lenses, which you think are perfect complements. 
C)  hot dogs and textbooks, which you think are neither perfect substitutes nor perfect complements. 
D)  none of the above.

Question 10

Ron spends $150 on movie tickets and pizza. The price of a pizza is $10 and a movie ticket is $7.50. With the quantity of movies measured along the vertical axis, the slope of Ron's budget line (with movies on the vertical axis) is ________ per pizza

Accepted Answer

A)  1.33 movies 
B)  -1.33 movies 
C)  0.75 of a movie 
D)  -0.75 of a movie 
A)  1.33 movies 
B)  -1.33 movies 
C)  0.75 of a movie 
D)  -0.75 of a movie

Question 11

In an indifference curve/budget line diagram, a consumer's equilibrium consumption combination will occur

Accepted Answer

A)  inside the budget line. 
B)  outside the budget line. 
C)  on the budget line. 
D)  at the origin. 
A)  inside the budget line. 
B)  outside the budget line. 
C)  on the budget line. 
D)  at the origin.

Question 12

-The figure above shows Sam's budget line. The magnitude of the slope of Sam's budget line is equal to the

Accepted Answer

A)  quantity of coffee purchased divided by the quantity of gasoline purchased. 
B)  price of coffee divided by the price of gasoline. 
C)  quantity of gasoline purchased divided by the quantity of coffee purchased. 
D)  price of gasoline divided by the price of coffee. 
A)  quantity of coffee purchased divided by the quantity of gasoline purchased. 
B)  price of coffee divided by the price of gasoline. 
C)  quantity of gasoline purchased divided by the quantity of coffee purchased. 
D)  price of gasoline divided by the price of coffee.

Question 13

-The indifference curves in the above figure could represent your indifference curves between

Accepted Answer

A)  Coke and Pepsi, which you consider perfect substitutes. 
B)  eyeglass frames and eyeglass lenses, which you think are perfect complements. 
C)  hot dogs and textbooks, which you think are neither perfect substitutes nor perfect complements. 
D)  none of the above. 
A)  Coke and Pepsi, which you consider perfect substitutes. 
B)  eyeglass frames and eyeglass lenses, which you think are perfect complements. 
C)  hot dogs and textbooks, which you think are neither perfect substitutes nor perfect complements. 
D)  none of the above.

Question 14

Some parents struggling with back-to-school buys. "A couple of years ago, I was able to buy everything practically new," said Charles Lane-Bey, a U.S. Postal Service worker who's struggling to make ends meet. Suppose Charles has $10 to spend on back-to-school clothing for his son, and pants cost 50 cents and shirts cost $1. Which of the following combinations of pants and shirts is affordable?

Accepted Answer

A)  10 pants and 6 shirts 
B)  7 pants and 7 shirts 
C)  3 pants and 8 shirts 
D)  6 pants and 2 shirts 
A)  10 pants and 6 shirts 
B)  7 pants and 7 shirts 
C)  3 pants and 8 shirts 
D)  6 pants and 2 shirts

Question 15

-Which of the following statements about the above figure is TRUE?

Accepted Answer

A)  Point A is equally preferred to point C. 
B)  Point B is equally preferred to point C. 
C)  Point C is preferred to point A. 
D)  Point A is preferred to point C. 
A)  Point A is equally preferred to point C. 
B)  Point B is equally preferred to point C. 
C)  Point C is preferred to point A. 
D)  Point A is preferred to point C.

Question 16

Larry spends all his $800 monthly income on pizza and milk. The price of pizza is $4 a slice, and the price of milk is $2 per quart. Larry's real monthly income in terms of pizza is

Accepted Answer

A)  400 slices. 
B)  $800. 
C)  200 slices. 
D)  $400. 
A)  400 slices. 
B)  $800. 
C)  200 slices. 
D)  $400.

Question 17

If Bill thinks tacos and turkey sandwiches are perfect substitutes, then his indifference curves for these two goods

Accepted Answer

A)  are L-shaped. 
B)  are negatively sloped and linear. 
C)  are positively sloped and linear. 
D)  have slopes equal to 1. 
A)  are L-shaped. 
B)  are negatively sloped and linear. 
C)  are positively sloped and linear. 
D)  have slopes equal to 1.

Question 18

You consume only steak and lobster. Your income effect from a drop in the price of lobster is measured by a movement along your indifference curve between steak and lobster.

Accepted Answer

A) True 
 B)False

Question 19

-The above figure gives your budget line between CDs and magazines. Which combination of CDs and magazines is not affordable?

Accepted Answer

A)  combination a 
B)  combination b 
C)  combination c 
D)  both combinations b and d 
A)  combination a 
B)  combination b 
C)  combination c 
D)  both combinations b and d

Question 20

-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 lobster 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

Sam buys gasoline and coffee each week. In order to draw his budget line between gasoline and coffee, Sam would have to know

The is the price of one good the price of another good.

-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 a decrease in her monthly dining out budget?

How is a budget line similar to a production possibilities frontier? How do they differ?

-Consider the budget line in the above figure. If the consumer has income of $240, what is the relative price of movies?

If an indifference map for a consumer is made up of straight, negatively sloped lines, the marginal rate of substitution ________ as more of the good on the horizontal axis is consumed.

-The figure above shows Ronald's budget line. He has a weekly income of $20, which he spends on hotdogs and hamburgers. Now Ronald's income decreases to $10 per week and the price of a hotdog doubles. Ronald's budget line becomes and .

-The indifference curves in the above figure could represent your indifference curves between

Ron spends $150 on movie tickets and pizza. The price of a pizza is $10 and a movie ticket is $7.50. With the quantity of movies measured along the vertical axis, the slope of Ron's budget line (with movies on the vertical axis) is ________ per pizza

In an indifference curve/budget line diagram, a consumer's equilibrium consumption combination will occur

-The figure above shows Sam's budget line. The magnitude of the slope of Sam's budget line is equal to the

-The indifference curves in the above figure could represent your indifference curves between

-Which of the following statements about the above figure is TRUE?

Larry spends all his $800 monthly income on pizza and milk. The price of pizza is $4 a slice, and the price of milk is $2 per quart. Larry's real monthly income in terms of pizza is

If Bill thinks tacos and turkey sandwiches are perfect substitutes, then his indifference curves for these two goods

You consume only steak and lobster. Your income effect from a drop in the price of lobster is measured by a movement along your indifference curve between steak and lobster.

-The above figure gives your budget line between CDs and magazines. Which combination of CDs and magazines is not affordable?

-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 lobster dinner?

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

Sam buys gasoline and coffee each week. In order to draw his budget line between gasoline and coffee, Sam would have to know

The ________ is the price of one good ________ the price of another good.

-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 a decrease in her monthly dining out budget?

How is a budget line similar to a production possibilities frontier? How do they differ?

-Consider the budget line in the above figure. If the consumer has income of $240, what is the relative price of movies?

If an indifference map for a consumer is made up of straight, negatively sloped lines, the marginal rate of substitution ________ as more of the good on the horizontal axis is consumed.

-The figure above shows Ronald's budget line. He has a weekly income of $20, which he spends on hotdogs and hamburgers. Now Ronald's income decreases to $10 per week and the price of a hotdog doubles. Ronald's budget line becomes ________ and ________.

-The indifference curves in the above figure could represent your indifference curves between

Ron spends $150 on movie tickets and pizza. The price of a pizza is $10 and a movie ticket is $7.50. With the quantity of movies measured along the vertical axis, the slope of Ron's budget line (with movies on the vertical axis) is ________ per pizza

In an indifference curve/budget line diagram, a consumer's equilibrium consumption combination will occur

-The figure above shows Sam's budget line. The magnitude of the slope of Sam's budget line is equal to the

-The indifference curves in the above figure could represent your indifference curves between

-Which of the following statements about the above figure is TRUE?

Larry spends all his $800 monthly income on pizza and milk. The price of pizza is $4 a slice, and the price of milk is $2 per quart. Larry's real monthly income in terms of pizza is

If Bill thinks tacos and turkey sandwiches are perfect substitutes, then his indifference curves for these two goods

You consume only steak and lobster. Your income effect from a drop in the price of lobster is measured by a movement along your indifference curve between steak and lobster.

-The above figure gives your budget line between CDs and magazines. Which combination of CDs and magazines is not affordable?

-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 lobster dinner?

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 is the price of one good the price of another good.

-The figure above shows Ronald's budget line. He has a weekly income of $20, which he spends on hotdogs and hamburgers. Now Ronald's income decreases to $10 per week and the price of a hotdog doubles. Ronald's budget line becomes and .