Question 1

Jodie has indifference curves for CDs and colas, with CDs on the vertical axis. The flatter her indifference curves are, the

Accepted Answer

A)  smaller her average rate of substitution. 
B)  larger her average rate of substitution. 
C)  smaller her marginal rate of substitution. 
D)  larger her marginal rate of substitution. 
A)  smaller her average rate of substitution. 
B)  larger her average rate of substitution. 
C)  smaller her marginal rate of substitution. 
D)  larger her marginal rate of substitution.

Question 2

-An increase in a consumer's income creates a

Accepted Answer

A)  rightward parallel shift of the budget line. 
B)  leftward parallel shift of the budget line. 
C)  rightward rotation of the budget line, so that the budget line becomes steeper. 
D)  leftward rotation of the budget line, so that the budget line becomes steeper. 
A)  rightward parallel shift of the budget line. 
B)  leftward parallel shift of the budget line. 
C)  rightward rotation of the budget line, so that the budget line becomes steeper. 
D)  leftward rotation of the budget line, so that the budget line becomes steeper.

Question 3

-The figure above shows Ilene's budget line. If the price of a can of cat food rises, her budget line rotates so that the vertical intercept is

Accepted Answer

A)  unchanged, but the horizontal intercept is closer to the origin. 
B)  unchanged, but the horizontal intercept is farther away from the origin. 
C)  farther away from the origin, but the horizontal intercept is closer to the origin. 
D)  closer to the origin, but the horizontal intercept is farther away from the origin. 
A)  unchanged, but the horizontal intercept is closer to the origin. 
B)  unchanged, but the horizontal intercept is farther away from the origin. 
C)  farther away from the origin, but the horizontal intercept is closer to the origin. 
D)  closer to the origin, but the horizontal intercept is farther away from the origin.

Question 4

The effect of a change in price on the quantity bought when the consumer remains indifferent between the original and the new situation is called the

Accepted Answer

A)  income effect. 
B)  indifference effect. 
C)  substitution effect. 
D)  demand effect. 
A)  income effect. 
B)  indifference effect. 
C)  substitution effect. 
D)  demand effect.

Question 5

The budget line can shift or rotate

Accepted Answer

A)  only when income changes. 
B)  only when prices change. 
C)  when either income or prices change. 
D)  None of the above, because changes in income and prices do not shift or rotate the budget line. 
A)  only when income changes. 
B)  only when prices change. 
C)  when either income or prices change. 
D)  None of the above, because changes in income and prices do not shift or rotate the budget line.

Question 6

-Given the budget line in the figure above, the combination of chips that is NOT affordable is

Accepted Answer

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

Question 7

-The figure above shows Ilene's budget line. The price of a can of cat food is $2. The price of a can of dog food

Accepted Answer

A)  is $1.60. 
B)  is $4.00. 
C)  is $5.00. 
D)  cannot be determined without more information. 
A)  is $1.60. 
B)  is $4.00. 
C)  is $5.00. 
D)  cannot be determined without more information.

Question 8

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. The relative price of milk is

Accepted Answer

A)  2 slices of pizza per quart. 
B)  0.5 slices of pizza per quart. 
C)  $2 per quart. 
D)  0.5 quarts per slice of pizza. 
A)  2 slices of pizza per quart. 
B)  0.5 slices of pizza per quart. 
C)  $2 per quart. 
D)  0.5 quarts per slice of pizza.

Question 9

What is the relationship between the income effect and the substitution effect for a normal good and what is it for an inferior good?

Accepted Answer

For a normal good, the income effect rei

Question 10

If all prices fall by 5 percent and money income remains constant, the new budget line will have

Accepted Answer

A)  a positive slope. 
B)  the same slope. 
C)  a steeper slope. 
D)  a flatter slope. 
A)  a positive slope. 
B)  the same slope. 
C)  a steeper slope. 
D)  a flatter slope.

Question 11

If units of pizza are plotted on the horizontal axis, and units of hot dogs plotted on the vertical axis, and the price of a hot dog increases the

Accepted Answer

A)  x-intercept and the slope of the budget line will increase. 
B)  y-intercept and the slope of the budget line will increase. 
C)  x-intercept and the slope of the budget line will decrease. 
D)  y-intercept and the slope of the budget line will decrease. 
A)  x-intercept and the slope of the budget line will increase. 
B)  y-intercept and the slope of the budget line will increase. 
C)  x-intercept and the slope of the budget line will decrease. 
D)  y-intercept and the slope of the budget line will decrease.

Question 12

Indifference curves are drawn on a diagram with the

Accepted Answer

A)  price of a good on the vertical axis and its quantity on the horizontal axis. 
B)  price of one good on the vertical axis and the price of another good on the horizontal axis. 
C)  quantity of a good on the vertical axis and its price on the horizontal axis. 
D)  quantity of one good on the vertical axis and the quantity of another good on the horizontal axis. 
A)  price of a good on the vertical axis and its quantity on the horizontal axis. 
B)  price of one good on the vertical axis and the price of another good on the horizontal axis. 
C)  quantity of a good on the vertical axis and its price on the horizontal axis. 
D)  quantity of one good on the vertical axis and the quantity of another good on the horizontal axis.

Question 13

If Sam has $80.00 each week to spend on tacos and magazines, and their respective prices are $.50 per taco and $4.00 per magazine, which of the following equations represents his budget line?

Accepted Answer

A)  $80.00 = $.50/Qt + $4.00/Qm 
B)  $80.00 = Qt/Qm + $.50 /$4.00 
C)  $80.00 = $.50(Qm) + $4.00(Qt) 
D)  $80.00 = $.50(Qt) + $4.00(Qm) 
A)  $80.00 = $.50/Qt + $4.00/Qm 
B)  $80.00 = Qt/Qm + $.50 /$4.00 
C)  $80.00 = $.50(Qm) + $4.00(Qt) 
D)  $80.00 = $.50(Qt) + $4.00(Qm)

Question 14

-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 15

Why do consumers prefer higher indifference curves (farther to the right) to lower indifference curves?

Accepted Answer

When comparing two indifference curves,

Question 16

At the best affordable point, consumers equate their marginal rates of substitution to

Accepted Answer

A)  their money income. 
B)  their real income. 
C)  relative prices. 
D)  relative quantities. 
A)  their money income. 
B)  their real income. 
C)  relative prices. 
D)  relative quantities.

Question 17

If two goods are complements, then their

Accepted Answer

A)  indifference curves are positively sloped straight lines. 
B)  indifference curves are negatively sloped straight lines. 
C)  indifference curves are L-shaped. 
D)  marginal rate of substitution is infinity. 
A)  indifference curves are positively sloped straight lines. 
B)  indifference curves are negatively sloped straight lines. 
C)  indifference curves are L-shaped. 
D)  marginal rate of substitution is infinity.

Question 18

A decrease in price allows a consumer to attain a higher indifference curve.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements best describes a consumer's budget line?

Accepted Answer

A)  It shows all combinations of goods among which the consumer is indifferent. 
B)  It shows the limits to a consumer's set of affordable consumption choices. 
C)  It shows the desired level of consumption for the consumer. 
D)  It shows the consumption choices made by a consumer. 
A)  It shows all combinations of goods among which the consumer is indifferent. 
B)  It shows the limits to a consumer's set of affordable consumption choices. 
C)  It shows the desired level of consumption for the consumer. 
D)  It shows the consumption choices made by a consumer.

Question 20

-The above figure gives your budget line between CDs and magazines. What would allow you to buy more CDs?

Accepted Answer

A)  a decrease in the relative price of CDs 
B)  an increase in income 
C)  a decrease in the price of magazines with no change in the price of CDs 
D)  All of the above changes would allow you to buy more CDs. 
A)  a decrease in the relative price of CDs 
B)  an increase in income 
C)  a decrease in the price of magazines with no change in the price of CDs 
D)  All of the above changes would allow you to buy more CDs.

Jodie has indifference curves for CDs and colas, with CDs on the vertical axis. The flatter her indifference curves are, the

-An increase in a consumer's income creates a

-The figure above shows Ilene's budget line. If the price of a can of cat food rises, her budget line rotates so that the vertical intercept is

The effect of a change in price on the quantity bought when the consumer remains indifferent between the original and the new situation is called the

The budget line can shift or rotate

-Given the budget line in the figure above, the combination of chips that is NOT affordable is

-The figure above shows Ilene's budget line. The price of a can of cat food is $2. The price of a can of dog food

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. The relative price of milk is

What is the relationship between the income effect and the substitution effect for a normal good and what is it for an inferior good?

If all prices fall by 5 percent and money income remains constant, the new budget line will have

If units of pizza are plotted on the horizontal axis, and units of hot dogs plotted on the vertical axis, and the price of a hot dog increases the

Indifference curves are drawn on a diagram with the

If Sam has $80.00 each week to spend on tacos and magazines, and their respective prices are $.50 per taco and $4.00 per magazine, which of the following equations represents his budget line?

-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?

Why do consumers prefer higher indifference curves (farther to the right) to lower indifference curves?

At the best affordable point, consumers equate their marginal rates of substitution to

If two goods are complements, then their

A decrease in price allows a consumer to attain a higher indifference curve.

Which of the following statements best describes a consumer's budget line?

-The above figure gives your budget line between CDs and magazines. What would allow you to buy more CDs?

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

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Exam 9: Possibilities, Preferences, and Choices

Jodie has indifference curves for CDs and colas, with CDs on the vertical axis. The flatter her indifference curves are, the

-An increase in a consumer's income creates a

-The figure above shows Ilene's budget line. If the price of a can of cat food rises, her budget line rotates so that the vertical intercept is

The effect of a change in price on the quantity bought when the consumer remains indifferent between the original and the new situation is called the

The budget line can shift or rotate

-Given the budget line in the figure above, the combination of chips that is NOT affordable is

-The figure above shows Ilene's budget line. The price of a can of cat food is $2. The price of a can of dog food

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. The relative price of milk is

What is the relationship between the income effect and the substitution effect for a normal good and what is it for an inferior good?

If all prices fall by 5 percent and money income remains constant, the new budget line will have

If units of pizza are plotted on the horizontal axis, and units of hot dogs plotted on the vertical axis, and the price of a hot dog increases the

Indifference curves are drawn on a diagram with the

If Sam has $80.00 each week to spend on tacos and magazines, and their respective prices are $.50 per taco and $4.00 per magazine, which of the following equations represents his budget line?

-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?

Why do consumers prefer higher indifference curves (farther to the right) to lower indifference curves?

At the best affordable point, consumers equate their marginal rates of substitution to

If two goods are complements, then their

A decrease in price allows a consumer to attain a higher indifference curve.

Which of the following statements best describes a consumer's budget line?

-The above figure gives your budget line between CDs and magazines. What would allow you to buy more CDs?

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