Question 1

Under the buy one, get one free regime, the

Accepted Answer

A) budget line rotates counter-clockwise. 
B) price is reduced by 50%. 
C) budget set expands. 
D) indifference curve is changed. 
A) budget line rotates counter-clockwise. 
B) price is reduced by 50%. 
C) budget set expands. 
D) indifference curve is changed.

Question 2

The absolute value of the slope of the indifference curve is called the:

Accepted Answer

A) marginal revenue. 
B) average rate of substitution. 
C) marginal rate of substitution. 
D) marginal cost. 
A) marginal revenue. 
B) average rate of substitution. 
C) marginal rate of substitution. 
D) marginal cost.

Question 3

The firm manager with indifference curves which are convex from the origin (output on the horizontal axis and profit on the vertical axis) views

Accepted Answer

A) only profits to be "goods." 
B) only outputs to be "goods." 
C) both profits and outputs to be "goods." 
D) none of the statements associated with this question are correct. 
A) only profits to be "goods." 
B) only outputs to be "goods." 
C) both profits and outputs to be "goods." 
D) none of the statements associated with this question are correct.

Question 4

If a consumer is given a $10 gift certificate, good for items in store X and all items in store X are inferior goods, then consumer desires to consume

Accepted Answer

A) more goods in store X. 
B) less goods in store X. 
C) the same amount of goods in store X. 
D) none of the statements associated with this question are correct. 
A) more goods in store X. 
B) less goods in store X. 
C) the same amount of goods in store X. 
D) none of the statements associated with this question are correct.

Question 5

Sam Voter prefers Jack to Rob, Rob to Mark, and Jack to Mark.Sam's preferences

Accepted Answer

A) are not consistent with our assumptions about consumer behavior. 
B) indicate that he is a liberal. 
C) are not complete. 
D) are transitive. 
A) are not consistent with our assumptions about consumer behavior. 
B) indicate that he is a liberal. 
C) are not complete. 
D) are transitive.

Question 6

The maximum quantity of good X that is affordable is:

Accepted Answer

A) M/PY. 
B) M/X. 
C) M/PX. 
D) PYY. 
A) M/PY. 
B) M/X. 
C) M/PX. 
D) PYY.

Question 7

Suppose the following Lagrangian is formed to maximize a consumer's utility subject to her budget constraint: ? = U(X,Y) + $\ell$(1,000 - 50X - 5Y).The first-order conditions for this problem imply

Accepted Answer

A) MRS = 10. 
B) PX / PY = 10. 
C) ($\partial$U/$\partial$X) / ($\partial$U/$\partial$Y) = 10. 
D) All of the statements associated with this question are correct. 
A) MRS = 10. 
B) PX / PY = 10. 
C) ($\partial$U/$\partial$X) / ($\partial$U/$\partial$Y) = 10. 
D) All of the statements associated with this question are correct.

Question 8

Suppose that consumers' preferences are well behaved in that properties 4-1 - 4-4 are satisfied.Furthermore, assume that X is a normal good, Y is an inferior good and that the price of good Y decreases.Then, which of the following effect is known with certainty.

Accepted Answer

A) the income and substitution effect reinforce one another leading to an overall decrease in the consumption of good X. 
B) the income and substitution effect will have competing effects leading to an indeterminate impact on the consumption of good Y. 
C) the income and substitution effect will reinforce one another leading to an overall increase in the consumption of good Y. 
D) the income and substitution effect will reinforce one another leading to an overall decrease in the consumption of good Y. 
E) the income and substitution effect will reinforce one another leading to an overall increase in the consumption of good X. 
A) the income and substitution effect reinforce one another leading to an overall decrease in the consumption of good X. 
B) the income and substitution effect will have competing effects leading to an indeterminate impact on the consumption of good Y. 
C) the income and substitution effect will reinforce one another leading to an overall increase in the consumption of good Y. 
D) the income and substitution effect will reinforce one another leading to an overall decrease in the consumption of good Y. 
E) the income and substitution effect will reinforce one another leading to an overall increase in the consumption of good X.

Question 9

Consider a two good world, with commodities X and Y.Which of the following statements is correct?

Accepted Answer

A) Both X and Y must be normal goods. 
B) If good X is a normal good, good Y must be an inferior good. 
C) If good X is an inferior good, good Y must be a normal good. 
D) Both good X and good Y can be inferior goods. 
A) Both X and Y must be normal goods. 
B) If good X is a normal good, good Y must be an inferior good. 
C) If good X is an inferior good, good Y must be a normal good. 
D) Both good X and good Y can be inferior goods.

Question 10

Suppose a manager's preferences depend only on quantity.Such a manager will then have an indifference curve that

Accepted Answer

A) is tangent to the profit curve somewhere between quantities of 0 and 2.5. 
B) is tangent to the profit curve somewhere between quantities of 2.5 and 5. 
C) intersects the profit curve at a quantity exactly equal to 2.5. 
D) intersects the profit curve at a quantity exactly equal to 5. 
A) is tangent to the profit curve somewhere between quantities of 0 and 2.5. 
B) is tangent to the profit curve somewhere between quantities of 2.5 and 5. 
C) intersects the profit curve at a quantity exactly equal to 2.5. 
D) intersects the profit curve at a quantity exactly equal to 5.

Question 11

The substitution affect isolates the change in the consumption of a good caused by:

Accepted Answer

A) the lower "real" income. 
B) the change in the relative prices of two goods. 
C) the change in consumer preferences. 
D) none of the statements associated with this question are correct. 
A) the lower "real" income. 
B) the change in the relative prices of two goods. 
C) the change in consumer preferences. 
D) none of the statements associated with this question are correct.

Question 12

Diminishing marginal rate of substitution implies that

Accepted Answer

A) indifference curves are convex from the origin. 
B) indifference curves are concave from the origin. 
C) indifference curves are either convex or concave from the origin. 
D) indifference curves are straight line. 
A) indifference curves are convex from the origin. 
B) indifference curves are concave from the origin. 
C) indifference curves are either convex or concave from the origin. 
D) indifference curves are straight line.

Question 13

The total earnings of a worker are represented by E = 100 + $10(24 - L), where E is earnings and L is the number of hours of leisure.How much will the worker earn if he takes 14 hours of leisure per day?

Accepted Answer

A) $150. 
B) $240. 
C) $100. 
D) $200. 
A) $150. 
B) $240. 
C) $100. 
D) $200.

Question 14

Which of the following is most likely not to be an example of a normal good?

Accepted Answer

A) Lobster. 
B) Sports cars. 
C) Bus travel. 
D) Jacuzzis. 
A) Lobster. 
B) Sports cars. 
C) Bus travel. 
D) Jacuzzis.

Question 15

The horizontal intercept of the budget line is:

Accepted Answer

A) -PX/PY. 
B) M/PX. 
C) M/PY. 
D) PYY. 
A) -PX/PY. 
B) M/PX. 
C) M/PY. 
D) PYY.

Question 16

Suppose earnings are given by E = $60 + $7(24 - L), where E is earnings and L is the hours of leisure.How much is this person working if their daily earnings are $116?

Accepted Answer

A) 18 hours. 
B) 16 hours. 
C) 12 hours. 
D) 6 hours. 
A) 18 hours. 
B) 16 hours. 
C) 12 hours. 
D) 6 hours.

Question 17

Sally Consumer's indifference curve between cigarettes and hamburgers is upward sloping.Based on this information, can we conclude that Sally views cigarettes as "bads" and hamburgers as "goods"? Explain.

Accepted Answer

No.But we can conclu

Question 18

Suppose that consumers' preferences are well behaved in that properties 4-1 - 4-4 are satisfied.Furthermore, assume goods X and Y are normal goods and the price of good X decreases.Then the substitution effect will lead consumers to consume

Accepted Answer

A) more of good X and more of good Y. 
B) less of good X and more of good Y. 
C) less of good X and less of good Y. 
D) more of good X and less of good Y. 
A) more of good X and more of good Y. 
B) less of good X and more of good Y. 
C) less of good X and less of good Y. 
D) more of good X and less of good Y.

Question 19

If the price of good X is $10 and the price of good Y is $5, how much of good X would the consumer purchase if her income is $15?

Accepted Answer

A) 0. 
B) 2. 
C) 3. 
D) Cannot tell based on the above information. 
A) 0. 
B) 2. 
C) 3. 
D) Cannot tell based on the above information.

Question 20

A price increase causes a consumer's "real" income to:

Accepted Answer

A) increase. 
B) decrease. 
C) remain unchanged. 
D) decrease or increase depending on the size of the price change. 
A) increase. 
B) decrease. 
C) remain unchanged. 
D) decrease or increase depending on the size of the price change.

Under the buy one, get one free regime, the

The absolute value of the slope of the indifference curve is called the:

The firm manager with indifference curves which are convex from the origin (output on the horizontal axis and profit on the vertical axis) views

If a consumer is given a $10 gift certificate, good for items in store X and all items in store X are inferior goods, then consumer desires to consume

Sam Voter prefers Jack to Rob, Rob to Mark, and Jack to Mark.Sam's preferences

The maximum quantity of good X that is affordable is:

Suppose the following Lagrangian is formed to maximize a consumer's utility subject to her budget constraint: ? = U(X,Y) + $\ell$ (1,000 - 50X - 5Y).The first-order conditions for this problem imply

Suppose that consumers' preferences are well behaved in that properties 4-1 - 4-4 are satisfied.Furthermore, assume that X is a normal good, Y is an inferior good and that the price of good Y decreases.Then, which of the following effect is known with certainty.

Consider a two good world, with commodities X and Y.Which of the following statements is correct?

Suppose a manager's preferences depend only on quantity.Such a manager will then have an indifference curve that

The substitution affect isolates the change in the consumption of a good caused by:

Diminishing marginal rate of substitution implies that

The total earnings of a worker are represented by E = 100 + $10(24 - L), where E is earnings and L is the number of hours of leisure.How much will the worker earn if he takes 14 hours of leisure per day?

Which of the following is most likely not to be an example of a normal good?

The horizontal intercept of the budget line is:

Suppose earnings are given by E = $60 + $7(24 - L), where E is earnings and L is the hours of leisure.How much is this person working if their daily earnings are $116?

Sally Consumer's indifference curve between cigarettes and hamburgers is upward sloping.Based on this information, can we conclude that Sally views cigarettes as "bads" and hamburgers as "goods"? Explain.

Suppose that consumers' preferences are well behaved in that properties 4-1 - 4-4 are satisfied.Furthermore, assume goods X and Y are normal goods and the price of good X decreases.Then the substitution effect will lead consumers to consume

If the price of good X is $10 and the price of good Y is $5, how much of good X would the consumer purchase if her income is $15?

A price increase causes a consumer's "real" income to:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Exam 4: The Theory of Individual Behavior

Under the buy one, get one free regime, the

The absolute value of the slope of the indifference curve is called the:

The firm manager with indifference curves which are convex from the origin (output on the horizontal axis and profit on the vertical axis) views

If a consumer is given a $10 gift certificate, good for items in store X and all items in store X are inferior goods, then consumer desires to consume

Sam Voter prefers Jack to Rob, Rob to Mark, and Jack to Mark.Sam's preferences

The maximum quantity of good X that is affordable is:

Suppose the following Lagrangian is formed to maximize a consumer's utility subject to her budget constraint: ? = U(X,Y) + ℓ\ellℓ (1,000 - 50X - 5Y).The first-order conditions for this problem imply

Suppose that consumers' preferences are well behaved in that properties 4-1 - 4-4 are satisfied.Furthermore, assume that X is a normal good, Y is an inferior good and that the price of good Y decreases.Then, which of the following effect is known with certainty.

Consider a two good world, with commodities X and Y.Which of the following statements is correct?

Suppose a manager's preferences depend only on quantity.Such a manager will then have an indifference curve that

The substitution affect isolates the change in the consumption of a good caused by:

Diminishing marginal rate of substitution implies that

The total earnings of a worker are represented by E = 100 + $10(24 - L), where E is earnings and L is the number of hours of leisure.How much will the worker earn if he takes 14 hours of leisure per day?

Which of the following is most likely not to be an example of a normal good?

The horizontal intercept of the budget line is:

Suppose earnings are given by E = $60 + $7(24 - L), where E is earnings and L is the hours of leisure.How much is this person working if their daily earnings are $116?

Sally Consumer's indifference curve between cigarettes and hamburgers is upward sloping.Based on this information, can we conclude that Sally views cigarettes as "bads" and hamburgers as "goods"? Explain.

Suppose that consumers' preferences are well behaved in that properties 4-1 - 4-4 are satisfied.Furthermore, assume goods X and Y are normal goods and the price of good X decreases.Then the substitution effect will lead consumers to consume

If the price of good X is $10 and the price of good Y is $5, how much of good X would the consumer purchase if her income is $15?

A price increase causes a consumer's "real" income to:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Suppose the following Lagrangian is formed to maximize a consumer's utility subject to her budget constraint: ? = U(X,Y) + $\ell$ (1,000 - 50X - 5Y).The first-order conditions for this problem imply