Question 1

If the utility for two goods "x" and "y" is measured as U = x + y,then it can be concluded that

Accepted Answer

A) "x" and "y" are perfect substitutes. 
B) "x" and "y" are perfect complements. 
C) "x" and "y" are both bads. 
D) the indifference curves on the x,y graph will be upward sloping. 
A) "x" and "y" are perfect substitutes. 
B) "x" and "y" are perfect complements. 
C) "x" and "y" are both bads. 
D) the indifference curves on the x,y graph will be upward sloping. A

Question 2

Indifference curves cannot ever be concave for two goods.

Accepted Answer

A) True 
 B)False  False

Question 3

If Johnny likes homework (H)but hates exercise (E),which of the following might best represent his utility function for homework and exercise?

Accepted Answer

A) U = H + E 
B) U = H/E 
C) U = H2 +   
D) U = H2 ×   
A) U = H + E 
B) U = H/E 
C) U = H2 +   
D) U = H2 ×   B

Question 4

The rate at which a consumer must give up y to get one more x is equal to

Accepted Answer

A) -Px/Py. 
B) -Py/Px. 
C) -MUx/MUy. 
D) MUy/MUx. 
A) -Px/Py. 
B) -Py/Px. 
C) -MUx/MUy. 
D) MUy/MUx.

Question 5

Compute the MRS for the following utility functions:
a.U(X,Y)= aln(X)+ bln(Y),
b.U(X,Y)= XaYb,and
c.U(X,Y)= aX + bY,
where a and b are strictly positive constants.

Accepted Answer

a.MU_X = a/X,MU_Y= b/Y,thus MRS =

Question 6

If the consumer's income increases while the prices of both goods remain unchanged,what will happen to the budget line?

Accepted Answer

A) The budget line rotates inward from the intercept on the horizontal axis. 
B) The budget line rotates outward from the intercept on the vertical axis. 
C) The budget line shifts inward without a change in slope. 
D) The budget line shifts outward without a change in slope. 
A) The budget line rotates inward from the intercept on the horizontal axis. 
B) The budget line rotates outward from the intercept on the vertical axis. 
C) The budget line shifts inward without a change in slope. 
D) The budget line shifts outward without a change in slope.

Question 7

If Fred's marginal rate of substitution of salad for pizza equals five,then

Accepted Answer

A) he would give up five pizzas to get the next salad. 
B) he would give up five salads to get the next pizza. 
C) he will eat five times as much pizza as salad. 
D) he will eat five times as much salad as pizza. 
A) he would give up five pizzas to get the next salad. 
B) he would give up five salads to get the next pizza. 
C) he will eat five times as much pizza as salad. 
D) he will eat five times as much salad as pizza.

Question 8

Sarah has the utility function U(X,Y)= X.5Y.25.When Sarah consumes X = 2 and Y = 6 she has a marginal rate of substitution of

Accepted Answer

A) -12. 
B) -1/6. 
C) -6. 
D) -1/12. 
A) -12. 
B) -1/6. 
C) -6. 
D) -1/12.

Question 9

If prices of both horizontal and vertical goods decrease by 50%,

Accepted Answer

A) budget constraint will be unchanged. 
B) slope of the budget constraint will increase. 
C) slope of the budget constraint will decrease. 
D) budget constraint will shift outward in a parallel fashion. 
A) budget constraint will be unchanged. 
B) slope of the budget constraint will increase. 
C) slope of the budget constraint will decrease. 
D) budget constraint will shift outward in a parallel fashion.

Question 10

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.Which bundle will Max choose?

Accepted Answer

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

Question 11

Suppose Joe's utility for lobster (L)and soda (S)can be represented as U = L0.5 S0.5.Draw the indifference curve that yields a utility level of 9.Calculate the MUL,MUS,and MRS of L for S on that indifference curve when S = 3.

Accepted Answer

@#IMG-DLM& 
See the above figure.Along t

Question 12

Lisa views pizzas and burritos as goods.If she prefers a bundle of four burritos and four pizzas to a bundle of four burritos and five pizzas,which property of consumer preference is violated? What change in the assumptions could lead a rational consumer to prefer the first bundle?

Accepted Answer

The property of more-is-better

Question 13

The assumption of completeness means that

Accepted Answer

A) the consumer can rank all possible consumption bundles. 
B) more of a good is always better. 
C) the consumer can rank all affordable consumption bundles. 
D) all preferences conditions are met. 
A) the consumer can rank all possible consumption bundles. 
B) more of a good is always better. 
C) the consumer can rank all affordable consumption bundles. 
D) all preferences conditions are met.

Question 14

The consumer is in equilibrium when

Accepted Answer

A) MRT = MRS. 
B) Px/Py = MUx/MUy. 
C) the budget line is tangent to the indifference curve at the bundle chosen. 
D) All of the above. 
A) MRT = MRS. 
B) Px/Py = MUx/MUy. 
C) the budget line is tangent to the indifference curve at the bundle chosen. 
D) All of the above.

Question 15

If prices of both horizontal and vertical goods increase by 50%,

Accepted Answer

A) budget constraint will be unchanged. 
B) slope of the budget constraint stay the same. 
C) slope of the budget constraint will decrease. 
D) budget constraint will shift outward in a parallel fashion. 
A) budget constraint will be unchanged. 
B) slope of the budget constraint stay the same. 
C) slope of the budget constraint will decrease. 
D) budget constraint will shift outward in a parallel fashion.

Question 16

Lisa eats both pizzas and burritos.If the price of a pizza increases,Lisa's opportunity set

Accepted Answer

A) becomes larger. 
B) becomes smaller. 
C) is unchanged. 
D) cannot be determined without more information. 
A) becomes larger. 
B) becomes smaller. 
C) is unchanged. 
D) cannot be determined without more information.

Question 17

-Max has allocated $100 toward meats for his barbecue.His budget line and indifference map are shown in the above figure.If Max is currently at point d,

Accepted Answer

A) his MRS is larger than the trade-off offered by the market. 
B) he is willing to give up more chicken than he has to,given market prices. 
C) he is not maximizing his utility. 
D) All of the above. 
A) his MRS is larger than the trade-off offered by the market. 
B) he is willing to give up more chicken than he has to,given market prices. 
C) he is not maximizing his utility. 
D) All of the above.

Question 18

Lisa consumes only pizzas (P)and burritos (B).Her utility function is U = P0.5 B0.5.The price of per pizza is $10 and the price per burrito is $5.In equilibrium,Lisa consumes four pizzas.Using Lisa's utility function,calculate how many burritos she consumes.

Accepted Answer

The marginal utility of pizza equals B^0.5/2

Question 19

If Fred's marginal utility of pizza equals 10 and his marginal utility of salad equals 2,then

Accepted Answer

A) he would give up five pizzas to get the next salad. 
B) he would give up five salads to get the next pizza. 
C) he will eat five times as much pizza as salad. 
D) he will eat five times as much salad as pizza. 
A) he would give up five pizzas to get the next salad. 
B) he would give up five salads to get the next pizza. 
C) he will eat five times as much pizza as salad. 
D) he will eat five times as much salad as pizza.

Question 20

The indifference curves for left shoes and right shoes would most likely be

Accepted Answer

A) upward sloping and concave to the origin. 
B) downward sloping and convex to the origin. 
C) downward sloping and straight lines. 
D) L-shaped. 
A) upward sloping and concave to the origin. 
B) downward sloping and convex to the origin. 
C) downward sloping and straight lines. 
D) L-shaped.

If the utility for two goods "x" and "y" is measured as U = x + y,then it can be concluded that

Indifference curves cannot ever be concave for two goods.

If Johnny likes homework (H)but hates exercise (E),which of the following might best represent his utility function for homework and exercise?

The rate at which a consumer must give up y to get one more x is equal to

Compute the MRS for the following utility functions: a.U(X,Y)= aln(X)+ bln(Y), b.U(X,Y)= X^aY^b,and c.U(X,Y)= aX + bY, where a and b are strictly positive constants.

If the consumer's income increases while the prices of both goods remain unchanged,what will happen to the budget line?

If Fred's marginal rate of substitution of salad for pizza equals five,then

Sarah has the utility function U(X,Y)= X^.5Y^.25.When Sarah consumes X = 2 and Y = 6 she has a marginal rate of substitution of

If prices of both horizontal and vertical goods decrease by 50%,

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.Which bundle will Max choose?

Suppose Joe's utility for lobster (L)and soda (S)can be represented as U = L^0.5 S^0.5.Draw the indifference curve that yields a utility level of 9.Calculate the MUL,MUS,and MRS of L for S on that indifference curve when S = 3.

Lisa views pizzas and burritos as goods.If she prefers a bundle of four burritos and four pizzas to a bundle of four burritos and five pizzas,which property of consumer preference is violated? What change in the assumptions could lead a rational consumer to prefer the first bundle?

The assumption of completeness means that

The consumer is in equilibrium when

If prices of both horizontal and vertical goods increase by 50%,

Lisa eats both pizzas and burritos.If the price of a pizza increases,Lisa's opportunity set

-Max has allocated $100 toward meats for his barbecue.His budget line and indifference map are shown in the above figure.If Max is currently at point d,

Lisa consumes only pizzas (P)and burritos (B).Her utility function is U = P^0.5 B^0.5.The price of per pizza is $10 and the price per burrito is $5.In equilibrium,Lisa consumes four pizzas.Using Lisa's utility function,calculate how many burritos she consumes.

If Fred's marginal utility of pizza equals 10 and his marginal utility of salad equals 2,then

The indifference curves for left shoes and right shoes would most likely be

Introduction

Supply and Demand

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 3: A Consumers Constrained Choice

If the utility for two goods "x" and "y" is measured as U = x + y,then it can be concluded that

Indifference curves cannot ever be concave for two goods.

If Johnny likes homework (H)but hates exercise (E),which of the following might best represent his utility function for homework and exercise?

The rate at which a consumer must give up y to get one more x is equal to

Compute the MRS for the following utility functions: a.U(X,Y)= aln(X)+ bln(Y), b.U(X,Y)= XaYb,and c.U(X,Y)= aX + bY, where a and b are strictly positive constants.

If the consumer's income increases while the prices of both goods remain unchanged,what will happen to the budget line?

If Fred's marginal rate of substitution of salad for pizza equals five,then

Sarah has the utility function U(X,Y)= X.5Y.25.When Sarah consumes X = 2 and Y = 6 she has a marginal rate of substitution of

If prices of both horizontal and vertical goods decrease by 50%,

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.Which bundle will Max choose?

Suppose Joe's utility for lobster (L)and soda (S)can be represented as U = L0.5 S0.5.Draw the indifference curve that yields a utility level of 9.Calculate the MUL,MUS,and MRS of L for S on that indifference curve when S = 3.

Lisa views pizzas and burritos as goods.If she prefers a bundle of four burritos and four pizzas to a bundle of four burritos and five pizzas,which property of consumer preference is violated? What change in the assumptions could lead a rational consumer to prefer the first bundle?

The assumption of completeness means that

The consumer is in equilibrium when

If prices of both horizontal and vertical goods increase by 50%,

Lisa eats both pizzas and burritos.If the price of a pizza increases,Lisa's opportunity set

-Max has allocated $100 toward meats for his barbecue.His budget line and indifference map are shown in the above figure.If Max is currently at point d,

Lisa consumes only pizzas (P)and burritos (B).Her utility function is U = P0.5 B0.5.The price of per pizza is $10 and the price per burrito is $5.In equilibrium,Lisa consumes four pizzas.Using Lisa's utility function,calculate how many burritos she consumes.

If Fred's marginal utility of pizza equals 10 and his marginal utility of salad equals 2,then

The indifference curves for left shoes and right shoes would most likely be

Introduction

Supply and Demand

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Compute the MRS for the following utility functions: a.U(X,Y)= aln(X)+ bln(Y), b.U(X,Y)= X^aY^b,and c.U(X,Y)= aX + bY, where a and b are strictly positive constants.

Sarah has the utility function U(X,Y)= X^.5Y^.25.When Sarah consumes X = 2 and Y = 6 she has a marginal rate of substitution of

Suppose Joe's utility for lobster (L)and soda (S)can be represented as U = L^0.5 S^0.5.Draw the indifference curve that yields a utility level of 9.Calculate the MUL,MUS,and MRS of L for S on that indifference curve when S = 3.

Lisa consumes only pizzas (P)and burritos (B).Her utility function is U = P^0.5 B^0.5.The price of per pizza is $10 and the price per burrito is $5.In equilibrium,Lisa consumes four pizzas.Using Lisa's utility function,calculate how many burritos she consumes.