Question 1

The fact that indifference curves are bowed in toward the origin

Accepted Answer

A)  is not true. 
B)  follows from the fact that more is preferred to less. 
C)  follows from the property that the consumer likes diversity in his or her consumption bundle. 
D)  follows from the property that consumption and leisure are normal goods. 
A)  is not true. 
B)  follows from the fact that more is preferred to less. 
C)  follows from the property that the consumer likes diversity in his or her consumption bundle. 
D)  follows from the property that consumption and leisure are normal goods. C

Question 2

The indifference map

Accepted Answer

A)  shows that the consumer is indifferent among all consumption bundles. 
B)  is an individual indifference curve. 
C)  captures the same information as the utility function. 
D)  is impossible to derive from the utility function. 
A)  shows that the consumer is indifferent among all consumption bundles. 
B)  is an individual indifference curve. 
C)  captures the same information as the utility function. 
D)  is impossible to derive from the utility function. C

Question 3

A lump-sum tax is a tax that

Accepted Answer

A)  can be avoided by strategic behavior. 
B)  does not depend on the actions of the economic agent being taxed. 
C)  does not depend on the actions of the government. 
D)  distorts economic decisions. 
A)  can be avoided by strategic behavior. 
B)  does not depend on the actions of the economic agent being taxed. 
C)  does not depend on the actions of the government. 
D)  distorts economic decisions. B

Question 4

Look at the production schedule of the Widget Company below:  
If the real wage is 7,how many workers should Widget Company hire?

Accepted Answer

A)  none 
B)  2 
C)  3 
D)  4 
A)  none 
B)  2 
C)  3 
D)  4

Question 5

A defense for the assumption that consumers maximize is that

Accepted Answer

A)  consumers never make mistakes. 
B)  consumers do not consistently make the same mistakes. 
C)  it allows for many possible outcomes. 
D)  mistaken consumers may receive counseling from the government. 
A)  consumers never make mistakes. 
B)  consumers do not consistently make the same mistakes. 
C)  it allows for many possible outcomes. 
D)  mistaken consumers may receive counseling from the government.

Question 6

Look at the production schedule below:  
Which worker violates a property of the standard production function?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 7

The marginal rate of substitution

Accepted Answer

A)  is minus the slope of the indifference curve. 
B)  can be computed by measuring the curvature of the indifference curve. 
C)  cannot be deduced from the properties of the indifference curve. 
D)  can only be computed if we know the prices of all goods. 
A)  is minus the slope of the indifference curve. 
B)  can be computed by measuring the curvature of the indifference curve. 
C)  cannot be deduced from the properties of the indifference curve. 
D)  can only be computed if we know the prices of all goods.

Question 8

Theoretically,an increase in the real wage

Accepted Answer

A)  increases leisure. 
B)  decreases leisure. 
C)  has an ambiguous effect on leisure. 
D)  has no effect on leisure. 
A)  increases leisure. 
B)  decreases leisure. 
C)  has an ambiguous effect on leisure. 
D)  has no effect on leisure.

Question 9

Total factor productivity encompasses

Accepted Answer

A)  labor. 
B)  capital. 
C)  output. 
D)  know-how. 
A)  labor. 
B)  capital. 
C)  output. 
D)  know-how.

Question 10

A positive,pure income effect can be obtained by

Accepted Answer

A)  increasing the real wage. 
B)  increasing the tax. 
C)  increasing the dividend. 
D)  decreasing leisure. 
A)  increasing the real wage. 
B)  increasing the tax. 
C)  increasing the dividend. 
D)  decreasing leisure.

Question 11

Look at the production schedule of the Widget Company below:  
What is the marginal product of the second worker?

Accepted Answer

A)  8 
B)  10 
C)  12 
D)  22 
A)  8 
B)  10 
C)  12 
D)  22

Question 12

A utility function

Accepted Answer

A)  needs to measure the absolute level of happiness. 
B)  needs to measure relative amounts of happiness for a single individual. 
C)  helps compare the relative happiness of two separate consumers. 
D)  is most useful if it can be influenced by others. 
A)  needs to measure the absolute level of happiness. 
B)  needs to measure relative amounts of happiness for a single individual. 
C)  helps compare the relative happiness of two separate consumers. 
D)  is most useful if it can be influenced by others.

Question 13

We assume that the representative consumer's preferences exhibit the properties that

Accepted Answer

A)  they evolve over time and that more is always preferred to less. 
B)  more is preferred to less and that the consumer prefers diversity. 
C)  the consumer likes diversity and that more is sometimes preferred to less. 
D)  more is sometimes preferred to less and that consumption and leisure are both normal goods. 
A)  they evolve over time and that more is always preferred to less. 
B)  more is preferred to less and that the consumer prefers diversity. 
C)  the consumer likes diversity and that more is sometimes preferred to less. 
D)  more is sometimes preferred to less and that consumption and leisure are both normal goods.

Question 14

In a one-period economy

Accepted Answer

A)  consumption equals disposable income. 
B)  consumption equals disposable income plus the value of non-market work. 
C)  savings is always positive. 
D)  consumers may increase their consumption by borrowing. 
A)  consumption equals disposable income. 
B)  consumption equals disposable income plus the value of non-market work. 
C)  savings is always positive. 
D)  consumers may increase their consumption by borrowing.

Question 15

A good is normal for a consumer if

Accepted Answer

A)  it is always consumed in a consistent quantity. 
B)  its consumption rises when income rises. 
C)  its consumption falls when income rises. 
D)  some minimal level of the good must be consumed to assure the consumer's survival. 
A)  it is always consumed in a consistent quantity. 
B)  its consumption rises when income rises. 
C)  its consumption falls when income rises. 
D)  some minimal level of the good must be consumed to assure the consumer's survival.

Question 16

An increase in the real wage

Accepted Answer

A)  unambiguously increases consumption and increases labor supply. 
B)  increases consumption and has an ambiguous effect on labor supply. 
C)  has an ambiguous effect on consumption and increases labor supply. 
D)  has an ambiguous effect on both consumption and labor supply. 
A)  unambiguously increases consumption and increases labor supply. 
B)  increases consumption and has an ambiguous effect on labor supply. 
C)  has an ambiguous effect on consumption and increases labor supply. 
D)  has an ambiguous effect on both consumption and labor supply.

Question 17

Look at the production schedule below:  
Which property of a standard production function does it violate?

Accepted Answer

A)  constant returns to scale 
B)  decreasing marginal product of capital 
C)  decreasing marginal product of labor 
D)  production increasing in labor 
A)  constant returns to scale 
B)  decreasing marginal product of capital 
C)  decreasing marginal product of labor 
D)  production increasing in labor

Question 18

Labor supply

Accepted Answer

A)  must necessarily increase when the real wage increases. 
B)  increases if the substitution effect exceeds the income effect. 
C)  is increasing and then decreasing in the real wage. 
D)  increases when taxes increase. 
A)  must necessarily increase when the real wage increases. 
B)  increases if the substitution effect exceeds the income effect. 
C)  is increasing and then decreasing in the real wage. 
D)  increases when taxes increase.

Question 19

When the wage increases,the substitution effect in the household's choices leads to

Accepted Answer

A)  a decrease in consumption and leisure. 
B)  a decrease in consumption and an increase in leisure. 
C)  an increase in consumption and a decrease in leisure. 
D)  an increase in consumption and leisure. 
A)  a decrease in consumption and leisure. 
B)  a decrease in consumption and an increase in leisure. 
C)  an increase in consumption and a decrease in leisure. 
D)  an increase in consumption and leisure.

Question 20

An economy without monetary exchange is called

Accepted Answer

A)  a primitive economy. 
B)  a barter economy. 
C)  a socialist economy. 
D)  an autarky economy. 
A)  a primitive economy. 
B)  a barter economy. 
C)  a socialist economy. 
D)  an autarky economy.

The fact that indifference curves are bowed in toward the origin

The indifference map

A lump-sum tax is a tax that

Look at the production schedule of the Widget Company below: If the real wage is 7,how many workers should Widget Company hire?

A defense for the assumption that consumers maximize is that

Look at the production schedule below: Which worker violates a property of the standard production function?

The marginal rate of substitution

Theoretically,an increase in the real wage

Total factor productivity encompasses

A positive,pure income effect can be obtained by

Look at the production schedule of the Widget Company below: What is the marginal product of the second worker?

A utility function

We assume that the representative consumer's preferences exhibit the properties that

In a one-period economy

A good is normal for a consumer if

An increase in the real wage

Look at the production schedule below: Which property of a standard production function does it violate?

Labor supply

When the wage increases,the substitution effect in the household's choices leads to

An economy without monetary exchange is called

Introduction

Measurement

Business Cycle Measurement

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: The Consumption-Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking

Inflation, the Phillips Curve, and Central Bank Commitment

Filters

Exam 4: Consumer and Firm Behavior: The Work-Leisure Decision and Profit Maximization

The fact that indifference curves are bowed in toward the origin

The indifference map

A lump-sum tax is a tax that

Look at the production schedule of the Widget Company below: If the real wage is 7,how many workers should Widget Company hire?

A defense for the assumption that consumers maximize is that

Look at the production schedule below: Which worker violates a property of the standard production function?

The marginal rate of substitution

Theoretically,an increase in the real wage

Total factor productivity encompasses

A positive,pure income effect can be obtained by

Look at the production schedule of the Widget Company below: What is the marginal product of the second worker?

A utility function

We assume that the representative consumer's preferences exhibit the properties that

In a one-period economy

A good is normal for a consumer if

An increase in the real wage

Look at the production schedule below: Which property of a standard production function does it violate?

Labor supply

When the wage increases,the substitution effect in the household's choices leads to

An economy without monetary exchange is called

Introduction

Measurement

Business Cycle Measurement

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: The Consumption-Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking

Inflation, the Phillips Curve, and Central Bank Commitment

Filters