Question 1

-Which of the above figures reflects a decrease in the price of chicken?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
E)  Both Figure A and Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
E)  Both Figure A and Figure D

Question 2

-The figure above shows a consumer's budget line between sodas and DVD rentals.Point c represents an

Accepted Answer

A)  affordable combination of sodas and DVDs that spends the entire budget. 
B)  affordable combination of sodas and DVDs that does not spend the entire budget. 
C)  unaffordable combination of sodas and DVDs. 
D)  affordable combination of sodas and DVDs, but whether it spends the entire budget cannot be determined from the figure. 
E)  None of the above answers is correct. 
A)  affordable combination of sodas and DVDs that spends the entire budget. 
B)  affordable combination of sodas and DVDs that does not spend the entire budget. 
C)  unaffordable combination of sodas and DVDs. 
D)  affordable combination of sodas and DVDs, but whether it spends the entire budget cannot be determined from the figure. 
E)  None of the above answers is correct.

Question 3

You can use marginal utility theory to find the demand curve by changing

Accepted Answer

A)  only the price of one good. 
B)  only income. 
C)  the utility schedule. 
D)  only the prices of both goods. 
E)  income and the prices of both goods. 
A)  only the price of one good. 
B)  only income. 
C)  the utility schedule. 
D)  only the prices of both goods. 
E)  income and the prices of both goods.

Question 4

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each,steaks cost $10 each.If Reb purchases 124 lures per week,how many steaks can he buy?

Accepted Answer

A)  620 
B)  38 
C)  123 
D)  380 
E)  100 
A)  620 
B)  38 
C)  123 
D)  380 
E)  100

Question 5

-George has a $600 annual entertainment budget that he uses to buy trips to the movies and dinners at local restaurants.The figure above shows indifference curves and budget lines for these two goods.The price of a movie is $15.
a.Along budget line BL?,what is the price of a dinner?
b.What combination of dinners and movies will George select along budget line BL??
c.Budget line BL? represents a change in the price of dinners from that along BL?.What is the new price of dinners along this budget line?
d.What combination of dinners and movies will George select along budget line BL??
e.Use the information in this problem to give two points on George's demand curve for dinners

Accepted Answer

a.George can buy 20 dinners and his inco

Question 6

When the price of one good changes while another good's price does not change,then there has been a change in the

Accepted Answer

A)  relative price. 
B)  marginal utility price. 
C)  absolute price. 
D)  marginal price. 
E)  utility price. 
A)  relative price. 
B)  marginal utility price. 
C)  absolute price. 
D)  marginal price. 
E)  utility price.

Question 7

Assume that there are two goods,x and y.The quantity of good x is measured on the x-axis and the quantity of good y is measured on the y-axis.If the price of good y rises,then the

Accepted Answer

A)  y-axis intercept of the budget line increases. 
B)  y-axis intercept of the budget line increases and the x-axis intercept of the budget line decreases. 
C)  y-axis intercept of the budget line decreases and the x-axis intercept does not change. 
D)  slope of the budget line changes. 
E)  Both answers C and D are correct. 
A)  y-axis intercept of the budget line increases. 
B)  y-axis intercept of the budget line increases and the x-axis intercept of the budget line decreases. 
C)  y-axis intercept of the budget line decreases and the x-axis intercept does not change. 
D)  slope of the budget line changes. 
E)  Both answers C and D are correct.

Question 8

Mary is currently buying apples and oranges such that the last unit of apples has 30 units of utility and the last unit of oranges has 40 units of utility.She has allocated her entire budget.If the price of an apple is 10 cents and the price of an orange is 20 cents,to maximize her utility,what should Mary do?

Accepted Answer

A)  buy more apples and fewer oranges 
B)  buy more oranges and fewer apples 
C)  continue to buy the same amounts of both goods 
D)  buy fewer apples and fewer oranges 
E)  None of the above answers is correct. 
A)  buy more apples and fewer oranges 
B)  buy more oranges and fewer apples 
C)  continue to buy the same amounts of both goods 
D)  buy fewer apples and fewer oranges 
E)  None of the above answers is correct.

Question 9

A curve that shows combinations of goods among which a consumer does not prefer one combination to another is

Accepted Answer

A)  a budget line. 
B)  an indifference curve. 
C)  a production possibilities curve. 
D)  a demand curve. 
E)  a marginal rate of substitution curve. 
A)  a budget line. 
B)  an indifference curve. 
C)  a production possibilities curve. 
D)  a demand curve. 
E)  a marginal rate of substitution curve.

Question 10

Explain how changes in the price of goods and the consumer's budget affect the budget line.

Accepted Answer

If the price of the good measured on the

Question 11

Kevin likes weasel leg stew.But every bite of the stew that he eats provides him with less and less total utility.This fact means that Kevin's marginal utility is

Accepted Answer

A)  decreasing. 
B)  increasing, but at a decreasing rate. 
C)  increasing at an increasing rate. 
D)  not changing. 
E)  changing, but the rate of change is not certain without more information. 
A)  decreasing. 
B)  increasing, but at a decreasing rate. 
C)  increasing at an increasing rate. 
D)  not changing. 
E)  changing, but the rate of change is not certain without more information.

Question 12

Katie has $15.She likes M&M candies and Hershey's white chocolate bars.M&M candies are $1.50 a pack and (the large)Hershey bars are $3.00 each.Katie can choose to buy

Accepted Answer

A)  4 Hershey bars and 2 packs of M&Ms. 
B)  2 Hershey bars and 6 packs of M&Ms. 
C)  5 Hershey bars and 10 packs of M&Ms. 
D)  Answers A and B are correct. 
E)  Answers A, B, and C are correct. 
A)  4 Hershey bars and 2 packs of M&Ms. 
B)  2 Hershey bars and 6 packs of M&Ms. 
C)  5 Hershey bars and 10 packs of M&Ms. 
D)  Answers A and B are correct. 
E)  Answers A, B, and C are correct.

Question 13

Diamonds have ________ consumer surplus because ________.

Accepted Answer

A)  a smaller; fewer diamonds are sold at higher prices 
B)  a smaller; there is a lower marginal utility for diamonds 
C)  a large; diamonds are a rare and valuable stone 
D)  zero; diamonds have a high price and provide low total utility 
E)  zero; diamonds are not necessary for life 
A)  a smaller; fewer diamonds are sold at higher prices 
B)  a smaller; there is a lower marginal utility for diamonds 
C)  a large; diamonds are a rare and valuable stone 
D)  zero; diamonds have a high price and provide low total utility 
E)  zero; diamonds are not necessary for life

Question 14

You consume hamburgers and hot dogs.If the price of a hamburger increases while the price of a hot dog and your budget do not change,then your budget line will

Accepted Answer

A)  not change because your budget hasn't changed. 
B)  shift outward and not change its slope. 
C)  rotate outward and change its slope. 
D)  rotate inward and change its slope. 
E)  shift inward and not change its slope. 
A)  not change because your budget hasn't changed. 
B)  shift outward and not change its slope. 
C)  rotate outward and change its slope. 
D)  rotate inward and change its slope. 
E)  shift inward and not change its slope.

Question 15

-Consider an indifference curve for sodas and pizza,drawn in a figure with sodas measured along the horizontal axis.Moving downward along the indifference curve,the

Accepted Answer

A)  marginal utility per dollar for sodas must increase. 
B)  marginal utility per dollar for pizza must increase. 
C)  consumer remains indifferent among the different combinations of soda and pizza. 
D)  the level of total utility must change. 
E)  marginal rate of substitution is constant. 
A)  marginal utility per dollar for sodas must increase. 
B)  marginal utility per dollar for pizza must increase. 
C)  consumer remains indifferent among the different combinations of soda and pizza. 
D)  the level of total utility must change. 
E)  marginal rate of substitution is constant.

Question 16

Moving along an indifference curve,if a consumer requires a large amount of the good measured along the y-axis to make up for one unit less of the good measured on the x-axis,then

Accepted Answer

A)  total utility is increasing. 
B)  the marginal rate of substitution is low and the indifference curve is flat. 
C)  the marginal rate of substitution is low and the indifference curve is steep. 
D)  the marginal rate of substitution is high and the indifference curve is steep. 
E)  the marginal rate of substitution is high and the indifference curve is flat. 
A)  total utility is increasing. 
B)  the marginal rate of substitution is low and the indifference curve is flat. 
C)  the marginal rate of substitution is low and the indifference curve is steep. 
D)  the marginal rate of substitution is high and the indifference curve is steep. 
E)  the marginal rate of substitution is high and the indifference curve is flat.

Question 17

Moving down along an indifference curve,

Accepted Answer

A)  the price of the good measured on the vertical axis decreases. 
B)  total utility decreases. 
C)  the marginal rate of substitution for the good on the horizontal axis decreases. 
D)  the slope of the budget line decreases. 
E)  the consumer increasingly prefers the new consumption points to the old consumption points. 
A)  the price of the good measured on the vertical axis decreases. 
B)  total utility decreases. 
C)  the marginal rate of substitution for the good on the horizontal axis decreases. 
D)  the slope of the budget line decreases. 
E)  the consumer increasingly prefers the new consumption points to the old consumption points.

Question 18

Over the past 10 years,the relative price of gasoline has ________.As a result,________.

Accepted Answer

A)  increased; consumers have found substitutes for gasoline and bought less gasoline 
B)  increased; the consumption possibilities for gasoline have increased 
C)  decreased; consumers have had an incentive to buy more gasoline 
D)  decreased; the relative prices of other goods have increased 
E)  not changed; the relative prices of other goods have fallen 
A)  increased; consumers have found substitutes for gasoline and bought less gasoline 
B)  increased; the consumption possibilities for gasoline have increased 
C)  decreased; consumers have had an incentive to buy more gasoline 
D)  decreased; the relative prices of other goods have increased 
E)  not changed; the relative prices of other goods have fallen

Question 19

The marginal rate of substitution for the good on the horizontal axis is

Accepted Answer

A)  the consumer surplus. 
B)  the same as the consumer's budget line. 
C)  equal to the magnitude of the slope of the indifference curve. 
D)  equal to the magnitude of the slope of the consumer surplus curve. 
E)  equal to 1.0 if the indifference curves are linear. 
A)  the consumer surplus. 
B)  the same as the consumer's budget line. 
C)  equal to the magnitude of the slope of the indifference curve. 
D)  equal to the magnitude of the slope of the consumer surplus curve. 
E)  equal to 1.0 if the indifference curves are linear.

Question 20

Suppose the quantity of burgers is on the horizontal axis and the quantity of bags of French fries is measured on the vertical axis and Carol's indifference curves are drawn in the graph.As Carol consumes more

Accepted Answer

A)  burgers, moving along an indifference curve her marginal rate of substitution for burgers decreases. 
B)  bags of fries, moving along an indifference curve her marginal rate of substitution for burgers decreases. 
C)  burgers and bags of fries moving along an indifference curve, Carol reaches her best affordable point. 
D)  of either good, moving along an indifference curve her marginal rate of substitution for burgers increases. 
E)  of both goods, moving from one indifference curve to a higher indifference curve, her marginal rate of substitution definitely does not change. 
A)  burgers, moving along an indifference curve her marginal rate of substitution for burgers decreases. 
B)  bags of fries, moving along an indifference curve her marginal rate of substitution for burgers decreases. 
C)  burgers and bags of fries moving along an indifference curve, Carol reaches her best affordable point. 
D)  of either good, moving along an indifference curve her marginal rate of substitution for burgers increases. 
E)  of both goods, moving from one indifference curve to a higher indifference curve, her marginal rate of substitution definitely does not change.

-Which of the above figures reflects a decrease in the price of chicken?

-The figure above shows a consumer's budget line between sodas and DVD rentals.Point c represents an

You can use marginal utility theory to find the demand curve by changing

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each,steaks cost $10 each.If Reb purchases 124 lures per week,how many steaks can he buy?

When the price of one good changes while another good's price does not change,then there has been a change in the

Assume that there are two goods,x and y.The quantity of good x is measured on the x-axis and the quantity of good y is measured on the y-axis.If the price of good y rises,then the

A curve that shows combinations of goods among which a consumer does not prefer one combination to another is

Explain how changes in the price of goods and the consumer's budget affect the budget line.

Kevin likes weasel leg stew.But every bite of the stew that he eats provides him with less and less total utility.This fact means that Kevin's marginal utility is

Katie has $15.She likes M&M candies and Hershey's white chocolate bars.M&M candies are $1.50 a pack and (the large)Hershey bars are $3.00 each.Katie can choose to buy

Diamonds have consumer surplus because .

You consume hamburgers and hot dogs.If the price of a hamburger increases while the price of a hot dog and your budget do not change,then your budget line will

-Consider an indifference curve for sodas and pizza,drawn in a figure with sodas measured along the horizontal axis.Moving downward along the indifference curve,the

Moving along an indifference curve,if a consumer requires a large amount of the good measured along the y-axis to make up for one unit less of the good measured on the x-axis,then

Moving down along an indifference curve,

Over the past 10 years,the relative price of gasoline has .As a result,.

The marginal rate of substitution for the good on the horizontal axis is

Suppose the quantity of burgers is on the horizontal axis and the quantity of bags of French fries is measured on the vertical axis and Carol's indifference curves are drawn in the graph.As Carol consumes more

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 13: Consumer Choice and Demand

-Which of the above figures reflects a decrease in the price of chicken?

-The figure above shows a consumer's budget line between sodas and DVD rentals.Point c represents an

You can use marginal utility theory to find the demand curve by changing

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each,steaks cost $10 each.If Reb purchases 124 lures per week,how many steaks can he buy?

When the price of one good changes while another good's price does not change,then there has been a change in the

Assume that there are two goods,x and y.The quantity of good x is measured on the x-axis and the quantity of good y is measured on the y-axis.If the price of good y rises,then the

A curve that shows combinations of goods among which a consumer does not prefer one combination to another is

Explain how changes in the price of goods and the consumer's budget affect the budget line.

Kevin likes weasel leg stew.But every bite of the stew that he eats provides him with less and less total utility.This fact means that Kevin's marginal utility is

Katie has $15.She likes M&M candies and Hershey's white chocolate bars.M&M candies are $1.50 a pack and (the large)Hershey bars are $3.00 each.Katie can choose to buy

Diamonds have ________ consumer surplus because ________.

You consume hamburgers and hot dogs.If the price of a hamburger increases while the price of a hot dog and your budget do not change,then your budget line will

-Consider an indifference curve for sodas and pizza,drawn in a figure with sodas measured along the horizontal axis.Moving downward along the indifference curve,the

Moving along an indifference curve,if a consumer requires a large amount of the good measured along the y-axis to make up for one unit less of the good measured on the x-axis,then

Moving down along an indifference curve,

Over the past 10 years,the relative price of gasoline has ________.As a result,________.

The marginal rate of substitution for the good on the horizontal axis is

Suppose the quantity of burgers is on the horizontal axis and the quantity of bags of French fries is measured on the vertical axis and Carol's indifference curves are drawn in the graph.As Carol consumes more

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Diamonds have consumer surplus because .

Over the past 10 years,the relative price of gasoline has .As a result,.