Question 1

A rotation of the budget line indicates a change in the price of one of the goods under consideration.

Accepted Answer

A) True 
 B)False

Question 2

An indifference curve slopes downward to the right because

Accepted Answer

A)  more goods are preferable to less 
B)  goods are substitutes for each other 
C)  the consumer has a limited income 
D)  the opportunity costs of goods differ 
E)  of the budget constraint 
A)  more goods are preferable to less 
B)  goods are substitutes for each other 
C)  the consumer has a limited income 
D)  the opportunity costs of goods differ 
E)  of the budget constraint

Question 3

What is the effect of a fall in the price of a normal good on the consumer's choice?

Accepted Answer

A)  She will buy more of the good but reach a lower indifference curve. 
B)  She will buy less of the good but reach a higher indifference curve. 
C)  She will buy more of the good and reach a higher indifference curve. 
D)  She will buy the same quantity of the good and stay on the same indifference curve. 
E)  She will buy more of the good and stay on the same indifference curve. 
A)  She will buy more of the good but reach a lower indifference curve. 
B)  She will buy less of the good but reach a higher indifference curve. 
C)  She will buy more of the good and reach a higher indifference curve. 
D)  She will buy the same quantity of the good and stay on the same indifference curve. 
E)  She will buy more of the good and stay on the same indifference curve.

Question 4

All combinations of goods along the same indifference curve represent the same level of utility.

Accepted Answer

A) True 
 B)False

Question 5

Exhibit 6-23  
-In Exhibit 6-23, the marginal rate of substitution of food for clothing between points a and b equals

Accepted Answer

A)  1/3 
B)  6/5 
C)  3 
D)  6 
E)  100 
A)  1/3 
B)  6/5 
C)  3 
D)  6 
E)  100

Question 6

Exhibit 6-23  
-In Exhibit 6-23, the marginal rate of substitution of food for clothing between points b and c is

Accepted Answer

A)  unable to be determined 
B)  2 
C)  3 
D)  more than 3 
E)  0 
A)  unable to be determined 
B)  2 
C)  3 
D)  more than 3 
E)  0

Question 7

Which of the following can be thought of as the consumer's consumption possibilities frontier?

Accepted Answer

A)  the consumer's marginal utility 
B)  the consumer's total utility 
C)  the consumer's budget line 
D)  the consumer's indifference curve 
E)  the consumer's demand curve 
A)  the consumer's marginal utility 
B)  the consumer's total utility 
C)  the consumer's budget line 
D)  the consumer's indifference curve 
E)  the consumer's demand curve

Question 8

An indifference curve shows

Accepted Answer

A)  combinations of goods that provide the same utility 
B)  combinations of goods that can be purchased with the same budget 
C)  combinations of goods that yield the same level of profit 
D)  the relationship between price and utility 
E)  the relationship between utility and profits 
A)  combinations of goods that provide the same utility 
B)  combinations of goods that can be purchased with the same budget 
C)  combinations of goods that yield the same level of profit 
D)  the relationship between price and utility 
E)  the relationship between utility and profits

Question 9

If a candy bar sells for 50 cents and video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12 and the vertical (video game) intercept of Ann's budget line is 24. Giving up one candy bar makes it possible for Ann to afford

Accepted Answer

A)  2 fewer video games 
B)  half an additional video game 
C)  2 more video games 
D)  12 more video games 
E)  24 more video games 
A)  2 fewer video games 
B)  half an additional video game 
C)  2 more video games 
D)  12 more video games 
E)  24 more video games

Question 10

If the price of an inferior good falls, there will be no income effect.

Accepted Answer

A) True 
 B)False

Question 11

Indifference curves in a consumer's indifference map do not intersect.

Accepted Answer

A) True 
 B)False

Question 12

A consumer allocates income between clams and mussels. If clams are a normal good, then when the price of clams falls, the consumer will definitely buy

Accepted Answer

A)  more clams and more mussels 
B)  fewer clams and fewer mussels 
C)  more clams and fewer mussels 
D)  fewer clams and more mussels 
E)  more clams, but the effect of the price change on purchases of mussels cannot be predicted 
A)  more clams and more mussels 
B)  fewer clams and fewer mussels 
C)  more clams and fewer mussels 
D)  fewer clams and more mussels 
E)  more clams, but the effect of the price change on purchases of mussels cannot be predicted

Question 13

This morning, Yoriko Dazai learned that the price of clams had dropped overnight while the price of mussels and her income stayed constant. Assuming that she must maintain the same level of utility, an increase in Yoriko's quantity demanded of clams would be caused by

Accepted Answer

A)  the income effect 
B)  the law of supply 
C)  the substitution effect 
D)  a perfectly elastic demand curve 
E)  clams being an inferior good 
A)  the income effect 
B)  the law of supply 
C)  the substitution effect 
D)  a perfectly elastic demand curve 
E)  clams being an inferior good

Question 14

A consumer allocates income between clams and mussels. If clams are a normal good, then when the price of clams rises, the consumer will definitely buy

Accepted Answer

A)  more clams and more mussels 
B)  fewer clams and fewer mussels 
C)  more clams and fewer mussels 
D)  fewer clams and more mussels 
E)  fewer clams, but the effect of the price change on purchases of mussels cannot be predicted 
A)  more clams and more mussels 
B)  fewer clams and fewer mussels 
C)  more clams and fewer mussels 
D)  fewer clams and more mussels 
E)  fewer clams, but the effect of the price change on purchases of mussels cannot be predicted

Question 15

-Point e in Exhibit 6-25 is better than which other point?

Accepted Answer

A)  Point a because e represents the same utility at a lower level of expenditure. 
B)  Point a because e represents higher utility at the same level of expenditure. 
C)  Point b because e represents the same utility at a lower level of expenditure. 
D)  Point b because e represents higher utility at the same level of expenditure. 
E)  Point a because e represents higher utility at a lower level of expenditure. 
A)  Point a because e represents the same utility at a lower level of expenditure. 
B)  Point a because e represents higher utility at the same level of expenditure. 
C)  Point b because e represents the same utility at a lower level of expenditure. 
D)  Point b because e represents higher utility at the same level of expenditure. 
E)  Point a because e represents higher utility at a lower level of expenditure.

Question 16

Exhibit 6-29  
-Which graph in Exhibit 6-29 shows the effect of an increase in the price of clothing, other things constant?

Accepted Answer

A)  Graph a 
B)  Graph b 
C)  Graph c 
D)  Graph d 
E)  Graph e 
A)  Graph a 
B)  Graph b 
C)  Graph c 
D)  Graph d 
E)  Graph e

Question 17

All combinations of goods along the same budget line represent the same level of utility.

Accepted Answer

A) True 
 B)False

Question 18

The slope of a budget line equals minus the ratio of the

Accepted Answer

A)  marginal utilities of the goods indicated on the two axes 
B)  total utilities of the goods indicated on the two axes 
C)  lowest possible consumption levels for each of the goods indicated on the two axes 
D)  prices of the goods indicated on the two axes 
E)  sum of the prices of the goods indicated on the two axes and the budget 
A)  marginal utilities of the goods indicated on the two axes 
B)  total utilities of the goods indicated on the two axes 
C)  lowest possible consumption levels for each of the goods indicated on the two axes 
D)  prices of the goods indicated on the two axes 
E)  sum of the prices of the goods indicated on the two axes and the budget

Question 19

All combinations of Pepsi and coffee that yield Geraldo the same satisfaction lie along a particular

Accepted Answer

A)  demand curve 
B)  marginal utility curve 
C)  budget line 
D)  income-consumption curve 
E)  indifference curve 
A)  demand curve 
B)  marginal utility curve 
C)  budget line 
D)  income-consumption curve 
E)  indifference curve

Question 20

What would happen if the price of novels increased and novels are measured on the horizontal axis of a budget line diagram?

Accepted Answer

A)  The budget line would shift to the right. 
B)  The budget line would rotate outward along the horizontal axis. 
C)  The budget line would rotate inward along the horizontal axis. 
D)  The budget line would rotate outward along the vertical axis. 
E)  The budget line would rotate inward along the vertical axis. 
A)  The budget line would shift to the right. 
B)  The budget line would rotate outward along the horizontal axis. 
C)  The budget line would rotate inward along the horizontal axis. 
D)  The budget line would rotate outward along the vertical axis. 
E)  The budget line would rotate inward along the vertical axis.

Exam 6: Appendix: Indifference Curves and Utility Maximization

A rotation of the budget line indicates a change in the price of one of the goods under consideration.

An indifference curve slopes downward to the right because

What is the effect of a fall in the price of a normal good on the consumer's choice?

All combinations of goods along the same indifference curve represent the same level of utility.

Exhibit 6-23 -In Exhibit 6-23, the marginal rate of substitution of food for clothing between points a and b equals

Exhibit 6-23 -In Exhibit 6-23, the marginal rate of substitution of food for clothing between points b and c is

Which of the following can be thought of as the consumer's consumption possibilities frontier?

An indifference curve shows

If a candy bar sells for 50 cents and video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12 and the vertical (video game) intercept of Ann's budget line is 24. Giving up one candy bar makes it possible for Ann to afford

If the price of an inferior good falls, there will be no income effect.

Indifference curves in a consumer's indifference map do not intersect.

A consumer allocates income between clams and mussels. If clams are a normal good, then when the price of clams falls, the consumer will definitely buy

This morning, Yoriko Dazai learned that the price of clams had dropped overnight while the price of mussels and her income stayed constant. Assuming that she must maintain the same level of utility, an increase in Yoriko's quantity demanded of clams would be caused by

A consumer allocates income between clams and mussels. If clams are a normal good, then when the price of clams rises, the consumer will definitely buy

-Point e in Exhibit 6-25 is better than which other point?

Exhibit 6-29 -Which graph in Exhibit 6-29 shows the effect of an increase in the price of clothing, other things constant?

All combinations of goods along the same budget line represent the same level of utility.

The slope of a budget line equals minus the ratio of the

All combinations of Pepsi and coffee that yield Geraldo the same satisfaction lie along a particular

What would happen if the price of novels increased and novels are measured on the horizontal axis of a budget line diagram?

The Art and Science of Economic Analysis

Appendix: Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix: price Elasticity and Tax Incidence

Consumer Choice and Demand

Production and Cost in the Firm

Appendix: a Closer Look at Production and Cost

A: perfect Competition

B: perfect Competition

A: monopoly

B: Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

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