Question 1

A curve representing combinations of two goods that yield equal total utility is a(n)

Accepted Answer

A) production possibilities frontier 
B) demand curve 
C) supply curve 
D) marginal utility curve 
E) indifference curve 
A) production possibilities frontier 
B) demand curve 
C) supply curve 
D) marginal utility curve 
E) indifference curve

Question 2

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 3

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 4

Exhibit 6-31   Assume that a consumer is initially in equilibrium at point a in Exhibit 6-31.Then the price of good B falls.The movement from point a to point c represents

Accepted Answer

A) the substitution effect 
B) the income effect 
C) the substitution effect minus the income effect 
D) the sum of the substitution and income effects 
E) the income effect minus the substitution effect 
A) the substitution effect 
B) the income effect 
C) the substitution effect minus the income effect 
D) the sum of the substitution and income effects 
E) the income effect minus the substitution effect

Question 5

Which of the following statements about indifference curves is not true?

Accepted Answer

A) The consumer is indifferent among the combinations illustrated along a given curve. 
B) Every indifference curve intersects the consumer's budget line at least once. 
C) Indifference curves slope downward. 
D) Indifference curves are concave (bowed in toward the origin). 
E) Indifference curves do not intersect. 
A) The consumer is indifferent among the combinations illustrated along a given curve. 
B) Every indifference curve intersects the consumer's budget line at least once. 
C) Indifference curves slope downward. 
D) Indifference curves are concave (bowed in toward the origin). 
E) Indifference curves do not intersect.

Question 6

If the marginal utilities per dollar are not equal among the final set of goods Joe is planning to consume, he can increase his total utility by changing the amounts of what he intends to purchase.

Accepted Answer

A) True 
 B)False

Question 7

If Hannah considers biscuits an inferior good, then when their price falls, she

Accepted Answer

A) will definitely buy more biscuits 
B) will definitely buy fewer biscuits 
C) may buy more biscuits 
D) will buy fewer biscuits if the substitution effect is larger than the income effect 
E) will buy more biscuits if the substitution effect is smaller than the income effect 
A) will definitely buy more biscuits 
B) will definitely buy fewer biscuits 
C) may buy more biscuits 
D) will buy fewer biscuits if the substitution effect is larger than the income effect 
E) will buy more biscuits if the substitution effect is smaller than the income effect

Question 8

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

Accepted Answer

A) unable to be determined 
B) 2 
C) 1/3 
D) less than 1/3 
E) 0 
A) unable to be determined 
B) 2 
C) 1/3 
D) less than 1/3 
E) 0

Question 9

Exhibit 6-22   If a consumer moves from point a to point b on the indifference curve shown in Exhibit 6-22,

Accepted Answer

A) the consumer's total utility from food and books remains unchanged 
B) the consumer's total utility from food and books falls 
C) the consumer becomes more willing to give up additional units of books in order to consume one more unit of food 
D) the consumer's willingness to give up additional units of books in order to consume more units of food does not change 
E) the consumer's total utility from food and books rises 
A) the consumer's total utility from food and books remains unchanged 
B) the consumer's total utility from food and books falls 
C) the consumer becomes more willing to give up additional units of books in order to consume one more unit of food 
D) the consumer's willingness to give up additional units of books in order to consume more units of food does not change 
E) the consumer's total utility from food and books rises

Question 10

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 video game makes it possible for Ann to afford

Accepted Answer

A) 2 fewer candy bars 
B) half of an additional candy bar 
C) 2 more candy bars 
D) 12 more candy bars 
E) 24 more candy bars 
A) 2 fewer candy bars 
B) half of an additional candy bar 
C) 2 more candy bars 
D) 12 more candy bars 
E) 24 more candy bars

Question 11

Combinations of goods along an indifference curve reflect a level of utility that is

Accepted Answer

A) constant and measured by a specific number 
B) variable along the curve and measured by specific numbers 
C) variable along the curve, though unspecified 
D) constant, though unspecified 
E) inelastic above the midpoint and elastic below the midpoint 
A) constant and measured by a specific number 
B) variable along the curve and measured by specific numbers 
C) variable along the curve, though unspecified 
D) constant, though unspecified 
E) inelastic above the midpoint and elastic below the midpoint

Question 12

A candy bar sells for 50 cents, 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.If Ann's income increased to $20, the vertical intercept would be

Accepted Answer

A) $4 
B) $2 
C) 20 
D) 40 
E) 80 
A) $4 
B) $2 
C) 20 
D) 40 
E) 80

Question 13

A family on a trip budgets $200 for restaurant meals and fast food.If the price of a fast-food meal for the whole family is $20, what is the horizontal intercept of the budget line when fast food is measured on the horizontal axis?

Accepted Answer

A) 100 
B) 10 
C) 20 
D) 400 
E) it is impossible to tell from the information given 
A) 100 
B) 10 
C) 20 
D) 400 
E) it is impossible to tell from the information given

Question 14

Exhibit 6-25   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 15

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

Accepted Answer

A) True 
 B)False

Question 16

Exhibit 6-25   Which of the following is true of Exhibit 6-25?

Accepted Answer

A) Points a, c, and e would all cost the same amount to purchase. 
B) Points a, b, and c all represent the same level of utility, which is higher than that represented by points d, e, and f. 
C) Points a, c, and e all represent the same level of utility, which is lower than that represented by point b. 
D) Points a, c, and e all represent the same level of utility, which is higher than that represented by point b. 
E) Point d represents a level of utility higher than any other point on the graph. 
A) Points a, c, and e would all cost the same amount to purchase. 
B) Points a, b, and c all represent the same level of utility, which is higher than that represented by points d, e, and f. 
C) Points a, c, and e all represent the same level of utility, which is lower than that represented by point b. 
D) Points a, c, and e all represent the same level of utility, which is higher than that represented by point b. 
E) Point d represents a level of utility higher than any other point on the graph.

Question 17

The slope of a budget line with x on the vertical axis and y on the horizontal axis equals

Accepted Answer

A) (-income/Px)/ (income/Py) 
B) (income - Px)/ (income - Py) 
C) (income + Px)/ (income + Py) 
D) (Px - Py)/ (Px + Py) 
E) (Px + Py)/ (Py - Px) 
A) (-income/Px)/ (income/Py) 
B) (income - Px)/ (income - Py) 
C) (income + Px)/ (income + Py) 
D) (Px - Py)/ (Px + Py) 
E) (Px + Py)/ (Py - Px)

Question 18

Assume that you divide your food budget between fish and chicken.Which of the following would not alter the position of a budget line drawn with fish on the horizontal axis and chicken on the vertical axis?

Accepted Answer

A) an increase in the price of fish 
B) a decrease in the price of chicken 
C) a change in your preference for fish 
D) an increase in your food budget 
E) an increase in the price of fish combined with an increase in your food budget 
A) an increase in the price of fish 
B) a decrease in the price of chicken 
C) a change in your preference for fish 
D) an increase in your food budget 
E) an increase in the price of fish combined with an increase in your food budget

Question 19

Suppose Norm really loves coffee and Diane really loves books.If we drew their indifference curves on a graph with books on the horizontal axis and coffee on the vertical axis, Diane's indifference curves would be

Accepted Answer

A) the same as Norm's 
B) upward sloping, and Norm's would be downward sloping 
C) downward sloping, and Norm's would be upward sloping 
D) steeper than Norm's 
E) flatter than Norm's 
A) the same as Norm's 
B) upward sloping, and Norm's would be downward sloping 
C) downward sloping, and Norm's would be upward sloping 
D) steeper than Norm's 
E) flatter than Norm's

Question 20

For inferior goods, a rise in price causes

Accepted Answer

A) negative income and substitution effects 
B) positive income and substitution effects 
C) a negative income effect and a positive substitution effect 
D) a positive income effect and a negative substitution effect 
E) a positive income effect but no substitution effect 
A) negative income and substitution effects 
B) positive income and substitution effects 
C) a negative income effect and a positive substitution effect 
D) a positive income effect and a negative substitution effect 
E) a positive income effect but no substitution effect

Exam 6: Appendix--Indifference Curves and Utility Maximization

A curve representing combinations of two goods that yield equal total utility is a(n)

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

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

Exhibit 6-31 Assume that a consumer is initially in equilibrium at point a in Exhibit 6-31.Then the price of good B falls.The movement from point a to point c represents

Which of the following statements about indifference curves is not true?

If the marginal utilities per dollar are not equal among the final set of goods Joe is planning to consume, he can increase his total utility by changing the amounts of what he intends to purchase.

If Hannah considers biscuits an inferior good, then when their price falls, she

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

Exhibit 6-22 If a consumer moves from point a to point b on the indifference curve shown in Exhibit 6-22,

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 video game makes it possible for Ann to afford

Combinations of goods along an indifference curve reflect a level of utility that is

A candy bar sells for 50 cents, 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.If Ann's income increased to $20, the vertical intercept would be

A family on a trip budgets $200 for restaurant meals and fast food.If the price of a fast-food meal for the whole family is $20, what is the horizontal intercept of the budget line when fast food is measured on the horizontal axis?

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

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

Exhibit 6-25 Which of the following is true of Exhibit 6-25?

The slope of a budget line with x on the vertical axis and y on the horizontal axis equals

Assume that you divide your food budget between fish and chicken.Which of the following would not alter the position of a budget line drawn with fish on the horizontal axis and chicken on the vertical axis?

Suppose Norm really loves coffee and Diane really loves books.If we drew their indifference curves on a graph with books on the horizontal axis and coffee on the vertical axis, Diane's indifference curves would be

For inferior goods, a rise in price causes

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

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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