Question 1

-Given the budget line in the figure above, the combination of chips that is NOT affordable is

Accepted Answer

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

Question 2

-In an indifference curve/budget line diagram, a consumer's equilibrium consumption combination will occur

Accepted Answer

A)  inside the budget line. 
B)  outside the budget line. 
C)  on the budget line. 
D)  at the origin. 
A)  inside the budget line. 
B)  outside the budget line. 
C)  on the budget line. 
D)  at the origin.

Question 3

-In the figure above, which budget line results in the most real income in terms of carrots?

Accepted Answer

A)  AD 
B)  BD 
C)  CD 
D)  Real income is equal for all three budget lines. 
A)  AD 
B)  BD 
C)  CD 
D)  Real income is equal for all three budget lines.

Question 4

-The figure illustrates Sally's budget line and her preferences. Point ________ is Sally's best affordable point, and Sally prefers point ________ to point ________.

Accepted Answer

A)  A; B; A 
B)  E; C; B 
C)  B; A; B 
D)  B; B; D 
A)  A; B; A 
B)  E; C; B 
C)  B; A; B 
D)  B; B; D

Question 5

Holding your income and the price of lobster constant, you can derive your demand curve for steak from an indifference curve/budget line diagram by determining how your consumption of steak changes when the price of a steak changes.

Accepted Answer

A) True 
 B)False

Question 6

Why does your marginal rate of substitution between chocolate and vanilla ice cream decline continuously as you move rightward on your indifference curve between the two?

Accepted Answer

With chocolate on the vertical axis and

Question 7

Jake spends $200 on fried chickens and Pepsi. The price of a fried chicken is $5 and Pepsi is $2.50 per bottle. With the quantity of Pepsi being measured along the vertical axis, the slope of Jake's budget line is ________ per fried chicken.

Accepted Answer

A)  0.5 of a Pepsi 
B)  -0.5 of a Pepsi 
C)  2 Pepsis 
D)  -2 Pepsis 
A)  0.5 of a Pepsi 
B)  -0.5 of a Pepsi 
C)  2 Pepsis 
D)  -2 Pepsis

Question 8

All points above a given indifference curve are

Accepted Answer

A)  inferior to any point on the indifference curve. 
B)  preferred to any point on the indifference curve. 
C)  definitely not affordable. 
D)  Both answers Band C are correct. 
A)  inferior to any point on the indifference curve. 
B)  preferred to any point on the indifference curve. 
C)  definitely not affordable. 
D)  Both answers Band C are correct.

Question 9

-The MRS of the indifference curves in the above figure

Accepted Answer

A)  equals 1/2. 
B)  equals 2. 
C)  changes when moving along any one of the curves. 
D)  is constant along a particular indifference curve, but changes from one indifference curve to the next. 
A)  equals 1/2. 
B)  equals 2. 
C)  changes when moving along any one of the curves. 
D)  is constant along a particular indifference curve, but changes from one indifference curve to the next.

Question 10

What is an indifference curve?

Accepted Answer

An indifference curve measures

Question 11

-The figure above shows Sam's budget line. Which of the following combinations of gasoline and coffee are not available to Sam?

Accepted Answer

A)  40 gallons of gasoline and 0 pounds of coffee 
B)  32 gallons of gasoline and 4 pounds of coffee 
C)  8 gallons of gasoline and 8 pounds of coffee 
D)  16 gallons of gasoline and 16 pounds of coffee 
A)  40 gallons of gasoline and 0 pounds of coffee 
B)  32 gallons of gasoline and 4 pounds of coffee 
C)  8 gallons of gasoline and 8 pounds of coffee 
D)  16 gallons of gasoline and 16 pounds of coffee

Question 12

-In the figure above, the MRS at point A is ________ the MRS at point B.

Accepted Answer

A)  equal to 
B)  less than 
C)  greater than 
D)  not able to be compared to 
A)  equal to 
B)  less than 
C)  greater than 
D)  not able to be compared to

Question 13

-The indifference curves in the figure above (I1, I2, and I3) reflect Peter's consumption preferences. Peter prefers consuming ________ to consuming ________.

Accepted Answer

A)  48 slices of pizza and 12 chocolate bars; 24 slices of pizza and 24 chocolate bars 
B)  40 slices of pizza and 20 chocolate bars; 48 slices of pizza and 12 chocolate bars 
C)  24 slices of pizza and 24 chocolate bars; 40 slices of pizza and 20 chocolate bars 
D)  32 slices of pizza and 8 chocolate bars; 16 slices of pizza and 16 chocolate bars 
A)  48 slices of pizza and 12 chocolate bars; 24 slices of pizza and 24 chocolate bars 
B)  40 slices of pizza and 20 chocolate bars; 48 slices of pizza and 12 chocolate bars 
C)  24 slices of pizza and 24 chocolate bars; 40 slices of pizza and 20 chocolate bars 
D)  32 slices of pizza and 8 chocolate bars; 16 slices of pizza and 16 chocolate bars

Question 14

-The higher the price of the good measured on the vertical axis, other thing remaining the same, the flatter the budget line.

Accepted Answer

A) True 
 B)False

Question 15

The larger the marginal rate of substitution, the larger is the amount of one good that the consumer is willing to give up in exchange for another good and still remain at the same level of satisfaction.

Accepted Answer

A) True 
 B)False

Question 16

-Consider the budget line in the above figure. If the consumer's income is $240, then the price of a movie is

Accepted Answer

A)  $24 per movie. 
B)  $12 per movie. 
C)  $10 per movie. 
D)  More information is needed to determine the price of a movie. 
A)  $24 per movie. 
B)  $12 per movie. 
C)  $10 per movie. 
D)  More information is needed to determine the price of a movie.

Question 17

-The figure above shows Ronald's budget line. He has a weekly income of $20, which he spends on hotdogs and hamburgers. Now Ronald's income decreases to $10 per week and the price of a hotdog doubles. Ronald's budget line becomes ________ and ________.

Accepted Answer

A)  flatter; shifts rightward 
B)  flatter; does not shift 
C)  steeper; shifts rightward 
D)  steeper; shifts leftward 
A)  flatter; shifts rightward 
B)  flatter; does not shift 
C)  steeper; shifts rightward 
D)  steeper; shifts leftward

Question 18

-Suppose the quantity of sodas and the quantity of popcorn are on an indifference curve/budget line diagram. An increase in income shifts the budget line ________ and, if popcorn is a normal good, shifts the demand curve for popcorn ________.

Accepted Answer

A)  rightward; rightward 
B)  rightward; leftward 
C)  leftward; rightward 
D)  leftward; leftward 
A)  rightward; rightward 
B)  rightward; leftward 
C)  leftward; rightward 
D)  leftward; leftward

Question 19

-The indifference curve in the above figure

Accepted Answer

A)  could illustrate a person's preferences for identical computer disks made by two different companies. 
B)  could illustrate a person's preferences for right-handed and left-handed gloves. 
C)  has a constant marginal rate of substitution. 
D)  None of the above statements is correct. 
A)  could illustrate a person's preferences for identical computer disks made by two different companies. 
B)  could illustrate a person's preferences for right-handed and left-handed gloves. 
C)  has a constant marginal rate of substitution. 
D)  None of the above statements is correct.

Question 20

-The above figure gives your budget line between CDs and magazines. The slope of the budget line is ________ CD per magazine.

Accepted Answer

A)  1/2 
B)  -1/2 
C)  -1 
D)  -2 
A)  1/2 
B)  -1/2 
C)  -1 
D)  -2

Exam 9: Possibilities, Preferences, and Choices

-Given the budget line in the figure above, the combination of chips that is NOT affordable is

-In an indifference curve/budget line diagram, a consumer's equilibrium consumption combination will occur

-In the figure above, which budget line results in the most real income in terms of carrots?

-The figure illustrates Sally's budget line and her preferences. Point ________ is Sally's best affordable point, and Sally prefers point ________ to point ________.

Holding your income and the price of lobster constant, you can derive your demand curve for steak from an indifference curve/budget line diagram by determining how your consumption of steak changes when the price of a steak changes.

Why does your marginal rate of substitution between chocolate and vanilla ice cream decline continuously as you move rightward on your indifference curve between the two?

Jake spends $200 on fried chickens and Pepsi. The price of a fried chicken is $5 and Pepsi is $2.50 per bottle. With the quantity of Pepsi being measured along the vertical axis, the slope of Jake's budget line is ________ per fried chicken.

All points above a given indifference curve are

-The MRS of the indifference curves in the above figure

What is an indifference curve?

-The figure above shows Sam's budget line. Which of the following combinations of gasoline and coffee are not available to Sam?

-In the figure above, the MRS at point A is ________ the MRS at point B.

-The indifference curves in the figure above (I1, I2, and I3) reflect Peter's consumption preferences. Peter prefers consuming ________ to consuming ________.

-The higher the price of the good measured on the vertical axis, other thing remaining the same, the flatter the budget line.

The larger the marginal rate of substitution, the larger is the amount of one good that the consumer is willing to give up in exchange for another good and still remain at the same level of satisfaction.

-Consider the budget line in the above figure. If the consumer's income is $240, then the price of a movie is

-The figure above shows Ronald's budget line. He has a weekly income of $20, which he spends on hotdogs and hamburgers. Now Ronald's income decreases to $10 per week and the price of a hotdog doubles. Ronald's budget line becomes ________ and ________.

-Suppose the quantity of sodas and the quantity of popcorn are on an indifference curve/budget line diagram. An increase in income shifts the budget line ________ and, if popcorn is a normal good, shifts the demand curve for popcorn ________.

-The indifference curve in the above figure

-The above figure gives your budget line between CDs and magazines. The slope of the budget line is ________ CD per magazine.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

-The figure illustrates Sally's budget line and her preferences. Point is Sally's best affordable point, and Sally prefers point to point .

-The indifference curves in the figure above (I₁, I₂, and I₃) reflect Peter's consumption preferences. Peter prefers consuming to consuming .

-The figure above shows Ronald's budget line. He has a weekly income of $20, which he spends on hotdogs and hamburgers. Now Ronald's income decreases to $10 per week and the price of a hotdog doubles. Ronald's budget line becomes and .

-Suppose the quantity of sodas and the quantity of popcorn are on an indifference curve/budget line diagram. An increase in income shifts the budget line and, if popcorn is a normal good, shifts the demand curve for popcorn .