Question 1

If the price of video games falls, then the substitution effect will cause a consumer to reduce her consumption of video games.

Accepted Answer

A) True 
 B)False  False

Question 2

Exhibit 5A-2  
-Refer to Exhibit 5A-2. If the individual starts at point A and moves to point B as a result of an increase in the price of Y, then the income effect

Accepted Answer

A)  decreases the consumption of both X and Y. 
B)  has no effect on the consumption of either X or Y. 
C)  increases the consumption of both X and Y. 
D)  decreases the consumption of X but increases the consumption of Y. 
E)  increases the consumption of X but decreases the consumption of Y. 
A)  decreases the consumption of both X and Y. 
B)  has no effect on the consumption of either X or Y. 
C)  increases the consumption of both X and Y. 
D)  decreases the consumption of X but increases the consumption of Y. 
E)  increases the consumption of X but decreases the consumption of Y. E

Question 3

As you move down an indifference curve, your

Accepted Answer

A)  budget must decrease. 
B)  budget must increase. 
C)  total utility increases. 
D)  total utility remains the same. 
E)  total utility decreases. 
A)  budget must decrease. 
B)  budget must increase. 
C)  total utility increases. 
D)  total utility remains the same. 
E)  total utility decreases. D

Question 4

The slope of a budget line for two goods, A and B, with A on the vertical axis and B on the horizontal axis, is equal to

Accepted Answer

A)  -PA/PB. 
B)  PB/PA. 
C)  -PB/PA. 
D)  -MUA/PB. 
E)  PA/PB. 
A)  -PA/PB. 
B)  PB/PA. 
C)  -PB/PA. 
D)  -MUA/PB. 
E)  PA/PB.

Question 5

Exhibit 5A-2  
-Refer to Exhibit 5A-2. If the individual starts at point A and moves to point B as a result of an increase in the price of Y, then the amount of reduction in the consumption of Y is

Accepted Answer

A)  45 due to the substitution effect and 25 due to the income effect. 
B)  25 due to the substitution effect and 20 due to the income effect. 
C)  25 due to both the substitution effect and income effect. 
D)  20 due to the substitution effect and 25 due to the income effect. 
E)  25 due to the substitution effect and 45 due to the income effect. 
A)  45 due to the substitution effect and 25 due to the income effect. 
B)  25 due to the substitution effect and 20 due to the income effect. 
C)  25 due to both the substitution effect and income effect. 
D)  20 due to the substitution effect and 25 due to the income effect. 
E)  25 due to the substitution effect and 45 due to the income effect.

Question 6

An indifference curve shows

Accepted Answer

A)  various combinations of two goods that give the consumer the same amount of utility. 
B)  the quantities of a good that give the consumer maximum utility when compared directly to price. 
C)  the relationship between the price and quantity of a good that a consumer is able to purchase. 
D)  the relationship between the quantity of a good and maximum utility. 
E)  the relationship between total and marginal utility. 
A)  various combinations of two goods that give the consumer the same amount of utility. 
B)  the quantities of a good that give the consumer maximum utility when compared directly to price. 
C)  the relationship between the price and quantity of a good that a consumer is able to purchase. 
D)  the relationship between the quantity of a good and maximum utility. 
E)  the relationship between total and marginal utility.

Question 7

Suppose a consumer allocates a budget to apples and oranges. Now, the prices of apples and oranges are increased by the same percentage. What change will happen to the budget line? What change will happen to the consumer's indifference curves? What will happen to the consumption of the two goods?

Accepted Answer

This causes the budget line to make a pa

Question 8

Which of the following will most likely happen when a person's income increases, other things being equal?

Accepted Answer

A)  The budget line will shift outward. 
B)  The indifference curves will shift downward. 
C)  The indifference curves will shift outward. 
D)  The budget line will become steeper. 
E)  The budget line will become flatter. 
A)  The budget line will shift outward. 
B)  The indifference curves will shift downward. 
C)  The indifference curves will shift outward. 
D)  The budget line will become steeper. 
E)  The budget line will become flatter.

Question 9

Exhibit 5A-1  
-Refer to Exhibit 5A-1. Which of the following statements is false?

Accepted Answer

A)  At point C, MUX/MUY > PX/PY. 
B)  Curve I2 represents a greater level of utility than I1. 
C)  If the individual started at point A and moved to point B, the most likely cause was a decrease in the price of X. 
D)  In moving from point A to point B, the individual is moving down along his or her demand curve for good Y. 
E)  At point B, MUX/PX = MUY/PY. 
A)  At point C, MUX/MUY > PX/PY. 
B)  Curve I2 represents a greater level of utility than I1. 
C)  If the individual started at point A and moved to point B, the most likely cause was a decrease in the price of X. 
D)  In moving from point A to point B, the individual is moving down along his or her demand curve for good Y. 
E)  At point B, MUX/PX = MUY/PY.

Question 10

When income decreases, all else held constant, which of the following occurs?

Accepted Answer

A)  Demand for an inferior good decreases. 
B)  The slope of the highest attainable indifference curve changes. 
C)  The budget line shifts out from the origin. 
D)  Total utility decreases. 
E)  Total utility increases. 
A)  Demand for an inferior good decreases. 
B)  The slope of the highest attainable indifference curve changes. 
C)  The budget line shifts out from the origin. 
D)  Total utility decreases. 
E)  Total utility increases.

Question 11

For every point along a demand curve, utility is being maximized.

Accepted Answer

A) True 
 B)False

Question 12

Along an indifference curve, different combinations of a good represent the same cost to a consumer.

Accepted Answer

A) True 
 B)False

Question 13

Exhibit 5A-3  
-Refer to Exhibit 5A-3. Calculate the maximum quantity of good Y and the maximum quantity of good X that the consumer can purchase if the price of good Y is $3 and the price of good X is $5.

Accepted Answer

51; 30.6
Consumer in

Question 14

The budget line rotates when a consumer's budget increases.

Accepted Answer

A) True 
 B)False

Question 15

The slope of an indifference curve is equal to the

Accepted Answer

A)  degree of responsiveness of demand to a change in price. 
B)  price elasticity of demand for a good. 
C)  rate of substitution between two goods. 
D)  marginal utility of a good measured on the horizontal axis. 
E)  marginal utility of a good measured on the vertical axis. 
A)  degree of responsiveness of demand to a change in price. 
B)  price elasticity of demand for a good. 
C)  rate of substitution between two goods. 
D)  marginal utility of a good measured on the horizontal axis. 
E)  marginal utility of a good measured on the vertical axis.

Question 16

When the price of a good increases, all else held equal, which of the following does not occur?

Accepted Answer

A)  The slope of the budget line changes. 
B)  The consumer's indifference curves shift. 
C)  Utility decreases. 
D)  Quantity demanded decreases. 
E)  The budget line shifts inward along that good's axis. 
A)  The slope of the budget line changes. 
B)  The consumer's indifference curves shift. 
C)  Utility decreases. 
D)  Quantity demanded decreases. 
E)  The budget line shifts inward along that good's axis.

Question 17

Exhibit 5A-3  
-Refer to Exhibit 5A-3. Calculate the income of the consumer with this budget line if the price of good Y is $3 and the price of good X is $5.

Accepted Answer

$153
To buy 26 units of Y and

Question 18

A curve showing different combinations of two products that give a consumer the same satisfaction is

Accepted Answer

A)  a paradox of value. 
B)  an indifference curve. 
C)  total utility. 
D)  an indifference map. 
E)  a utility curve. 
A)  a paradox of value. 
B)  an indifference curve. 
C)  total utility. 
D)  an indifference map. 
E)  a utility curve.

Question 19

In terms of indifference curve analysis, equilibrium occurs at the point of tangency of the indifference curve and the demand curve.

Accepted Answer

A) True 
 B)False

Question 20

As you move down your indifference curve, total utility decreases.

Accepted Answer

A) True 
 B)False

If the price of video games falls, then the substitution effect will cause a consumer to reduce her consumption of video games.

Exhibit 5A-2 -Refer to Exhibit 5A-2. If the individual starts at point A and moves to point B as a result of an increase in the price of Y, then the income effect

As you move down an indifference curve, your

The slope of a budget line for two goods, A and B, with A on the vertical axis and B on the horizontal axis, is equal to

Exhibit 5A-2 -Refer to Exhibit 5A-2. If the individual starts at point A and moves to point B as a result of an increase in the price of Y, then the amount of reduction in the consumption of Y is

An indifference curve shows

Suppose a consumer allocates a budget to apples and oranges. Now, the prices of apples and oranges are increased by the same percentage. What change will happen to the budget line? What change will happen to the consumer's indifference curves? What will happen to the consumption of the two goods?

Which of the following will most likely happen when a person's income increases, other things being equal?

Exhibit 5A-1 -Refer to Exhibit 5A-1. Which of the following statements is false?

When income decreases, all else held constant, which of the following occurs?

For every point along a demand curve, utility is being maximized.

Along an indifference curve, different combinations of a good represent the same cost to a consumer.

Exhibit 5A-3 -Refer to Exhibit 5A-3. Calculate the maximum quantity of good Y and the maximum quantity of good X that the consumer can purchase if the price of good Y is $3 and the price of good X is $5.

The budget line rotates when a consumer's budget increases.

The slope of an indifference curve is equal to the

When the price of a good increases, all else held equal, which of the following does not occur?

Exhibit 5A-3 -Refer to Exhibit 5A-3. Calculate the income of the consumer with this budget line if the price of good Y is $3 and the price of good X is $5.

A curve showing different combinations of two products that give a consumer the same satisfaction is

In terms of indifference curve analysis, equilibrium occurs at the point of tangency of the indifference curve and the demand curve.

As you move down your indifference curve, total utility decreases.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Reading, Understanding, and Creating Graphs

Producer Theory With Isoquants

Filters

Exam 18: Consumer Theory With Indifference Curves

If the price of video games falls, then the substitution effect will cause a consumer to reduce her consumption of video games.

Exhibit 5A-2 -Refer to Exhibit 5A-2. If the individual starts at point A and moves to point B as a result of an increase in the price of Y, then the income effect

As you move down an indifference curve, your

The slope of a budget line for two goods, A and B, with A on the vertical axis and B on the horizontal axis, is equal to

Exhibit 5A-2 -Refer to Exhibit 5A-2. If the individual starts at point A and moves to point B as a result of an increase in the price of Y, then the amount of reduction in the consumption of Y is

An indifference curve shows

Suppose a consumer allocates a budget to apples and oranges. Now, the prices of apples and oranges are increased by the same percentage. What change will happen to the budget line? What change will happen to the consumer's indifference curves? What will happen to the consumption of the two goods?

Which of the following will most likely happen when a person's income increases, other things being equal?

Exhibit 5A-1 -Refer to Exhibit 5A-1. Which of the following statements is false?

When income decreases, all else held constant, which of the following occurs?

For every point along a demand curve, utility is being maximized.

Along an indifference curve, different combinations of a good represent the same cost to a consumer.

Exhibit 5A-3 -Refer to Exhibit 5A-3. Calculate the maximum quantity of good Y and the maximum quantity of good X that the consumer can purchase if the price of good Y is $3 and the price of good X is $5.

The budget line rotates when a consumer's budget increases.

The slope of an indifference curve is equal to the

When the price of a good increases, all else held equal, which of the following does not occur?

Exhibit 5A-3 -Refer to Exhibit 5A-3. Calculate the income of the consumer with this budget line if the price of good Y is $3 and the price of good X is $5.

A curve showing different combinations of two products that give a consumer the same satisfaction is

In terms of indifference curve analysis, equilibrium occurs at the point of tangency of the indifference curve and the demand curve.

As you move down your indifference curve, total utility decreases.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Reading, Understanding, and Creating Graphs

Producer Theory With Isoquants

Filters