Question 1

What is the equation for budget line RS,given the above graph?

Accepted Answer

A) Y = 10 + 18X 
B) Y = 10 - 1.8X 
C) Y = 15 + (9/5)X 
D) Y = 1.8 + (9/5)X 
E) Y = 18 - (18/10)X 
A) Y = 10 + 18X 
B) Y = 10 - 1.8X 
C) Y = 15 + (9/5)X 
D) Y = 1.8 + (9/5)X 
E) Y = 18 - (18/10)X

Question 2

A consumer has the indifference map shown below.The market prices of X and Y are $20 and $50,respectively.The consumer has $500 to spend on goods X and Y.For the utility-maximizing bundle,the marginal rate of substitution is ____________________ the slope of the budget line (in absolute value),and the ratio MU/P for good X is ____________ the ratio MU/P for good Y.

Accepted Answer

A) greater than; greater than 
B) greater than; less than 
C) less than; greater than 
D) less than; less than 
E) equal to; equal to 
A) greater than; greater than 
B) greater than; less than 
C) less than; greater than 
D) less than; less than 
E) equal to; equal to

Question 3

A market demand curve

Accepted Answer

A) is the horizontal summation of the demand curves of all consumers in the market. 
B) is the sum of the prices consumers are willing to pay at each quantity. 
C) shows that consumers demand more at higher prices. 
D) both a and b 
E) all of the above 
A) is the horizontal summation of the demand curves of all consumers in the market. 
B) is the sum of the prices consumers are willing to pay at each quantity. 
C) shows that consumers demand more at higher prices. 
D) both a and b 
E) all of the above

Question 4

In the following graph the price of Y is $15.At point B,

Accepted Answer

A) the consumer can exchange one unit of X for one unit of Y and keep income unchanged. 
B) the marginal rate of substitution of X for Y is greater than it is at point A. 
C) the consumer's utility is greater than it is at point A. 
D) both a and b 
E) all of the above 
A) the consumer can exchange one unit of X for one unit of Y and keep income unchanged. 
B) the marginal rate of substitution of X for Y is greater than it is at point A. 
C) the consumer's utility is greater than it is at point A. 
D) both a and b 
E) all of the above

Question 5

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $14.At point N on the demand curve for X,the price of X is $____.

Accepted Answer

A) $48 
B) $50 
C) $56 
D) $60 
E) $64 
A) $48 
B) $50 
C) $56 
D) $60 
E) $64

Question 6

If a consumer is choosing the bundle of goods that maximizes utility subject to a budget constraint,then

Accepted Answer

A) the rate at which income affects the utility-maximizing choice is equal for all goods. 
B) the rate at which the consumer is willing to substitute between goods is equal to the market rate of exchange. 
C) the ratio of marginal utility to price is equal for all goods. 
D) both b and c 
E) all of the above 
A) the rate at which income affects the utility-maximizing choice is equal for all goods. 
B) the rate at which the consumer is willing to substitute between goods is equal to the market rate of exchange. 
C) the ratio of marginal utility to price is equal for all goods. 
D) both b and c 
E) all of the above

Question 7

The consumer's income is $800.
-According to the above figure,why doesn't the consumer choose the combination of 30X and 56Y at point A?

Accepted Answer

A) MRS is less than $P _ { x } / P _ { x }$ . 
B) MRS is greater than $P _ { x } / P _ { y }$ . 
C)  $M U _ { x }$ is greater than $M U _ { y }$ . 
D)  $M U _ { x } / P _ { x }$ is less than $M U _ { \mathrm { r } } / P _ { \mathrm { r } }$ . 
A) MRS is less than $P _ { x } / P _ { x }$ . 
B) MRS is greater than $P _ { x } / P _ { y }$ . 
C)  $M U _ { x }$ is greater than $M U _ { y }$ . 
D)  $M U _ { x } / P _ { x }$ is less than $M U _ { \mathrm { r } } / P _ { \mathrm { r } }$ .

Question 8

According to the following figure,what could have caused a consumer's budget line to shift from ML to MN?

Accepted Answer

A) an increase in the price of X 
B) a decrease in the price of X 
C) an increase in the price of Y 
D) a decrease in the price of Y 
E) cannot determine without more information 
A) an increase in the price of X 
B) a decrease in the price of X 
C) an increase in the price of Y 
D) a decrease in the price of Y 
E) cannot determine without more information

Question 9

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $14.The equation of the budget line passing through point r is _______________.

Accepted Answer

A) Y = 800 - 4X 
B) Y = 900 - 4X 
C) Y = 800 - 5X 
D) Y = 900 - 5X 
A) Y = 800 - 4X 
B) Y = 900 - 4X 
C) Y = 800 - 5X 
D) Y = 900 - 5X

Question 10

Assume that an individual consumes two goods,X and Y.The total utility (assumed measurable)of each good is independent of the rate of consumption of other goods.The prices of X and Y are,respectively,$5 and $10. $\begin{array}{c}
\begin{array}{l}
\text { Units of the GOOd} \
1\
2 \
3 \
4 \
5 \
6 \
7\
8
\end{array}
\begin{array}{l}
\text { Total Utility of } X\
50 \
95 \
135 \
170 \
200 \
225 \
245\
160
\end{array}
\begin{array}{l}
\text { Total Utility of } y\
400 \
750 \
950 \
1100 \
1220 \
1320 \
1400 \
1450 
\end{array}

\end{array}$
  Given the above,if the consumer has $65 to spend on X and Y,the utility-maximizing bundle is

Accepted Answer

A) 3X and 5Y. 
B) 4X and 4Y. 
C) 5X and 2Y. 
D) 1X and 6Y. 
E) 2X and 7Y. 
A) 3X and 5Y. 
B) 4X and 4Y. 
C) 5X and 2Y. 
D) 1X and 6Y. 
E) 2X and 7Y.

Question 11

A consumer has the indifference map shown below.The market prices of X and Y are $20 and $12,respectively.The consumer has $1,000 to spend on goods X and Y.For the utility-maximizing bundle,the marginal rate of substitution is ____________________ the slope of the budget line (in absolute value),and the ratio MU/P for good X is ____________ the ratio MU/P for good Y.

Accepted Answer

A) greater than; greater than 
B) greater than; less than 
C) less than; greater than 
D) less than; less than 
E) equal to; equal to 
A) greater than; greater than 
B) greater than; less than 
C) less than; greater than 
D) less than; less than 
E) equal to; equal to

Question 12

Suppose that 2 units of X and 8 units of Y give a consumer the same satisfaction as 4 units of X and 2 units of Y.Then

Accepted Answer

A) the consumer is willing to give up 3 units of Y to obtain 1 more unit of X. 
B) the consumer is willing to give up 1 unit of Y to obtain 3 more units of X. 
C) the marginal rate of substitution of Y for X is 3. 
D) both a and c 
E) both b and c 
A) the consumer is willing to give up 3 units of Y to obtain 1 more unit of X. 
B) the consumer is willing to give up 1 unit of Y to obtain 3 more units of X. 
C) the marginal rate of substitution of Y for X is 3. 
D) both a and c 
E) both b and c

Question 13

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $14.What is the consumer's income?

Accepted Answer

A) $12,000 
B) $12,200 
C) $12,250 
D) $12,400 
E) $12,600 
A) $12,000 
B) $12,200 
C) $12,250 
D) $12,400 
E) $12,600

Question 14

If Ferdinand prefers a Big Mac to a Whopper and a Whopper to a hotdog,but is indifferent between a Big Mac and a Quarter Pounder he must

Accepted Answer

A) prefer a Quarter Pounder to a hotdog. 
B) prefer a Whopper to a Quarter Pounder. 
C) be indifferent between a Quarter Pounder and a Whopper. 
D) be indifferent between a Whopper and a hotdog. 
A) prefer a Quarter Pounder to a hotdog. 
B) prefer a Whopper to a Quarter Pounder. 
C) be indifferent between a Quarter Pounder and a Whopper. 
D) be indifferent between a Whopper and a hotdog.

Question 15

The following figure shows a portion of a consumer's indifference map and budget lines.The price of good Y is $17 and the consumer's income is $7,650.Let the consumer begin in utility-maximizing equilibrium at point A on indifference curve II.Next the price of good X changes so that the consumer moves to a new utility-maximizing equilibrium at point B on indifference curve I.The total effect of the change in the price of X is

Accepted Answer

A) 50 
B) 100 
C) 150 
D) -100 
E) -150 
A) 50 
B) 100 
C) 150 
D) -100 
E) -150

Question 16

A consumer has the indifference map shown below.The market prices of X and Y are $20 and $12,respectively.The consumer has $1,000 to spend on goods X and Y.The utility-maximizing bundle is

Accepted Answer

A) 40 units of good X and 10 units of good Y. 
B) 10 units of good X and 40 units of good Y. 
C) 20 units of good X and 18 units of good Y. 
D) 50 units of good X and 0 units of good Y. 
E) none of the above 
A) 40 units of good X and 10 units of good Y. 
B) 10 units of good X and 40 units of good Y. 
C) 20 units of good X and 18 units of good Y. 
D) 50 units of good X and 0 units of good Y. 
E) none of the above

Question 17

Refer to the following indifference map for a consumer who has an income of $48 to spend on goods X and Y and the market prices of X and Y are both $4:   Now suppose the price of good X increases to $12 while the price of good Y remains $4.Utility will be maximized on which indifference curve?

Accepted Answer

A) I 
B) II 
C) III 
D) On an indifference curve below I 
A) I 
B) II 
C) III 
D) On an indifference curve below I

Question 18

Assume that an individual consumes two goods,X and Y.The total utility (assumed measurable)of each good is independent of the rate of consumption of other goods.The prices of X and Y are,respectively,$5 and $10. $\begin{array}{c}
\begin{array}{l}
\text { Units of the GOOd} \
1\
2 \
3 \
4 \
5 \
6 \
7\
8
\end{array}
\begin{array}{l}
\text { Total Utility of } X\
50 \
95 \
135 \
170 \
200 \
225 \
245\
160
\end{array}
\begin{array}{l}
\text { Total Utility of } y\
400 \
750 \
950 \
1100 \
1220 \
1320 \
1400 \
1450 
\end{array}

\end{array}$
 Given the above,if the consumer buys the third unit of Y,

Accepted Answer

A) the marginal utility of the third unit is 950 units of satisfaction. 
B) the marginal utility per dollar spent on Y is 200. 
C) the marginal utility per dollar spent on Y is 20. 
D) both a and b 
A) the marginal utility of the third unit is 950 units of satisfaction. 
B) the marginal utility per dollar spent on Y is 200. 
C) the marginal utility per dollar spent on Y is 20. 
D) both a and b

Question 19

-According to the above figure,the marginal rate of substitution of X for Y at point C is:

Accepted Answer

A) 5 
B) 2 
C) 0.5 
D) 0.3 
E) none of the above 
A) 5 
B) 2 
C) 0.5 
D) 0.3 
E) none of the above

Question 20

The following figure shows a portion of a consumer's indifference map and budget lines.The price of good Y is $7 and the consumer's income is $700.Let the consumer begin in utility-maximizing equilibrium at point A on indifference curve I.Next the price of good X changes so that the consumer moves to a new utility-maximizing equilibrium at point B on indifference curve II.The income effect of the change in the price of X is

Accepted Answer

A) +12 
B) +10 
C) -10 
D) +32 
E) +42 
A) +12 
B) +10 
C) -10 
D) +32 
E) +42

What is the equation for budget line RS,given the above graph?

A market demand curve

In the following graph the price of Y is $15.At point B,

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $14.At point N on the demand curve for X,the price of X is $____.

If a consumer is choosing the bundle of goods that maximizes utility subject to a budget constraint,then

The consumer's income is $800. -According to the above figure,why doesn't the consumer choose the combination of 30X and 56Y at point A?

According to the following figure,what could have caused a consumer's budget line to shift from ML to MN?

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $14.The equation of the budget line passing through point r is _______________.

Suppose that 2 units of X and 8 units of Y give a consumer the same satisfaction as 4 units of X and 2 units of Y.Then

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $14.What is the consumer's income?

If Ferdinand prefers a Big Mac to a Whopper and a Whopper to a hotdog,but is indifferent between a Big Mac and a Quarter Pounder he must

A consumer has the indifference map shown below.The market prices of X and Y are $20 and $12,respectively.The consumer has $1,000 to spend on goods X and Y.The utility-maximizing bundle is

Refer to the following indifference map for a consumer who has an income of $48 to spend on goods X and Y and the market prices of X and Y are both $4: Now suppose the price of good X increases to $12 while the price of good Y remains $4.Utility will be maximized on which indifference curve?

-According to the above figure,the marginal rate of substitution of X for Y at point C is:

Managers,profits,and Markets

Demand,supply,and Market Equilibrium

Marginal Analysis for Optimal Decisions

Basic Estimation Techniques

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

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Exam 5: Theory of Consumer Behavior

What is the equation for budget line RS,given the above graph?

A market demand curve

In the following graph the price of Y is $15.At point B,

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $14.At point N on the demand curve for X,the price of X is $____.

If a consumer is choosing the bundle of goods that maximizes utility subject to a budget constraint,then

The consumer's income is $800. -According to the above figure,why doesn't the consumer choose the combination of 30X and 56Y at point A?

According to the following figure,what could have caused a consumer's budget line to shift from ML to MN?

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $14.The equation of the budget line passing through point r is _______________.

Suppose that 2 units of X and 8 units of Y give a consumer the same satisfaction as 4 units of X and 2 units of Y.Then

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $14.What is the consumer's income?

If Ferdinand prefers a Big Mac to a Whopper and a Whopper to a hotdog,but is indifferent between a Big Mac and a Quarter Pounder he must

A consumer has the indifference map shown below.The market prices of X and Y are $20 and $12,respectively.The consumer has $1,000 to spend on goods X and Y.The utility-maximizing bundle is

Refer to the following indifference map for a consumer who has an income of $48 to spend on goods X and Y and the market prices of X and Y are both $4: Now suppose the price of good X increases to $12 while the price of good Y remains $4.Utility will be maximized on which indifference curve?

-According to the above figure,the marginal rate of substitution of X for Y at point C is:

Managers,profits,and Markets

Demand,supply,and Market Equilibrium

Marginal Analysis for Optimal Decisions

Basic Estimation Techniques

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

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