Question 1

A budget constraint defines the:

Accepted Answer

A) odds of earning a particular income. 
B) consumer's preference ordering. 
C) funds allocated for a particular purpose. 
D) attainable consumption bundles. 
A) odds of earning a particular income. 
B) consumer's preference ordering. 
C) funds allocated for a particular purpose. 
D) attainable consumption bundles. D

Question 2

Ron's utility function is given by U(x,y)= min[x,y]. If the price of x is 2 and the price of y is 1 and if Ron's preferred consumption bundle is [4,4], then his income is:

Accepted Answer

A) 16. 
B) 10. 
C) 14. 
D) 12. 
A) 16. 
B) 10. 
C) 14. 
D) 12. D

Question 3

Beth consumes two goods, x1 and x2, and her income is $120. The price of x1 is $10, and the price of
X2 is $5. If her utility function is U(x1,x2)= min(x1,x2), her utility maximizing bundle is:

Accepted Answer

A) (7, 10). 
B) (12, 0). 
C) (8, 8). 
D) (0, 24). 
A) (7, 10). 
B) (12, 0). 
C) (8, 8). 
D) (0, 24). C

Question 4

Which of the following is true?

Accepted Answer

A) Individuals prefer excise taxes. 
B) Individuals prefer lump- sum taxes. 
C) Lump- sum taxes give individuals fewer choices than excise taxes. 
D) Excise taxes impose smaller individual costs than lump- sum taxes. 
A) Individuals prefer excise taxes. 
B) Individuals prefer lump- sum taxes. 
C) Lump- sum taxes give individuals fewer choices than excise taxes. 
D) Excise taxes impose smaller individual costs than lump- sum taxes.

Question 5

Along an individual demand curve for food, which one of the following is not held constant?

Accepted Answer

A) the consumer's utility function 
B) the consumer's level of utility 
C) the consumer's income 
D) the price of all other goods 
A) the consumer's utility function 
B) the consumer's level of utility 
C) the consumer's income 
D) the price of all other goods

Question 6

Explain how consideration of moral constraints, as opposed to budget constraints, can complement the usefulness of an economic model.

Accepted Answer

An economic model consists of individual

Question 7

What is the topic of the quote from Mark Twain's classical story "A Connecticut Yankee in King Arthur's Court" reproduced in chapter 3?

Accepted Answer

The quote illustrate in variou

Question 8

Suppose that an individual consumes only two goods, good 1 and good 2. If the price of good 1 rises, with all else constant, and the price elasticity of demand for good 1 is - 0.7, will the quantity of good 2 increase?

Accepted Answer

No. The demand for good 1 is i

Question 9

A negative sloped income consumption line indicates that:

Accepted Answer

A) both goods are normal. 
B) both goods are inferior. 
C) one of the goods is normal and the other is inferior. 
D) the goods may be normal or inferior. 
A) both goods are normal. 
B) both goods are inferior. 
C) one of the goods is normal and the other is inferior. 
D) the goods may be normal or inferior.

Question 10

Quantity demanded of good x does not increase as the price of x increases if x is:

Accepted Answer

A) a Giffen good. 
B) an inferior good whose income effect dominates its substitution effect. 
C) a normal good. 
D) an Engel good. 
A) a Giffen good. 
B) an inferior good whose income effect dominates its substitution effect. 
C) a normal good. 
D) an Engel good.

Question 11

When Netscape took Microsoft to court for using anti- competitive practices, the contention was that the Internet Explorer, a browser, and Windows, the operating system, were:

Accepted Answer

A) not working properly. 
B) incompatible. 
C) substitutes. 
D) complements. 
A) not working properly. 
B) incompatible. 
C) substitutes. 
D) complements.

Question 12

If good x1 is a substitute for good x2, then an increase in the price of x2 causes the demand of x1 to:

Accepted Answer

A) be indeterminate. 
B) increase. 
C) decrease. 
D) remain unchanged. 
A) be indeterminate. 
B) increase. 
C) decrease. 
D) remain unchanged.

Question 13

Figure 3A
 
-Which of the following is true about the goods in Figure 3A?

Accepted Answer

A) x1 is an inferior and x2 is a normal good. 
B) x1 is a normal and x2 is an inferior good. 
C) Both x1 and x2 are normal goods. 
D) Both x1 and x2 are inferior goods. 
A) x1 is an inferior and x2 is a normal good. 
B) x1 is a normal and x2 is an inferior good. 
C) Both x1 and x2 are normal goods. 
D) Both x1 and x2 are inferior goods.

Question 14

When consumers join a club, or a cooperative pays for a project, the individuals involved:

Accepted Answer

A) move to a higher indifference curve. 
B) move to a lower indifference curve. 
C) may move or remain depending on the prices of other goods. 
D) remain on the same indifference curve. 
A) move to a higher indifference curve. 
B) move to a lower indifference curve. 
C) may move or remain depending on the prices of other goods. 
D) remain on the same indifference curve.

Question 15

Figure 3A
 
-As the consumer's income changes (while prices remain constant), the consumer would be most likely to choose which points in Figure 3A?

Accepted Answer

A) A, B, and C 
B) B, D, and E 
C) A, D, and E 
D) E, D, and F 
A) A, B, and C 
B) B, D, and E 
C) A, D, and E 
D) E, D, and F

Question 16

Ann's well- being depends upon her consumption of milk (in pints, x1)and video games (x2). Her utility function is given by: U = 3lnx1 + x2. Calculate her demand for milk, her demand for video games, and her optimal choice when p1 = $3/pint, p2 = $2/game and her income is M = $14. Now suppose the government subsidized Geoff's milk by $2 per pint, so the price of milk fell from $3 to $1.
a)Calculate:
i)How much milk Geoff would demand at the subsidized price
ii)How many video games he would demand and
iii)His level of utility
iv)The cost of the subsidy to the government.
b)If the government gave Geoff the amount calculated in part (a - iv)in cash (leaving the price of milk at its original level of $3), how much milk would he demand, how many video games, and what would his utility be?

Accepted Answer

a)The demand for good 1 is: x1

Question 17

Susan Ng's preferences over bowls of french fries (x)and pints of ice cream (y)are given by: U = x2 +y 2
The price of french fries is $2 a bowl while the price of ice cream is $3 a pint. Her income is
$8. At her optimal choice, how many bowls of fries will she buy? How many pints of ice cream?

Accepted Answer

x = 4 and x = 0. Note that the

Question 18

If the cross- price elasticity of Nicorette, a nicotine replacement therapy, and cigarettes is 0.7, then:

Accepted Answer

A) tobacco companies cans till make money. 
B) cigarettes and Nicorette are not compatible. 
C) cigarettes and Nicorette are substitutes. 
D) cigarettes and Nicorette are complements. 
A) tobacco companies cans till make money. 
B) cigarettes and Nicorette are not compatible. 
C) cigarettes and Nicorette are substitutes. 
D) cigarettes and Nicorette are complements.

Question 19

Ron's utility function is given by U(x,y)= min[x,y]. If the price of x is 2 and the price of y is 1, Ron spends his $12 income on:

Accepted Answer

A) 4 units of x and 2 units of y. 
B) 4 units of x and 4 units of y. 
C) 2 units of x and 4 units of y. 
D) 2 units of x and 2 units of y. 
A) 4 units of x and 2 units of y. 
B) 4 units of x and 4 units of y. 
C) 2 units of x and 4 units of y. 
D) 2 units of x and 2 units of y.

Question 20

Constraints in the theory of consumer behaviour:

Accepted Answer

A) have no bearing on choices individuals make. 
B) are the only influence on consumer choices. 
C) are measurable in principle. 
D) restrict choices. 
A) have no bearing on choices individuals make. 
B) are the only influence on consumer choices. 
C) are measurable in principle. 
D) restrict choices.

A budget constraint defines the:

Ron's utility function is given by U(x,y)= min[x,y]. If the price of x is 2 and the price of y is 1 and if Ron's preferred consumption bundle is [4,4], then his income is:

Beth consumes two goods, x₁and x₂, and her income is $120. The price of x₁is $10, and the price of X₂is $5. If her utility function is U(x₁,x₂)= min(x₁,x₂), her utility maximizing bundle is:

Which of the following is true?

Along an individual demand curve for food, which one of the following is not held constant?

Explain how consideration of moral constraints, as opposed to budget constraints, can complement the usefulness of an economic model.

What is the topic of the quote from Mark Twain's classical story "A Connecticut Yankee in King Arthur's Court" reproduced in chapter 3?

Suppose that an individual consumes only two goods, good 1 and good 2. If the price of good 1 rises, with all else constant, and the price elasticity of demand for good 1 is - 0.7, will the quantity of good 2 increase?

A negative sloped income consumption line indicates that:

Quantity demanded of good x does not increase as the price of x increases if x is:

When Netscape took Microsoft to court for using anti- competitive practices, the contention was that the Internet Explorer, a browser, and Windows, the operating system, were:

If good x₁is a substitute for good x₂, then an increase in the price of x₂causes the demand of x₁to:

Figure 3A -Which of the following is true about the goods in Figure 3A?

When consumers join a club, or a cooperative pays for a project, the individuals involved:

Figure 3A -As the consumer's income changes (while prices remain constant), the consumer would be most likely to choose which points in Figure 3A?

Susan Ng's preferences over bowls of french fries (x)and pints of ice cream (y)are given by: U = x²+y ² The price of french fries is $2 a bowl while the price of ice cream is $3 a pint. Her income is $8. At her optimal choice, how many bowls of fries will she buy? How many pints of ice cream?

If the cross- price elasticity of Nicorette, a nicotine replacement therapy, and cigarettes is 0.7, then:

Ron's utility function is given by U(x,y)= min[x,y]. If the price of x is 2 and the price of y is 1, Ron spends his $12 income on:

Constraints in the theory of consumer behaviour:

Microeconomics: a Working Methodology

A Theory of Preferences

More Demand Theory

Intertemporal Decision Making and Capital Values

Production Cost: One Variable Input

Production Cost: Many Variable Inputs

The Theory of Perfect Competition

Applications of the Competitive Model

Monopoly

Input Markets and the Allocation of Resources

Labour Market Applications

Competitive General Equilibrium

Price Discrimination Monopoly Practices

Introduction to Game Theory

Game Theory and Oligopoly

Choice Making Under Uncertainty

Assymmetric Information, the Rules of the Game, and Externalities

The Theory of the Firm

Assymetric Information and Market Behaviour

Filters

Exam 3: Demand Theory

A budget constraint defines the:

Ron's utility function is given by U(x,y)= min[x,y]. If the price of x is 2 and the price of y is 1 and if Ron's preferred consumption bundle is [4,4], then his income is:

Beth consumes two goods, x1 and x2, and her income is $120. The price of x1 is $10, and the price of X2 is $5. If her utility function is U(x1,x2)= min(x1,x2), her utility maximizing bundle is:

Which of the following is true?

Along an individual demand curve for food, which one of the following is not held constant?

Explain how consideration of moral constraints, as opposed to budget constraints, can complement the usefulness of an economic model.

What is the topic of the quote from Mark Twain's classical story "A Connecticut Yankee in King Arthur's Court" reproduced in chapter 3?

Suppose that an individual consumes only two goods, good 1 and good 2. If the price of good 1 rises, with all else constant, and the price elasticity of demand for good 1 is - 0.7, will the quantity of good 2 increase?

A negative sloped income consumption line indicates that:

Quantity demanded of good x does not increase as the price of x increases if x is:

When Netscape took Microsoft to court for using anti- competitive practices, the contention was that the Internet Explorer, a browser, and Windows, the operating system, were:

If good x1 is a substitute for good x2, then an increase in the price of x2 causes the demand of x1 to:

Figure 3A -Which of the following is true about the goods in Figure 3A?

When consumers join a club, or a cooperative pays for a project, the individuals involved:

Figure 3A -As the consumer's income changes (while prices remain constant), the consumer would be most likely to choose which points in Figure 3A?

Susan Ng's preferences over bowls of french fries (x)and pints of ice cream (y)are given by: U = x2 +y 2 The price of french fries is $2 a bowl while the price of ice cream is $3 a pint. Her income is $8. At her optimal choice, how many bowls of fries will she buy? How many pints of ice cream?

If the cross- price elasticity of Nicorette, a nicotine replacement therapy, and cigarettes is 0.7, then:

Ron's utility function is given by U(x,y)= min[x,y]. If the price of x is 2 and the price of y is 1, Ron spends his $12 income on:

Constraints in the theory of consumer behaviour:

Microeconomics: a Working Methodology

A Theory of Preferences

More Demand Theory

Intertemporal Decision Making and Capital Values

Production Cost: One Variable Input

Production Cost: Many Variable Inputs

The Theory of Perfect Competition

Applications of the Competitive Model

Monopoly

Input Markets and the Allocation of Resources

Labour Market Applications

Competitive General Equilibrium

Price Discrimination Monopoly Practices

Introduction to Game Theory

Game Theory and Oligopoly

Choice Making Under Uncertainty

Assymmetric Information, the Rules of the Game, and Externalities

The Theory of the Firm

Assymetric Information and Market Behaviour

Filters

Beth consumes two goods, x₁and x₂, and her income is $120. The price of x₁is $10, and the price of X₂is $5. If her utility function is U(x₁,x₂)= min(x₁,x₂), her utility maximizing bundle is:

If good x₁is a substitute for good x₂, then an increase in the price of x₂causes the demand of x₁to:

Susan Ng's preferences over bowls of french fries (x)and pints of ice cream (y)are given by: U = x²+y ² The price of french fries is $2 a bowl while the price of ice cream is $3 a pint. Her income is $8. At her optimal choice, how many bowls of fries will she buy? How many pints of ice cream?