Question 1

A utility maximizing bundle is:

Accepted Answer

A) the bundle which satiates the consumer's desires. 
B) inside the budget line and on an indifference curve. 
C) on a budget line tangent to an indifference curve. 
D) at the origin of the indifference map. 
A) the bundle which satiates the consumer's desires. 
B) inside the budget line and on an indifference curve. 
C) on a budget line tangent to an indifference curve. 
D) at the origin of the indifference map.

Question 2

If an individual's Engel curve for a good is negatively sloped, then the good is:

Accepted Answer

A) a normal good. 
B) an Engel good. 
C) a Giffen good. 
D) an inferior good. 
A) a normal good. 
B) an Engel good. 
C) a Giffen good. 
D) an inferior good.

Question 3

A negative sloped income consumption line indicates that:

Accepted Answer

A) one of the goods is a Giffen good 
B) the two goods are substitutes 
C) the two goods are complements 
D) one of the goods is normal and the other is inferior. 
A) one of the goods is a Giffen good 
B) the two goods are substitutes 
C) the two goods are complements 
D) one of the goods is normal and the other is inferior.

Question 4

Which of the following statements accurately reflects the money illusion?

Accepted Answer

A) Consumers care only about relative prices, not money prices. 
B) Pure inflation does not change the budget constraint. 
C) A change in money prices changes the indifference curves. 
D) Money has no intrinsic value and therefore is essentially worthless. 
A) Consumers care only about relative prices, not money prices. 
B) Pure inflation does not change the budget constraint. 
C) A change in money prices changes the indifference curves. 
D) Money has no intrinsic value and therefore is essentially worthless.

Question 5

Which of the following is not a constraint on choice?

Accepted Answer

A) self- interest 
B) time 
C) income 
D) endowed resources 
A) self- interest 
B) time 
C) income 
D) endowed resources

Question 6

Carol experiences a 4% increase in income this year. She is:

Accepted Answer

A) perhaps better or worse off. 
B) unambiguously no better or worse off. 
C) unambiguously worse off. 
D) unambiguously better off. 
A) perhaps better or worse off. 
B) unambiguously no better or worse off. 
C) unambiguously worse off. 
D) unambiguously better off.

Question 7

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. The opportunity cost of x2 is:

Accepted Answer

A) 0.25 units of x1. 
B) 2 units of x1. 
C) 1 unit of x1. 
D) 0.5 units of x1. 
A) 0.25 units of x1. 
B) 2 units of x1. 
C) 1 unit of x1. 
D) 0.5 units of x1.

Question 8

By "real" price, an economist means:

Accepted Answer

A) what an individual seriously pays for a good. 
B) not the artificial price. 
C) the dollar amount of money required to buy the good. 
D) the price in terms of other goods. 
A) what an individual seriously pays for a good. 
B) not the artificial price. 
C) the dollar amount of money required to buy the good. 
D) the price in terms of other goods.

Question 9

Given that the government wishes to raise a certain amount of tax revenue, individuals prefer:

Accepted Answer

A) a 100% lump sum tax. 
B) a combination of a 70% excise tax and a 30% lump sum tax. 
C) a combination of a 30% excise tax and a 70% lump sum tax. 
D) a 100% excise tax. 
A) a 100% lump sum tax. 
B) a combination of a 70% excise tax and a 30% lump sum tax. 
C) a combination of a 30% excise tax and a 70% lump sum tax. 
D) a 100% excise tax.

Question 10

For an inessential good, which of the following is true?

Accepted Answer

A) Quantity demanded is always zero. 
B) Quantity demanded is negative. 
C) Quantity demanded is always positive. 
D) Quantity demanded can be either positive or zero. 
A) Quantity demanded is always zero. 
B) Quantity demanded is negative. 
C) Quantity demanded is always positive. 
D) Quantity demanded can be either positive or zero.

Question 11

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)= x1 + x2, her utility maximizing bundle is:

Accepted Answer

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

Question 12

If some constraint is relaxed or alleviated:

Accepted Answer

A) preferences likewise will be relaxed or alleviated. 
B) a consumer will be worse off. 
C) a consumer's behaviour will not change. 
D) a consumer will have more options available. 
A) preferences likewise will be relaxed or alleviated. 
B) a consumer will be worse off. 
C) a consumer's behaviour will not change. 
D) a consumer will have more options available.

Question 13

Bonnie spends her entire income, $200 on 3 goods, x1, x2 and x3. When p1 = $1, p2 = $3, and p3 =
$5, she buys the following consumption bundle: (15, 20, 25). The price of x1 increases by 25%, and she now buys 15 units of x2 and 28 units of x3. Which of the following is not true?

Accepted Answer

A) the price elasticity of demand for x1 is one 
B) x1 is a Giffen good 
C) total revenue for x1 is maximized 
D) total expenditure on x1 is unchanged 
A) the price elasticity of demand for x1 is one 
B) x1 is a Giffen good 
C) total revenue for x1 is maximized 
D) total expenditure on x1 is unchanged

A utility maximizing bundle is:

If an individual's Engel curve for a good is negatively sloped, then the good is:

A negative sloped income consumption line indicates that:

Which of the following statements accurately reflects the money illusion?

Which of the following is not a constraint on choice?

Carol experiences a 4% increase in income this year. She is:

Beth consumes two goods, x₁and x₂, and her income is $120. The price of x₁is $10, and the price of X₂is $5. The opportunity cost of x₂is:

By "real" price, an economist means:

Given that the government wishes to raise a certain amount of tax revenue, individuals prefer:

For an inessential good, which of the following is true?

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)= x₁+ x₂, her utility maximizing bundle is:

If some constraint is relaxed or alleviated:

Bonnie spends her entire income, $200 on 3 goods, x₁, x₂and x₃. When p₁= $1, p₂= $3, and p₃= $5, she buys the following consumption bundle: (15, 20, 25). The price of x₁increases by 25%, and she now buys 15 units of x₂and 28 units of x₃. Which of the following is not true?

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 utility maximizing bundle is:

If an individual's Engel curve for a good is negatively sloped, then the good is:

A negative sloped income consumption line indicates that:

Which of the following statements accurately reflects the money illusion?

Which of the following is not a constraint on choice?

Carol experiences a 4% increase in income this year. She 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. The opportunity cost of x2 is:

By "real" price, an economist means:

Given that the government wishes to raise a certain amount of tax revenue, individuals prefer:

For an inessential good, which of the following is true?

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)= x1 + x2, her utility maximizing bundle is:

If some constraint is relaxed or alleviated:

Bonnie spends her entire income, $200 on 3 goods, x1, x2 and x3. When p1 = $1, p2 = $3, and p3 = $5, she buys the following consumption bundle: (15, 20, 25). The price of x1 increases by 25%, and she now buys 15 units of x2 and 28 units of x3. Which of the following is not true?

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. The opportunity cost of x₂is:

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)= x₁+ x₂, her utility maximizing bundle is:

Bonnie spends her entire income, $200 on 3 goods, x₁, x₂and x₃. When p₁= $1, p₂= $3, and p₃= $5, she buys the following consumption bundle: (15, 20, 25). The price of x₁increases by 25%, and she now buys 15 units of x₂and 28 units of x₃. Which of the following is not true?