Question 1

Indifference curves provide a way to graphically represent:

Accepted Answer

A) the income level of an individual. 
B) an individual's preferences. 
C) the relative price of goods. 
D) the constraints faced by consumers. 
A) the income level of an individual. 
B) an individual's preferences. 
C) the relative price of goods. 
D) the constraints faced by consumers. B

Question 2

Which of the following are necessary assumptions to guarantee that an individual can consistently rank any set of consumption bundles?

Accepted Answer

A) completeness and non- satiation 
B) transitivity and non satiation 
C) completeness and universality 
D) transitivity and completeness 
A) completeness and non- satiation 
B) transitivity and non satiation 
C) completeness and universality 
D) transitivity and completeness D

Question 3

Figure 2A
 
-In Figure 2A, the utility function for some individual is U(x1,x2)=x1x2. An indifference curve for this individual is depicted in:

Accepted Answer

A) Figure 2A (a). 
B) Figure 2A (b). 
C) Figure 2A (c). 
D) Figure 2A (d). 
A) Figure 2A (a). 
B) Figure 2A (b). 
C) Figure 2A (c). 
D) Figure 2A (d). A

Question 4

One of the factors influencing the increase in the size of shopping carts for the past three decades is:

Accepted Answer

A) the increase in the cost of produce storage at home. 
B) the average weight of Canadians increase by 15%. 
C) the continued entrance of women into the workforce. 
D) the fact that people eat out less. 
A) the increase in the cost of produce storage at home. 
B) the average weight of Canadians increase by 15%. 
C) the continued entrance of women into the workforce. 
D) the fact that people eat out less.

Question 5

Utility numbers provide:

Accepted Answer

A) positive information to society. 
B) precise differences between consumption bundles. 
C) normative information to society. 
D) positive information to individuals. 
A) positive information to society. 
B) precise differences between consumption bundles. 
C) normative information to society. 
D) positive information to individuals.

Question 6

If an individual turns down more spinach at dinner, this individual:

Accepted Answer

A) is violating the principle of diminishing marginal rate of substitution. 
B) is not maximizing. 
C) is not violating any postulates and could still be maximizing. 
D) is violating the principle of substitution. 
A) is violating the principle of diminishing marginal rate of substitution. 
B) is not maximizing. 
C) is not violating any postulates and could still be maximizing. 
D) is violating the principle of substitution.

Question 7

In economics, consumption bundles are:

Accepted Answer

A) utility functions. 
B) bags used by retail merchants. 
C) preference orderings. 
D) combinations of goods and services. 
A) utility functions. 
B) bags used by retail merchants. 
C) preference orderings. 
D) combinations of goods and services.

Question 8

Carl has the utility function U(x,y)= 2xy. His indifference curve passing through the bundle (4,3)must also pass through the point where x is equal to 6 and y is equal to:

Accepted Answer

A) 12. 
B) 24. 
C) 2. 
D) 10. 
A) 12. 
B) 24. 
C) 2. 
D) 10.

Question 9

Overtime pay is higher than regular pay because:

Accepted Answer

A) foregone leisure hours in addition to the ones for regular work are valued lower. 
B) employers want to insure quality work after hours. 
C) labour unions have the upper hand in the Canadian economy. 
D) foregone leisure hours in addition to the ones for regular work are valued higher. 
A) foregone leisure hours in addition to the ones for regular work are valued lower. 
B) employers want to insure quality work after hours. 
C) labour unions have the upper hand in the Canadian economy. 
D) foregone leisure hours in addition to the ones for regular work are valued higher.

Question 10

Assume that when you get home today, there is a letter in your mailbox from Joe Granburg, the stock market wizard. He has the latest expert advice for you about purchasing stocks. You should:

Accepted Answer

A) immediately phone your broker and follow his advice. 
B) wonder why Joe didn't follow his own advice rather than sell the information. 
C) only follow his advice if it details accurate past trends in stock prices. 
D) only follow his advice if he has good information about the future income streams of those companies whose stock he recommends you purchase. 
A) immediately phone your broker and follow his advice. 
B) wonder why Joe didn't follow his own advice rather than sell the information. 
C) only follow his advice if it details accurate past trends in stock prices. 
D) only follow his advice if he has good information about the future income streams of those companies whose stock he recommends you purchase.

Question 11

Tom currently has 100 units of x1 and 50 units of x2, and Jan has 50 units of x1 and 100 units of x2. If Tom's marginal rate of substitution is 10, and Jan's is 1:

Accepted Answer

A) Pareto- improving trades involve Jan giving up x2 for x1. 
B) Pareto- improving trades involve Tom giving up x1 for x2. 
C) Pareto- improving trades between Jan and Tom do not exist. 
D) Pareto- improving trades exist but cannot be assessed given the above information. 
A) Pareto- improving trades involve Jan giving up x2 for x1. 
B) Pareto- improving trades involve Tom giving up x1 for x2. 
C) Pareto- improving trades between Jan and Tom do not exist. 
D) Pareto- improving trades exist but cannot be assessed given the above information.

Question 12

The nonsatiation assumption implies that:

Accepted Answer

A) indifference curves do not cross. 
B) indifference curves have a negative slope. 
C) indifference curves have a positive slope. 
D) indifference curves are continuous. 
A) indifference curves do not cross. 
B) indifference curves have a negative slope. 
C) indifference curves have a positive slope. 
D) indifference curves are continuous.

Question 13

Consider the following utility function:
U(x, y)= 2x + 3y
a)Draw the indifference curve associated with utility numbers 12 and 24.
b)How does MRS change as we move from one indifference curve to another along the horizontal line y = 2? What about when y = 3?

Accepted Answer

a)Indifference curves are downward slopi

Question 14

The utility function U(x,y)= 2x + y is an apt description of the preferences when:

Accepted Answer

A) x is a left shoe and y is a right shoe. 
B) x is nickels and y is quarters. 
C) x is nickels and y is dimes. 
D) x is pizza and y is cola. 
A) x is a left shoe and y is a right shoe. 
B) x is nickels and y is quarters. 
C) x is nickels and y is dimes. 
D) x is pizza and y is cola.

Question 15

Consider the following utility function: U(x,y)= 2y + x1/3
a)What is the shape of an indifference curve (e.g., smooth, kinked, straight line)? Is the MRS diminishing?
b)How does the MRS change as you move from the indifference curve associated with the utility number 8 to the indifference curve associated with the utility number 27 when x = 2? What about when x = 3? (Calculus required)

Accepted Answer

a)The indifference curves are downward s

Question 16

The fact that I'm willing to eat tater tots when french fries are not available illustrates:

Accepted Answer

A) diminishing MV. 
B) maximization. 
C) substitution. 
D) inconsistency. 
A) diminishing MV. 
B) maximization. 
C) substitution. 
D) inconsistency.

Question 17

Consider four consumption bundles, denoted by A, B, C, and D. Which of the following sets of preference statements violates the transitivity assumption?

Accepted Answer

A) D is preferred to C, C is preferred to B, B is preferred to A, C is preferred to A. 
B) A is preferred to B, B is preferred to C, C is preferred to D, A is preferred to C. 
C) D is preferred to B, C is preferred to A, A is preferred to B, B is preferred to C. 
D) A is preferred to C, B is preferred to A. 
A) D is preferred to C, C is preferred to B, B is preferred to A, C is preferred to A. 
B) A is preferred to B, B is preferred to C, C is preferred to D, A is preferred to C. 
C) D is preferred to B, C is preferred to A, A is preferred to B, B is preferred to C. 
D) A is preferred to C, B is preferred to A.

Question 18

Benoit's preferences are given by the utility function U(x,y)= 10x + 5y. He consumes 10 units of good x and 9 units of good y. If he consumes only one unit of x, how many units of y must he consume in order to be as well off as before?

Accepted Answer

A) 10 
B) 27 
C) 18 
D) 30 
A) 10 
B) 27 
C) 18 
D) 30

Question 19

The completeness assumption implies that:

Accepted Answer

A) indifference curves are convex. 
B) the individual is indifferent between all bundles. 
C) indifference curves are smooth. 
D) any two points in the x - y space can be ranked. 
A) indifference curves are convex. 
B) the individual is indifferent between all bundles. 
C) indifference curves are smooth. 
D) any two points in the x - y space can be ranked.

Question 20

Figure 2A
 
-In Figure 2A (a):

Accepted Answer

A) c is preferred to d, d is preferred to e, e is preferred to c. 
B) e is preferred to c, e is preferred to d, c is indifferent to d. 
C) c is preferred to e, d is preferred to e, c is indifferent to d. 
D) d is indifferent to c, d is indifferent to e, e is indifferent to c. 
A) c is preferred to d, d is preferred to e, e is preferred to c. 
B) e is preferred to c, e is preferred to d, c is indifferent to d. 
C) c is preferred to e, d is preferred to e, c is indifferent to d. 
D) d is indifferent to c, d is indifferent to e, e is indifferent to c.

Indifference curves provide a way to graphically represent:

Which of the following are necessary assumptions to guarantee that an individual can consistently rank any set of consumption bundles?

Figure 2A -In Figure 2A, the utility function for some individual is U(x₁,x₂)=x₁x₂. An indifference curve for this individual is depicted in:

One of the factors influencing the increase in the size of shopping carts for the past three decades is:

Utility numbers provide:

If an individual turns down more spinach at dinner, this individual:

In economics, consumption bundles are:

Carl has the utility function U(x,y)= 2xy. His indifference curve passing through the bundle (4,3)must also pass through the point where x is equal to 6 and y is equal to:

Overtime pay is higher than regular pay because:

Assume that when you get home today, there is a letter in your mailbox from Joe Granburg, the stock market wizard. He has the latest expert advice for you about purchasing stocks. You should:

Tom currently has 100 units of x₁and 50 units of x₂, and Jan has 50 units of x₁and 100 units of x₂. If Tom's marginal rate of substitution is 10, and Jan's is 1:

The nonsatiation assumption implies that:

Consider the following utility function: U(x, y)= 2x + 3y a)Draw the indifference curve associated with utility numbers 12 and 24. b)How does MRS change as we move from one indifference curve to another along the horizontal line y = 2? What about when y = 3?

The utility function U(x,y)= 2x + y is an apt description of the preferences when:

The fact that I'm willing to eat tater tots when french fries are not available illustrates:

Consider four consumption bundles, denoted by A, B, C, and D. Which of the following sets of preference statements violates the transitivity assumption?

Benoit's preferences are given by the utility function U(x,y)= 10x + 5y. He consumes 10 units of good x and 9 units of good y. If he consumes only one unit of x, how many units of y must he consume in order to be as well off as before?

The completeness assumption implies that:

Figure 2A -In Figure 2A (a):

Microeconomics: a Working Methodology

Demand Theory

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 2: A Theory of Preferences

Indifference curves provide a way to graphically represent:

Which of the following are necessary assumptions to guarantee that an individual can consistently rank any set of consumption bundles?

Figure 2A -In Figure 2A, the utility function for some individual is U(x1,x2)=x1x2. An indifference curve for this individual is depicted in:

One of the factors influencing the increase in the size of shopping carts for the past three decades is:

Utility numbers provide:

If an individual turns down more spinach at dinner, this individual:

In economics, consumption bundles are:

Carl has the utility function U(x,y)= 2xy. His indifference curve passing through the bundle (4,3)must also pass through the point where x is equal to 6 and y is equal to:

Overtime pay is higher than regular pay because:

Assume that when you get home today, there is a letter in your mailbox from Joe Granburg, the stock market wizard. He has the latest expert advice for you about purchasing stocks. You should:

Tom currently has 100 units of x1 and 50 units of x2, and Jan has 50 units of x1 and 100 units of x2. If Tom's marginal rate of substitution is 10, and Jan's is 1:

The nonsatiation assumption implies that:

Consider the following utility function: U(x, y)= 2x + 3y a)Draw the indifference curve associated with utility numbers 12 and 24. b)How does MRS change as we move from one indifference curve to another along the horizontal line y = 2? What about when y = 3?

The utility function U(x,y)= 2x + y is an apt description of the preferences when:

The fact that I'm willing to eat tater tots when french fries are not available illustrates:

Consider four consumption bundles, denoted by A, B, C, and D. Which of the following sets of preference statements violates the transitivity assumption?

Benoit's preferences are given by the utility function U(x,y)= 10x + 5y. He consumes 10 units of good x and 9 units of good y. If he consumes only one unit of x, how many units of y must he consume in order to be as well off as before?

The completeness assumption implies that:

Figure 2A -In Figure 2A (a):

Microeconomics: a Working Methodology

Demand Theory

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

Figure 2A -In Figure 2A, the utility function for some individual is U(x₁,x₂)=x₁x₂. An indifference curve for this individual is depicted in:

Tom currently has 100 units of x₁and 50 units of x₂, and Jan has 50 units of x₁and 100 units of x₂. If Tom's marginal rate of substitution is 10, and Jan's is 1: