Question 1

Figure 21-1  
-Refer to Figure 21-1.A consumer who chooses to spend all of her income could be at which point(s)on the budget constraint?

Accepted Answer

A)  A only 
B)  E only 
C)  B,C,or D only 
D)  A,B,C,or D only 
A)  A only 
B)  E only 
C)  B,C,or D only 
D)  A,B,C,or D only

Question 2

Figure 21-10  
-Refer to Figure 21-10.When comparing bundle A to bundle E,the consumer

Accepted Answer

A)  prefers bundle A because it contains more donuts. 
B)  prefers bundle E because it lies on a higher indifference curve. 
C)  prefers bundle E because it contains more donuts. 
D)  is indifferent between the two bundles. 
A)  prefers bundle A because it contains more donuts. 
B)  prefers bundle E because it lies on a higher indifference curve. 
C)  prefers bundle E because it contains more donuts. 
D)  is indifferent between the two bundles.

Question 3

The following diagram shows two budget lines: A and B.   Which of the following could explain the change in the budget line from A to B?

Accepted Answer

A)  a decrease in income and a decrease in the price of X 
B)  a decrease in income and an increase in the price of X 
C)  an increase in income and a decrease in the price of X 
D)  an increase in income and an increase in the price of X 
A)  a decrease in income and a decrease in the price of X 
B)  a decrease in income and an increase in the price of X 
C)  an increase in income and a decrease in the price of X 
D)  an increase in income and an increase in the price of X

Question 4

Which of the following is a property of a typical indifference curve?

Accepted Answer

A)  upward sloping 
B)  bowed away from the origin 
C)  does not intersect another indifference curve 
D)  a lower one is preferred to a higher one 
A)  upward sloping 
B)  bowed away from the origin 
C)  does not intersect another indifference curve 
D)  a lower one is preferred to a higher one

Question 5

Kristi spends all of her income on tank tops and running shoes,and the price of a pair of running shoes is four times the price of a tank top.In order to maximize total utility,Kristi should buy

Accepted Answer

A)  four times as many tank tops as pairs of running shoes. 
B)  four times as many pairs of running shoes as tank tops. 
C)  both items until the marginal utility of a pair of running shoes is four times the marginal utility of a tank top. 
D)  both items until the marginal utility of a tank top is four times the marginal utility of a pair of running shoes. 
A)  four times as many tank tops as pairs of running shoes. 
B)  four times as many pairs of running shoes as tank tops. 
C)  both items until the marginal utility of a pair of running shoes is four times the marginal utility of a tank top. 
D)  both items until the marginal utility of a tank top is four times the marginal utility of a pair of running shoes.

Question 6

When economists describe preferences,they often use the concept of

Accepted Answer

A)  markets. 
B)  income. 
C)  utility. 
D)  prices. 
A)  markets. 
B)  income. 
C)  utility. 
D)  prices.

Question 7

Giffen goods are inferior goods for which the income effect dominates the substitution effect.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following equations corresponds to an optimal choice point? (i)
MRS = PX/PY
(ii)
MUX/MUY = PX/PY
(iii)
MUX/PX = MUY/PY
(iv)
MUX/PY = MUY/PX

Accepted Answer

A)  (i)only 
B)  (i), (ii),and (iii)only 
C)  (ii)and (iv)only 
D)  (i), (ii), (iii),and (iv) 
A)  (i)only 
B)  (i), (ii),and (iii)only 
C)  (ii)and (iv)only 
D)  (i), (ii), (iii),and (iv)

Question 9

The indifference curves for left gloves and right gloves are straight lines.

Accepted Answer

A) True 
 B)False

Question 10

Figure 21-17  
-Refer to Figure 21-17.Given the budget constraint depicted in the graph,the consumer's optimal choice will be point

Accepted Answer

A)  B. 
B)  C. 
C)  D. 
D)  E. 
A)  B. 
B)  C. 
C)  D. 
D)  E.

Question 11

When we draw Katie's indifference curves to represent her preferences for books and movies,we find that her indifference curves are upward-sloping.What does this tell us about Katie's preferences?

Accepted Answer

Either Katie dislike

Question 12

Figure 21-19
The following graph illustrates a representative consumer's preferences for marshmallows and chocolate chip cookies:  
-Refer to Figure 21-19.Assume that the consumer has an income of $40,the price of a bag of marshmallows is $2,and the price of a bag of chocolate chips is $2.The optimizing consumer will choose to purchase which bundle of marshmallows and chocolate chips?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 13

Figure 21-14      
-Refer to Figure 21-14.Which of the graphs shown may represent indifference curves?

Accepted Answer

A)  graph a 
B)  graph b 
C)  graph c 
D)  All of the above are correct. 
A)  graph a 
B)  graph b 
C)  graph c 
D)  All of the above are correct.

Question 14

Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack.  
-Refer to Figure 21-1.If the price of a pound of pears is $3,then Jack's income is

Accepted Answer

A)  $12.00. 
B)  $13.50. 
C)  $16.20. 
D)  $18.80. 
A)  $12.00. 
B)  $13.50. 
C)  $16.20. 
D)  $18.80.

Question 15

Figure 21-15  
-Refer to Figure 21-15.The price of X is $25,the price of Y is $25,and the consumer's income is $100.Which point represents the consumer's optimal choice?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 16

A consumer who doesn't spend all of her income

Accepted Answer

A)  would be at a point outside of her budget constraint. 
B)  would be at a point inside her budget constraint. 
C)  must not be consuming positive quantities of all goods. 
D)  must be consuming at a point where her budget constraint touches one of the axes. 
A)  would be at a point outside of her budget constraint. 
B)  would be at a point inside her budget constraint. 
C)  must not be consuming positive quantities of all goods. 
D)  must be consuming at a point where her budget constraint touches one of the axes.

Question 17

If the relative price of a concert ticket is three times the price of a meal at a good restaurant,then the opportunity cost of a concert ticket can be measured by the

Accepted Answer

A)  slope of the budget constraint. 
B)  slope of an indifference curve. 
C)  marginal rate of substitution. 
D)  income effect. 
A)  slope of the budget constraint. 
B)  slope of an indifference curve. 
C)  marginal rate of substitution. 
D)  income effect.

Question 18

Josh is currently consuming some of good X and some of good Y.If good Y is a normal good for Josh,an increase in his income will definitely cause him to

Accepted Answer

A)  increase his consumption of X. 
B)  increase his consumption of Y. 
C)  decrease his consumption of X. 
D)  decrease his consumption of Y. 
A)  increase his consumption of X. 
B)  increase his consumption of Y. 
C)  decrease his consumption of X. 
D)  decrease his consumption of Y.

Question 19

If an increase in the interest rate raises savings,then

Accepted Answer

A)  the substitution effect is greater than the income effect. 
B)  the income effect is greater than the substitution effect. 
C)  the income effect and the substitution effect move in the same direction. 
D)  we are unable to determine the sizes of the income and substitution effects without more information. 
A)  the substitution effect is greater than the income effect. 
B)  the income effect is greater than the substitution effect. 
C)  the income effect and the substitution effect move in the same direction. 
D)  we are unable to determine the sizes of the income and substitution effects without more information.

Question 20

A consumer's budget constraint for goods X and Y is determined by how much the consumer likes good X relative to good Y.

Accepted Answer

A) True 
 B)False

Exam 21: The Theory of Consumer Choice

Figure 21-1 -Refer to Figure 21-1.A consumer who chooses to spend all of her income could be at which point(s)on the budget constraint?

Figure 21-10 -Refer to Figure 21-10.When comparing bundle A to bundle E,the consumer

The following diagram shows two budget lines: A and B. Which of the following could explain the change in the budget line from A to B?

Which of the following is a property of a typical indifference curve?

Kristi spends all of her income on tank tops and running shoes,and the price of a pair of running shoes is four times the price of a tank top.In order to maximize total utility,Kristi should buy

When economists describe preferences,they often use the concept of

Giffen goods are inferior goods for which the income effect dominates the substitution effect.

Which of the following equations corresponds to an optimal choice point? (i) MRS = PX/PY (ii) MUX/MUY = PX/PY (iii) MUX/PX = MUY/PY (iv) MUX/PY = MUY/PX

The indifference curves for left gloves and right gloves are straight lines.

Figure 21-17 -Refer to Figure 21-17.Given the budget constraint depicted in the graph,the consumer's optimal choice will be point

When we draw Katie's indifference curves to represent her preferences for books and movies,we find that her indifference curves are upward-sloping.What does this tell us about Katie's preferences?

Figure 21-14 -Refer to Figure 21-14.Which of the graphs shown may represent indifference curves?

Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. -Refer to Figure 21-1.If the price of a pound of pears is $3,then Jack's income is

Figure 21-15 -Refer to Figure 21-15.The price of X is $25,the price of Y is $25,and the consumer's income is $100.Which point represents the consumer's optimal choice?

A consumer who doesn't spend all of her income

If the relative price of a concert ticket is three times the price of a meal at a good restaurant,then the opportunity cost of a concert ticket can be measured by the

Josh is currently consuming some of good X and some of good Y.If good Y is a normal good for Josh,an increase in his income will definitely cause him to

If an increase in the interest rate raises savings,then

A consumer's budget constraint for goods X and Y is determined by how much the consumer likes good X relative to good Y.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply,demand,and Government Policies

Consumers,producers,and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Market for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving,investment,and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Which of the following equations corresponds to an optimal choice point? (i) MRS = P_X/P_Y (ii) MU_X/MU_Y = P_X/P_Y (iii) MU_X/P_X = MU_Y/P_Y (iv) MU_X/P_Y = MU_Y/P_X