Question 1

Figure 21-10  
-Refer to Figure 21-10.Which of the following statements is not true for a consumer who moves from bundle B to bundle C?

Accepted Answer

A)  At bundle C the consumer would be willing to give up a larger amount of cake in exchange for a donut than at bundle B. 
B)  The marginal rate of substitution at bundles B and C are the same since the points lie on the same indifference curve. 
C)  The consumer is willing to sacrifice donuts to obtain cake. 
D)  The consumer receives the same level of satisfaction at bundles B and C. 
A)  At bundle C the consumer would be willing to give up a larger amount of cake in exchange for a donut than at bundle B. 
B)  The marginal rate of substitution at bundles B and C are the same since the points lie on the same indifference curve. 
C)  The consumer is willing to sacrifice donuts to obtain cake. 
D)  The consumer receives the same level of satisfaction at bundles B and C.

Question 2

All Giffen goods are

Accepted Answer

A)  inferior goods,and all inferior goods are Giffen goods. 
B)  inferior goods,but not all inferior goods are Giffen goods. 
C)  normal goods,but not all normal goods are Giffen goods. 
D)  normal goods,and all normal goods are Giffen goods. 
A)  inferior goods,and all inferior goods are Giffen goods. 
B)  inferior goods,but not all inferior goods are Giffen goods. 
C)  normal goods,but not all normal goods are Giffen goods. 
D)  normal goods,and all normal goods are Giffen goods.

Question 3

The two "goods" used when economists analyze labor supply are

Accepted Answer

A)  work and leisure. 
B)  work and consumption. 
C)  saving and consumption. 
D)  leisure and consumption. 
A)  work and leisure. 
B)  work and consumption. 
C)  saving and consumption. 
D)  leisure and consumption.

Question 4

How are the following three questions related: 1)Do all demand curves slope downward? 2)How do wages affect labor supply? 3)How do interest rates affect household saving?

Accepted Answer

A)  They all relate to macroeconomics. 
B)  They all relate to monetary economics. 
C)  They all relate to the theory of consumer choice. 
D)  They are not related to each other in any way. 
A)  They all relate to macroeconomics. 
B)  They all relate to monetary economics. 
C)  They all relate to the theory of consumer choice. 
D)  They are not related to each other in any way.

Question 5

Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack.  
-Refer to Figure 21-1.At his optimum,Jack is buying

Accepted Answer

A)  0.6 pounds of apples. 
B)  2.0 pounds of apples. 
C)  4.5 pounds of apples. 
D)  5.5 pounds of apples. 
A)  0.6 pounds of apples. 
B)  2.0 pounds of apples. 
C)  4.5 pounds of apples. 
D)  5.5 pounds of apples.

Question 6

The following diagram shows one indifference curve representing the preferences for goods X and Y for one consumer.   What is the marginal rate of substitution between points A and B?

Accepted Answer

A)  2/5 
B)  1 
C)  5/2 
D)  3 
A)  2/5 
B)  1 
C)  5/2 
D)  3

Question 7

The indifference curves for left shoes and right shoes are right angles.

Accepted Answer

A) True 
 B)False

Question 8

When Ryan has an income of $2,000,he consumes 30 units of good A and 50 units of good B.After Ryan's income decreases to $1,500,he consumes 23 units of good A and 55 units of good B.Which of the following statements is correct?

Accepted Answer

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

Question 9

Figure 21-2  
-Refer to Figure 21-2.Which points are affordable?

Accepted Answer

A)  W,X,and Y only 
B)  Z only 
C)  V,W,X,and Y only 
D)  V,W,X,Y,and Z 
A)  W,X,and Y only 
B)  Z only 
C)  V,W,X,and Y only 
D)  V,W,X,Y,and Z

Question 10

Figure 21-8  
-Refer to Figure 21-8.You have $600 to spend on good X and good Y.If good X costs $100 and good Y costs $100,your budget constraint is

Accepted Answer

A)  AB. 
B)  BC. 
C)  CD. 
D)  DE. 
A)  AB. 
B)  BC. 
C)  CD. 
D)  DE.

Question 11

When the price of an inferior good decreases,

Accepted Answer

A)  both the income and substitution effects encourage the consumer to purchase more of the good. 
B)  both the income and substitution effects encourage the consumer to purchase less of the good. 
C)  the income effect encourages the consumer to purchase more of the good,and the substitution effect encourages the consumer to purchase less of the good. 
D)  the income effect encourages the consumer to purchase less of the good,and the substitution effect encourages the consumer to purchase more of the good. 
A)  both the income and substitution effects encourage the consumer to purchase more of the good. 
B)  both the income and substitution effects encourage the consumer to purchase less of the good. 
C)  the income effect encourages the consumer to purchase more of the good,and the substitution effect encourages the consumer to purchase less of the good. 
D)  the income effect encourages the consumer to purchase less of the good,and the substitution effect encourages the consumer to purchase more of the good.

Question 12

Figure 21-5
 
-Refer to Figure 21-5.In graph (b),if income is equal to $420,the price of good Y is

Accepted Answer

A)  $1. 
B)  $3. 
C)  $10. 
D)  $30. 
A)  $1. 
B)  $3. 
C)  $10. 
D)  $30.

Question 13

Assume that a college student purchases only Ramen noodles and textbooks.If Ramen noodles are an inferior good and textbooks are a normal good,then the substitution effect associated with a decrease in the price of a textbook,by itself,will result in

Accepted Answer

A)  a decrease in the consumption of textbooks and a decrease in the consumption of Ramen noodles. 
B)  a decrease in the consumption of textbooks and an increase in the consumption of Ramen noodles. 
C)  an increase in the consumption of textbooks and an increase in the consumption of Ramen noodles. 
D)  an increase in the consumption of textbooks and a decrease in the consumption of Ramen noodles. 
A)  a decrease in the consumption of textbooks and a decrease in the consumption of Ramen noodles. 
B)  a decrease in the consumption of textbooks and an increase in the consumption of Ramen noodles. 
C)  an increase in the consumption of textbooks and an increase in the consumption of Ramen noodles. 
D)  an increase in the consumption of textbooks and a decrease in the consumption of Ramen noodles.

Question 14

Suppose a consumer is currently spending all of her available income on two goods: music CDs and DVDs.If the price of a CD is $9,the price of a DVD is $18,and she is currently consuming 10 CDs and 5 DVDs,what is the consumer's income?

Accepted Answer

A)  $90 
B)  $180 
C)  $270 
D)  $360 
A)  $90 
B)  $180 
C)  $270 
D)  $360

Question 15

Suppose the price of good X falls.As a result,the quantity demanded for good X increases for a particular consumer.For this consumer,the substitution effect induced the consumer to purchase more X while the income effect induced the consumer to purchase less X.We can infer that X is a(n)

Accepted Answer

A)  normal good. 
B)  inferior good. 
C)  Giffen good. 
D)  luxury good. 
A)  normal good. 
B)  inferior good. 
C)  Giffen good. 
D)  luxury good.

Question 16

Figure 21-20  
-Refer to Figure 21-20.Suppose that a consumer is originally at point R.Then the price of good X decreases.Which of the following represents the substitution effect of the price decrease?

Accepted Answer

A)  the movement from point R to point S 
B)  the movement from point R to point T 
C)  the movement from point T to point S 
D)  None of the above is correct. 
A)  the movement from point R to point S 
B)  the movement from point R to point T 
C)  the movement from point T to point S 
D)  None of the above is correct.

Question 17

List and briefly explain each of the four properties of indifference curves.

Accepted Answer

1: Higher indifference curves are prefer

Question 18

If Hector's marginal rate of substitution between pens and pencils is constant,regardless of how many pens and pencils he has,then his indifference curves

Accepted Answer

A)  are right angles. 
B)  are straight lines. 
C)  slope upward. 
D)  cross one another at certain points. 
A)  are right angles. 
B)  are straight lines. 
C)  slope upward. 
D)  cross one another at certain points.

Question 19

An indifference curve illustrates

Accepted Answer

A)  a firm's profits. 
B)  a consumer's budget. 
C)  a consumer's preferences. 
D)  the prices of two goods. 
A)  a firm's profits. 
B)  a consumer's budget. 
C)  a consumer's preferences. 
D)  the prices of two goods.

Question 20

Figure 21-13  
-Refer to Figure 21-13.As the consumer moves from A to B to C,the consumer's total utility

Accepted Answer

A)  increases. 
B)  decreases. 
C)  remains constant. 
D)  first increases,then decreases. 
A)  increases. 
B)  decreases. 
C)  remains constant. 
D)  first increases,then decreases.

Exam 21: The Theory of Consumer Choice

Figure 21-10 -Refer to Figure 21-10.Which of the following statements is not true for a consumer who moves from bundle B to bundle C?

All Giffen goods are

The two "goods" used when economists analyze labor supply are

How are the following three questions related: 1)Do all demand curves slope downward? 2)How do wages affect labor supply? 3)How do interest rates affect household saving?

Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. -Refer to Figure 21-1.At his optimum,Jack is buying

The following diagram shows one indifference curve representing the preferences for goods X and Y for one consumer. What is the marginal rate of substitution between points A and B?

The indifference curves for left shoes and right shoes are right angles.

When Ryan has an income of $2,000,he consumes 30 units of good A and 50 units of good B.After Ryan's income decreases to $1,500,he consumes 23 units of good A and 55 units of good B.Which of the following statements is correct?

Figure 21-2 -Refer to Figure 21-2.Which points are affordable?

Figure 21-8 -Refer to Figure 21-8.You have $600 to spend on good X and good Y.If good X costs $100 and good Y costs $100,your budget constraint is

When the price of an inferior good decreases,

Figure 21-5 -Refer to Figure 21-5.In graph (b),if income is equal to $420,the price of good Y is

Assume that a college student purchases only Ramen noodles and textbooks.If Ramen noodles are an inferior good and textbooks are a normal good,then the substitution effect associated with a decrease in the price of a textbook,by itself,will result in

Suppose a consumer is currently spending all of her available income on two goods: music CDs and DVDs.If the price of a CD is $9,the price of a DVD is $18,and she is currently consuming 10 CDs and 5 DVDs,what is the consumer's income?

Suppose the price of good X falls.As a result,the quantity demanded for good X increases for a particular consumer.For this consumer,the substitution effect induced the consumer to purchase more X while the income effect induced the consumer to purchase less X.We can infer that X is a(n)

Figure 21-20 -Refer to Figure 21-20.Suppose that a consumer is originally at point R.Then the price of good X decreases.Which of the following represents the substitution effect of the price decrease?

List and briefly explain each of the four properties of indifference curves.

If Hector's marginal rate of substitution between pens and pencils is constant,regardless of how many pens and pencils he has,then his indifference curves

An indifference curve illustrates

Figure 21-13 -Refer to Figure 21-13.As the consumer moves from A to B to C,the consumer's total utility

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

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