Question 1

Using the graph shown,construct a demand curve for M&M's given an income of $10.

Accepted Answer

The answer of Using the graph shown,construct a demand curve...

Question 2

A decrease in a consumer's income

Accepted Answer

A)  increases the slope of the consumer's budget constraint. 
B)  has no effect on the consumer's budget constraint. 
C)  decreases the slope of the consumer's budget constraint. 
D)  has no effect on the slope of the consumer's budget constraint. 
A)  increases the slope of the consumer's budget constraint. 
B)  has no effect on the consumer's budget constraint. 
C)  decreases the slope of the consumer's budget constraint. 
D)  has no effect on the slope of the consumer's budget constraint.

Question 3

Billie spends all of her income on soccer balls and jeans,and the price of a pair of jeans is three times the price of soccer balls.In order to maximize total utility,Billie should

Accepted Answer

A)  buy three times as many soccer balls as pairs of jeans. 
B)  buy three times as many pairs of jeans as soccer balls. 
C)  buy both items until the marginal utility of soccer balls is three times the marginal utility of a pair of jeans. 
D)  buy both items until the marginal utility of a pair of jeans is three times the marginal utility of soccer balls. 
A)  buy three times as many soccer balls as pairs of jeans. 
B)  buy three times as many pairs of jeans as soccer balls. 
C)  buy both items until the marginal utility of soccer balls is three times the marginal utility of a pair of jeans. 
D)  buy both items until the marginal utility of a pair of jeans is three times the marginal utility of soccer balls.

Question 4

When the price of a normal good increases,

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 5

Figure 21-8  
-Refer to Figure 21-8.If the price of good X is $5,and your budget constraint is DE,what is the price of good Y?

Accepted Answer

A)  $10 
B)  $5 
C)  $2.50 
D)  $1.67 
A)  $10 
B)  $5 
C)  $2.50 
D)  $1.67

Question 6

Suppose that you have $100 today and expect to receive $100 one year from today.Your money market account pays an annual interest rate of 25%,and you may borrow money at that interest rate.Consider the budget constraint between "spending today" on the horizontal axis and "spending a year from today" on the vertical axis.What is the slope of this budget constraint?

Accepted Answer

A)  -0.75 
B)  -1.00 
C)  -1.25 
D)  -2.25 
A)  -0.75 
B)  -1.00 
C)  -1.25 
D)  -2.25

Question 7

When two goods are perfect complements,the indifference curves will

Accepted Answer

A)  have a positive slope. 
B)  be right angles. 
C)  have a constant marginal rate of substitution. 
D)  Both b and c are correct. 
A)  have a positive slope. 
B)  be right angles. 
C)  have a constant marginal rate of substitution. 
D)  Both b and c are correct.

Question 8

At the consumer's optimum the

Accepted Answer

A)  budget constraint will have a slope of MUx/Px. 
B)  slope of the indifference curve is equal to the slope of the budget constraint. 
C)  indifference curve will intersect the budget constraint at the midpoint of the budget constraint. 
D)  Both b and c are correct. 
A)  budget constraint will have a slope of MUx/Px. 
B)  slope of the indifference curve is equal to the slope of the budget constraint. 
C)  indifference curve will intersect the budget constraint at the midpoint of the budget constraint. 
D)  Both b and c are correct.

Question 9

When considering her budget,the highest indifference curve that a consumer can reach is the

Accepted Answer

A)  one that is tangent to the budget constraint. 
B)  indifference curve farthest from the origin 
C)  indifference curve that intersects the budget constraint in at least two places. 
D)  None of the above is correct. 
A)  one that is tangent to the budget constraint. 
B)  indifference curve farthest from the origin 
C)  indifference curve that intersects the budget constraint in at least two places. 
D)  None of the above is correct.

Question 10

Suppose that for Emily,DVDs and trips to the movie theater are perfect substitutes.Currently,Emily is spending all of her income on trips to the movie theater.If the price of DVDs doubles,the substitution effect will

Accepted Answer

A)  be two times the income effect. 
B)  be half the income effect. 
C)  be zero. 
D)  always increase the number of trips to the movie theater Emily makes. 
A)  be two times the income effect. 
B)  be half the income effect. 
C)  be zero. 
D)  always increase the number of trips to the movie theater Emily makes.

Question 11

Figure 21-4
In each case,the budget constraint moves from BC-1 to BC-2.        
-Refer to Figure 21-4.Which of the graphs in the figure could reflect a decrease in income?

Accepted Answer

A)  graph a 
B)  graph b 
C)  graph d 
D)  None of the above is correct. 
A)  graph a 
B)  graph b 
C)  graph d 
D)  None of the above is correct.

Question 12

Economists have found evidence of a Giffen good when studying the consumption of rice in the Chinese province of Hunan.

Accepted Answer

A) True 
 B)False

Question 13

The substitution effect in the work-leisure model induces a person to work less in response to higher wages,which tends to make the labor-supply curve slope upward.

Accepted Answer

A) True 
 B)False

Question 14

When two goods are perfect complements,the indifference curves are

Accepted Answer

A)  positively sloped. 
B)  negatively sloped. 
C)  straight lines. 
D)  right angles. 
A)  positively sloped. 
B)  negatively sloped. 
C)  straight lines. 
D)  right angles.

Question 15

Giffen goods violate the law of demand.

Accepted Answer

A) True 
 B)False

Question 16

Assume that a consumer's indifference curve is a downward-sloping straight line.As the consumer moves from left to right along the horizontal axis,the consumer's marginal rate of substitution

Accepted Answer

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

Question 17

Traci consumes two goods,lemonade and pretzels.Lemonade costs $1 per glass,and she consumes it to the point where the marginal utility she receives from her last glass of lemonade is 3.Pretzels cost $2 per bag.The relationship between the marginal utility Traci gets from eating a bag of pretzels and the number of bags she eats per month is as follows:   If Traci is maximizing his utility,how much does she spend on potato chips each month?

Accepted Answer

A)  $2 
B)  $6 
C)  $8 
D)  $12 
A)  $2 
B)  $6 
C)  $8 
D)  $12

Question 18

Consider two goods,books and hamburgers.The slope of the consumer's budget constraint is measured by the

Accepted Answer

A)  consumer's income divided by the price of hamburgers. 
B)  relative price of books and hamburgers. 
C)  consumer's marginal rate of substitution. 
D)  number of books purchased divided by the number of hamburgers purchased. 
A)  consumer's income divided by the price of hamburgers. 
B)  relative price of books and hamburgers. 
C)  consumer's marginal rate of substitution. 
D)  number of books purchased divided by the number of hamburgers purchased.

Question 19

Figure 21-21  
-Refer to Figure 21-21.The shift from point B to point C in the figure is due to the

Accepted Answer

A)  substitution effect of an increase in the price of potato chips. 
B)  income effect of an increase in the price of potato chips. 
C)  substitution effect of a decrease in the price of potato chips. 
D)  income effect of a decrease in the price of potato chips. 
A)  substitution effect of an increase in the price of potato chips. 
B)  income effect of an increase in the price of potato chips. 
C)  substitution effect of a decrease in the price of potato chips. 
D)  income effect of a decrease in the price of potato chips.

Question 20

When two goods are perfect substitutes,the indifference curve is

Accepted Answer

A)  a horizontal straight line. 
B)  bowed outward. 
C)  a downward-sloping straight line. 
D)  a right angle. 
A)  a horizontal straight line. 
B)  bowed outward. 
C)  a downward-sloping straight line. 
D)  a right angle.

Exam 21: The Theory of Consumer Choice

Using the graph shown,construct a demand curve for M&M's given an income of $10.

A decrease in a consumer's income

Billie spends all of her income on soccer balls and jeans,and the price of a pair of jeans is three times the price of soccer balls.In order to maximize total utility,Billie should

When the price of a normal good increases,

Figure 21-8 -Refer to Figure 21-8.If the price of good X is $5,and your budget constraint is DE,what is the price of good Y?

When two goods are perfect complements,the indifference curves will

At the consumer's optimum the

When considering her budget,the highest indifference curve that a consumer can reach is the

Suppose that for Emily,DVDs and trips to the movie theater are perfect substitutes.Currently,Emily is spending all of her income on trips to the movie theater.If the price of DVDs doubles,the substitution effect will

Figure 21-4 In each case,the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-4.Which of the graphs in the figure could reflect a decrease in income?

Economists have found evidence of a Giffen good when studying the consumption of rice in the Chinese province of Hunan.

The substitution effect in the work-leisure model induces a person to work less in response to higher wages,which tends to make the labor-supply curve slope upward.

When two goods are perfect complements,the indifference curves are

Giffen goods violate the law of demand.

Assume that a consumer's indifference curve is a downward-sloping straight line.As the consumer moves from left to right along the horizontal axis,the consumer's marginal rate of substitution

Consider two goods,books and hamburgers.The slope of the consumer's budget constraint is measured by the

Figure 21-21 -Refer to Figure 21-21.The shift from point B to point C in the figure is due to the

When two goods are perfect substitutes,the indifference curve is

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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