Question 1

Figure 21-12  
-Refer to Figure 21-12.If the consumer moves from bundle V to bundle X,the

Accepted Answer

A)  marginal rate of substitution remains constant. 
B)  total utility remains constant. 
C)  total utility increases. 
D)  Both a and b are correct. 
A)  marginal rate of substitution remains constant. 
B)  total utility remains constant. 
C)  total utility increases. 
D)  Both a and b are correct.

Question 2

A typical consumer consumes both coffee and donuts.After the consumer's income decreases,the consumer consumes more coffee but fewer donuts than before.For this consumer,coffee is a normal good,but donuts are an inferior good.

Accepted Answer

A) True 
 B)False

Question 3

A consumer

Accepted Answer

A)  is equally satisfied with any indifference curve. 
B)  prefers indifference curves with positive slopes. 
C)  prefers higher indifference curves to lower indifference curves. 
D)  prefers indifference curves that are straight lines to indifference curves that are right angles. 
A)  is equally satisfied with any indifference curve. 
B)  prefers indifference curves with positive slopes. 
C)  prefers higher indifference curves to lower indifference curves. 
D)  prefers indifference curves that are straight lines to indifference curves that are right angles.

Question 4

A consumer is currently spending all of her available income on two goods: music CDs and DVDs.At her current consumption bundle,she is spending twice as much on CDs as she is on DVDs.If the consumer has $120 of income and is consuming 10 CDs and 2 DVDs,what is the price of a CD?

Accepted Answer

A)  $4 
B)  $8 
C)  $12 
D)  $20 
A)  $4 
B)  $8 
C)  $12 
D)  $20

Question 5

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 the price of X 
B)  an increase in the price of Y 
C)  a decrease in the price of Y 
D)  More than one of the above could explain this change. 
A)  a decrease in the price of X 
B)  an increase in the price of Y 
C)  a decrease in the price of Y 
D)  More than one of the above could explain this change.

Question 6

If a consumer purchases more of good A when her income falls,good A is an inferior good.

Accepted Answer

A) True 
 B)False

Question 7

When Jamar has an income of $2,000,he consumes 30 units of good A and 50 units of good B.After Jamar's income decreases to $1,500,he consumes 33 units of good A and 45 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 8

Figure 21-5
 
-Refer to Figure 21-5.In graph (a),if income is equal to $120,the price of good X is

Accepted Answer

A)  $3. 
B)  $4. 
C)  $10. 
D)  $12. 
A)  $3. 
B)  $4. 
C)  $10. 
D)  $12.

Question 9

The consumer's optimal choice is the one in which the marginal utility per dollar spent on good X is

Accepted Answer

A)  equal to the marginal utility per dollar saved on good X. 
B)  greater than the marginal utility per dollar spent on good Y. 
C)  equal to the marginal utility per dollar spent on good Y. 
D)  less than the marginal utility per dollar spent on good Y. 
A)  equal to the marginal utility per dollar saved on good X. 
B)  greater than the marginal utility per dollar spent on good Y. 
C)  equal to the marginal utility per dollar spent on good Y. 
D)  less than the marginal utility per dollar spent on good Y.

Question 10

Janet prefers cashews to almonds.She prefers macadamia nuts to peanuts,but she is indifferent between almonds and peanuts.Which of the following statements can we say for sure?

Accepted Answer

A)  Janet prefers cashews to macadamia nuts. 
B)  Janet prefers peanuts to cashews. 
C)  Janet prefers macadamia nuts to almonds. 
D)  Janet prefers almonds to macadamia nuts. 
A)  Janet prefers cashews to macadamia nuts. 
B)  Janet prefers peanuts to cashews. 
C)  Janet prefers macadamia nuts to almonds. 
D)  Janet prefers almonds to macadamia nuts.

Question 11

Figure 21-3
In each case,the budget constraint moves from BC-1 to BC-2.        
-Refer to Figure 21-3.Which of the graphs in the figure reflects a decrease in the price of good X only?

Accepted Answer

A)  graph a 
B)  graph b 
C)  graph c 
D)  graph d 
A)  graph a 
B)  graph b 
C)  graph c 
D)  graph d

Question 12

If goods X and Y are both normal goods for Brenda,then an increase in Brenda's income will lead her to __________.

Accepted Answer

buy more o

Question 13

When a consumer spends less time enjoying leisure and more time working,she has

Accepted Answer

A)  lower income and therefore cannot afford more consumption. 
B)  lower income and therefore can afford more consumption. 
C)  higher income and therefore cannot afford more consumption. 
D)  higher income and therefore can afford more consumption. 
A)  lower income and therefore cannot afford more consumption. 
B)  lower income and therefore can afford more consumption. 
C)  higher income and therefore cannot afford more consumption. 
D)  higher income and therefore can afford more consumption.

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.At his optimum,Jack is willing to give up about

Accepted Answer

A)  0.75 pounds of pears for 1 pound of apples. 
B)  0.75 pounds of apples for 1 pound of pears. 
C)  1.20 pounds of pears for 1 pound of apples. 
D)  1.20 pounds of apples for 1 pound of pears. 
A)  0.75 pounds of pears for 1 pound of apples. 
B)  0.75 pounds of apples for 1 pound of pears. 
C)  1.20 pounds of pears for 1 pound of apples. 
D)  1.20 pounds of apples for 1 pound of pears.

Question 15

Draw indifference curves that reflect the following preferences.
a.pencils with white erasers and pencils with pink erasers
b.left shoes and right shoes
c.potatoes and rice
d.income and polluted water

Accepted Answer

The answer of Draw indifference curves that reflect the following...

Question 16

When leisure is a normal good,the income effect from a decrease in wages is evident in

Accepted Answer

A)  a desire to consume more leisure. 
B)  a desire to consume less leisure. 
C)  an upward-sloping labor-supply curve. 
D)  a shift in labor demand. 
A)  a desire to consume more leisure. 
B)  a desire to consume less leisure. 
C)  an upward-sloping labor-supply curve. 
D)  a shift in labor demand.

Question 17

Figure 21-14      
-Refer to Figure 21-14.Which of the graphs illustrates indifference curves for which the marginal rate of substitution varies?

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 18

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

Accepted Answer

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

Question 19

Suppose the price of good X falls and the consumption of good X increases.From this we can infer that X is a(n) (i)
Normal good.
(ii)
Inferior good.
(iii)
Giffen good.

Accepted Answer

A)  (i)only 
B)  (i)or (ii)only 
C)  (iii)only 
D)  (ii)or (iii)only 
A)  (i)only 
B)  (i)or (ii)only 
C)  (iii)only 
D)  (ii)or (iii)only

Question 20

The labor supply curve may have a backward-bending portion if,at higher wages,the income effect is

Accepted Answer

A)  smaller than the substitution effect. 
B)  larger than the substitution effect. 
C)  negative. 
D)  Any of the above could result in a backward-bending supply curve. 
A)  smaller than the substitution effect. 
B)  larger than the substitution effect. 
C)  negative. 
D)  Any of the above could result in a backward-bending supply curve.

Exam 21: The Theory of Consumer Choice

Figure 21-12 -Refer to Figure 21-12.If the consumer moves from bundle V to bundle X,the

A typical consumer consumes both coffee and donuts.After the consumer's income decreases,the consumer consumes more coffee but fewer donuts than before.For this consumer,coffee is a normal good,but donuts are an inferior good.

A consumer

A consumer is currently spending all of her available income on two goods: music CDs and DVDs.At her current consumption bundle,she is spending twice as much on CDs as she is on DVDs.If the consumer has $120 of income and is consuming 10 CDs and 2 DVDs,what is the price of a CD?

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?

If a consumer purchases more of good A when her income falls,good A is an inferior good.

When Jamar has an income of $2,000,he consumes 30 units of good A and 50 units of good B.After Jamar's income decreases to $1,500,he consumes 33 units of good A and 45 units of good B.Which of the following statements is correct?

Figure 21-5 -Refer to Figure 21-5.In graph (a),if income is equal to $120,the price of good X is

The consumer's optimal choice is the one in which the marginal utility per dollar spent on good X is

Janet prefers cashews to almonds.She prefers macadamia nuts to peanuts,but she is indifferent between almonds and peanuts.Which of the following statements can we say for sure?

Figure 21-3 In each case,the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3.Which of the graphs in the figure reflects a decrease in the price of good X only?

If goods X and Y are both normal goods for Brenda,then an increase in Brenda's income will lead her to __________.

When a consumer spends less time enjoying leisure and more time working,she has

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 willing to give up about

Draw indifference curves that reflect the following preferences. a.pencils with white erasers and pencils with pink erasers b.left shoes and right shoes c.potatoes and rice d.income and polluted water

When leisure is a normal good,the income effect from a decrease in wages is evident in

Figure 21-14 -Refer to Figure 21-14.Which of the graphs illustrates indifference curves for which the marginal rate of substitution varies?

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

Suppose the price of good X falls and the consumption of good X increases.From this we can infer that X is a(n) (i) Normal good. (ii) Inferior good. (iii) Giffen good.

The labor supply curve may have a backward-bending portion if,at higher wages,the income effect 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

Filters