Question 1

When Adam's income increases,he purchases more tickets to Broadway musicals than he did before his income increased.For Adam,Broadway musicals are a(n)

Accepted Answer

A)  normal good. 
B)  inferior good that is not a Giffen good. 
C)  Giffen good. 
D)  optimal good. 
A)  normal good. 
B)  inferior good that is not a Giffen good. 
C)  Giffen good. 
D)  optimal good.

Question 2

Carlos goes to the movies every Sunday afternoon.The movie theater offers 4 combinations of popcorn and beverages: the "mini-combo" costs $5 and includes a small popcorn and a small drink,the "medium-combo" costs $7 and includes a medium popcorn and a medium drink,the "value-combo" also costs $7 and includes a small popcorn and a large drink,and the "large-combo" costs $9 and includes a large popcorn and a large drink.Carlos always purchases the "value-combo." We can conclude that

Accepted Answer

A)  Carlos cannot afford the "large-combo." 
B)  Carlos cannot afford the "medium-combo." 
C)  Carlos prefers a combo with a larger popcorn-to-beverage ratio. 
D)  Carlos prefers a combo with a smaller popcorn-to-beverage ratio. 
A)  Carlos cannot afford the "large-combo." 
B)  Carlos cannot afford the "medium-combo." 
C)  Carlos prefers a combo with a larger popcorn-to-beverage ratio. 
D)  Carlos prefers a combo with a smaller popcorn-to-beverage ratio.

Question 3

The indifference curves for nickels and dimes are straight lines.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is not correct?

Accepted Answer

A)  If Jane gets a higher wage and works more,the substitution effect is greater than the income effect for her. 
B)  If Spencer experiences a wage decrease and works less,the income effect is greater than the substitution effect for him. 
C)  If the substitution effect is greater than the income effect,the labor-supply curve is upward sloping. 
D)  If the income effect is greater than the substitution effect,the labor-supply curve is downward sloping. 
A)  If Jane gets a higher wage and works more,the substitution effect is greater than the income effect for her. 
B)  If Spencer experiences a wage decrease and works less,the income effect is greater than the substitution effect for him. 
C)  If the substitution effect is greater than the income effect,the labor-supply curve is upward sloping. 
D)  If the income effect is greater than the substitution effect,the labor-supply curve is downward sloping.

Question 5

Calvin is planning ahead for retirement and must decide how much to spend and how much to save while he's working in order to have money to spend when he retires.When the substitution effect dominates the income effect,an increase in the interest rate on savings will cause him to

Accepted Answer

A)  increase his savings rate. 
B)  decrease his savings rate. 
C)  continue saving at the same rate. 
D)  Any of the above are possible. 
A)  increase his savings rate. 
B)  decrease his savings rate. 
C)  continue saving at the same rate. 
D)  Any of the above are possible.

Question 6

A worker with a backward-bending labor supply curve responds to an increase in wages by working more hours.

Accepted Answer

A) True 
 B)False

Question 7

If a consumer experiences a decrease in income,the new budget constraint will have the same slope as the old budget constraint.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not correct?

Accepted Answer

A)  An increase in income shifts a consumer's budget constraint outward. 
B)  An increase in the price of good X causes a consumer's budget constraint to rotate inward along the X axis. 
C)  A decrease in the price of good Y causes a consumer's budget constraint to rotate outward along the Y axis. 
D)  Changes in income affect the slope of the budget constraint as well as its location on a graph. 
A)  An increase in income shifts a consumer's budget constraint outward. 
B)  An increase in the price of good X causes a consumer's budget constraint to rotate inward along the X axis. 
C)  A decrease in the price of good Y causes a consumer's budget constraint to rotate outward along the Y axis. 
D)  Changes in income affect the slope of the budget constraint as well as its location on a graph.

Question 9

The theory of consumer choice provides a(n)

Accepted Answer

A)  literal account of how people make decisions. 
B)  unrealistic picture of how people make decisions. 
C)  model that is consistent with how people make decisions. 
D)  in-depth model that is based more in psychology than in economics. 
A)  literal account of how people make decisions. 
B)  unrealistic picture of how people make decisions. 
C)  model that is consistent with how people make decisions. 
D)  in-depth model that is based more in psychology than in economics.

Question 10

Figure 21-17  
-Refer to Figure 21-17.Bundle D represents a point where

Accepted Answer

A)  MRSxy > Py/Px. 
B)  MRSxy = Px/Py. 
C)  MRSxy x/Py. 
D)  MRSxy y/Px. 
A)  MRSxy > Py/Px. 
B)  MRSxy = Px/Py. 
C)  MRSxy x/Py. 
D)  MRSxy y/Px.

Question 11

Which of the following statements is correct?

Accepted Answer

A)  The theory of consumer choice provides a more complete understanding of supply,just as the theory of the competitive firm provides a more complete understanding of demand. 
B)  The theory of consumer choice provides a more complete understanding of demand,just as the theory of the competitive firm provides a more complete understanding of supply. 
C)  Monetary theory provides a more complete understanding of demand,just as the theory of the competitive firm provides a more complete understanding of supply. 
D)  The theory of public choice provides a more complete understanding of supply,just as the theory of the competitive firm provides a more complete understanding of demand. 
A)  The theory of consumer choice provides a more complete understanding of supply,just as the theory of the competitive firm provides a more complete understanding of demand. 
B)  The theory of consumer choice provides a more complete understanding of demand,just as the theory of the competitive firm provides a more complete understanding of supply. 
C)  Monetary theory provides a more complete understanding of demand,just as the theory of the competitive firm provides a more complete understanding of supply. 
D)  The theory of public choice provides a more complete understanding of supply,just as the theory of the competitive firm provides a more complete understanding of demand.

Question 12

Indifference curves that cross violate the property of

Accepted Answer

A)  the marginal rate of substitution. 
B)  transitivity. 
C)  indifference curves bowing inward. 
D)  They do not violate any properties of indifference curves. 
A)  the marginal rate of substitution. 
B)  transitivity. 
C)  indifference curves bowing inward. 
D)  They do not violate any properties of indifference curves.

Exam 21: The Theory of Consumer Choice

When Adam's income increases,he purchases more tickets to Broadway musicals than he did before his income increased.For Adam,Broadway musicals are a(n)

The indifference curves for nickels and dimes are straight lines.

Which of the following statements is not correct?

Calvin is planning ahead for retirement and must decide how much to spend and how much to save while he's working in order to have money to spend when he retires.When the substitution effect dominates the income effect,an increase in the interest rate on savings will cause him to

A worker with a backward-bending labor supply curve responds to an increase in wages by working more hours.

If a consumer experiences a decrease in income,the new budget constraint will have the same slope as the old budget constraint.

Which of the following is not correct?

The theory of consumer choice provides a(n)

Figure 21-17 -Refer to Figure 21-17.Bundle D represents a point where

Which of the following statements is correct?

Indifference curves that cross violate the property of

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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