Question 1

Figure 21-11  
-Refer to Figure 21-11. What is the consumer's marginal rate of substitution as she moves from A to B?

Accepted Answer

A) 12 
B) 6 
C) 4 
D) 1 
A) 12 
B) 6 
C) 4 
D) 1

Question 2

Jack and Diane each buy pizza and paperback novels. Pizza costs $3 per slice, and paperback novels cost $5 each. Jack has a budget of $30, and Diane has a budget of $15 to spend on pizza and paperback novels. Which consumer(s) can afford to purchase 3 slices of pizza and 4 paperback novels?

Accepted Answer

A) Jack only 
B) Diane only 
C) both Jack and Diane 
D) neither Jack nor Diane 
A) Jack only 
B) Diane only 
C) both Jack and Diane 
D) neither Jack nor Diane

Question 3

Suppose a consumer has an income of $800 per month and that she spends her entire income each month on beer and bratwurst. The price of a pint of beer is $5, and the price of a bratwurst is $4. Which of the following combinations of beers and bratwursts represents a point that would lie to the interior of the consumer's budget constraint?

Accepted Answer

A) 160 beers and 200 bratwursts 
B) 40 beers and 50 bratwursts 
C) 80 beers and 100 bratwursts 
D) 160 beers and 0 bratwursts 
A) 160 beers and 200 bratwursts 
B) 40 beers and 50 bratwursts 
C) 80 beers and 100 bratwursts 
D) 160 beers and 0 bratwursts

Question 4

Pepsi and pizza are normal goods. When the price of pizza rises, the substitution effect causes Pepsi to be relatively

Accepted Answer

A) more expensive, so the consumer buys more Pepsi. 
B) more expensive, so the consumer buys less Pepsi. 
C) less expensive, so the consumer buys more Pepsi. 
D) less expensive, so the consumer buys less Pepsi. 
A) more expensive, so the consumer buys more Pepsi. 
B) more expensive, so the consumer buys less Pepsi. 
C) less expensive, so the consumer buys more Pepsi. 
D) less expensive, so the consumer buys less Pepsi.

Question 5

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 DVD?

Accepted Answer

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

Question 6

If the income effect counteracts the substitution effect, we know that the good in question is a(n)

Accepted Answer

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

Question 7

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 8

Goods x and y are available to Jeff. At Jeff's optimum, the marginal utility per dollar spent on good x equals __________________.

Accepted Answer

the margin

Question 9

A consumer's optimal choice is affected by income, prices of goods, and preferences.

Accepted Answer

A) True 
 B)False

Question 10

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 11

On a graph we draw a consumer's budget constraint, measuring the number of apples on the horizontal axis and the number of light bulbs on the vertical axis. If the slope of the budget constraint is -2, then

Accepted Answer

A) an apple costs twice as much as a light bulb. 
B) the opportunity cost of a light bulb is 2 apples. 
C) the opportunity cost of an apple is one-half of a light bulb. 
D) All of the above are correct. 
A) an apple costs twice as much as a light bulb. 
B) the opportunity cost of a light bulb is 2 apples. 
C) the opportunity cost of an apple is one-half of a light bulb. 
D) All of the above are correct.

Question 12

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, donuts are a normal good, but coffee is an inferior good.

Accepted Answer

A) True 
 B)False

Question 13

Suppose a consumer spends her income on two goods: music CDs and DVDs. The consumer has $200 to allocate to these two goods, the price of a CD is $10, and the price of a DVD is $20. What is the maximum number of CDs the consumer can purchase?

Accepted Answer

A) 10 
B) 20 
C) 40 
D) 50 
A) 10 
B) 20 
C) 40 
D) 50

Question 14

Figure 21-11  
-Refer to Figure 21-11. What is the consumer's marginal rate of substitution?

Accepted Answer

A) 12 
B) 4 
C) 1 
D) We do not have enough information to answer the question because the MRS varies along the graph. 
A) 12 
B) 4 
C) 1 
D) We do not have enough information to answer the question because the MRS varies along the graph.

Question 15

Figure 21-31 The figure shows two indifference curves and two budget constraints for a consumer named Kevin.  
-Refer to Figure 21-31. If Kevin's income is $1,260 and point A is his optimum, then what is the price of a shirt?

Accepted Answer

The price

Question 16

The marginal rate of substitution between goods A and B measures the price of A relative to the price of B.

Accepted Answer

A) True 
 B)False

Question 17

Figure 21-11  
-Refer to Figure 21-11. As the consumer moves from point A to B to C to D, the consumer's marginal rate of substitution

Accepted Answer

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

Question 18

Figure 21-30 The graph shows two budget constraints for a consumer.  
-Refer to Figure 21-30. Suppose Budget Constraint B applies. If the consumer's income is $90 and if he is buying 5 light bulbs, then how much money is he spending on hamburgers?

Accepted Answer

If income is $90, then the price of a li

Question 19

Scenario 21-4 Frank spends all of his income of $240 per month on shirts and hats. The price of a shirt is $40 and the price of a hat is $30.
-Refer to Scenario 21-4. What is the slope of Frank's budget constraint if it is drawn with the quantity of shirts on the horizontal axis and the quantity of hats on the vertical axis?

Accepted Answer

The slope of the bud

Question 20

Figure 21-9  
-Refer to Figure 21-9. If the price of good Y is $5, what is the price of good X?

Accepted Answer

A) $500 
B) $150 
C) $16.67 
D) $1.50 
A) $500 
B) $150 
C) $16.67 
D) $1.50

Figure 21-11 -Refer to Figure 21-11. What is the consumer's marginal rate of substitution as she moves from A to B?

Jack and Diane each buy pizza and paperback novels. Pizza costs $3 per slice, and paperback novels cost $5 each. Jack has a budget of $30, and Diane has a budget of $15 to spend on pizza and paperback novels. Which consumer(s) can afford to purchase 3 slices of pizza and 4 paperback novels?

Pepsi and pizza are normal goods. When the price of pizza rises, the substitution effect causes Pepsi to be relatively

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 DVD?

If the income effect counteracts the substitution effect, we know that the good in question is a(n)

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?

Goods x and y are available to Jeff. At Jeff's optimum, the marginal utility per dollar spent on good x equals __________________.

A consumer's optimal choice is affected by income, prices of goods, and preferences.

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

On a graph we draw a consumer's budget constraint, measuring the number of apples on the horizontal axis and the number of light bulbs on the vertical axis. If the slope of the budget constraint is -2, then

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, donuts are a normal good, but coffee is an inferior good.

Suppose a consumer spends her income on two goods: music CDs and DVDs. The consumer has $200 to allocate to these two goods, the price of a CD is $10, and the price of a DVD is $20. What is the maximum number of CDs the consumer can purchase?

Figure 21-11 -Refer to Figure 21-11. What is the consumer's marginal rate of substitution?

Figure 21-31 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. -Refer to Figure 21-31. If Kevin's income is $1,260 and point A is his optimum, then what is the price of a shirt?

The marginal rate of substitution between goods A and B measures the price of A relative to the price of B.

Figure 21-11 -Refer to Figure 21-11. As the consumer moves from point A to B to C to D, the consumer's marginal rate of substitution

Figure 21-30 The graph shows two budget constraints for a consumer. -Refer to Figure 21-30. Suppose Budget Constraint B applies. If the consumer's income is $90 and if he is buying 5 light bulbs, then how much money is he spending on hamburgers?

Figure 21-9 -Refer to Figure 21-9. If the price of good Y is $5, what is the price of good X?

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

Frontiers in Microeconomics

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Exam 21: The Theory of Consumer Choice

Figure 21-11 -Refer to Figure 21-11. What is the consumer's marginal rate of substitution as she moves from A to B?

Jack and Diane each buy pizza and paperback novels. Pizza costs $3 per slice, and paperback novels cost $5 each. Jack has a budget of $30, and Diane has a budget of $15 to spend on pizza and paperback novels. Which consumer(s) can afford to purchase 3 slices of pizza and 4 paperback novels?

Pepsi and pizza are normal goods. When the price of pizza rises, the substitution effect causes Pepsi to be relatively

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 DVD?

If the income effect counteracts the substitution effect, we know that the good in question is a(n)

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?

Goods x and y are available to Jeff. At Jeff's optimum, the marginal utility per dollar spent on good x equals __________________.

A consumer's optimal choice is affected by income, prices of goods, and preferences.

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

On a graph we draw a consumer's budget constraint, measuring the number of apples on the horizontal axis and the number of light bulbs on the vertical axis. If the slope of the budget constraint is -2, then

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, donuts are a normal good, but coffee is an inferior good.

Suppose a consumer spends her income on two goods: music CDs and DVDs. The consumer has $200 to allocate to these two goods, the price of a CD is $10, and the price of a DVD is $20. What is the maximum number of CDs the consumer can purchase?

Figure 21-11 -Refer to Figure 21-11. What is the consumer's marginal rate of substitution?

Figure 21-31 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. -Refer to Figure 21-31. If Kevin's income is $1,260 and point A is his optimum, then what is the price of a shirt?

The marginal rate of substitution between goods A and B measures the price of A relative to the price of B.

Figure 21-11 -Refer to Figure 21-11. As the consumer moves from point A to B to C to D, the consumer's marginal rate of substitution

Figure 21-30 The graph shows two budget constraints for a consumer. -Refer to Figure 21-30. Suppose Budget Constraint B applies. If the consumer's income is $90 and if he is buying 5 light bulbs, then how much money is he spending on hamburgers?

Figure 21-9 -Refer to Figure 21-9. If the price of good Y is $5, what is the price of good X?

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

Frontiers in Microeconomics

Filters