Question 1

The following diagram shows a budget constraint for a particular consumer.   If the price of X is $20, then what is the price of Y?

Accepted Answer

A) $15 
B) $25 
C) $35 
D) $70 
A) $15 
B) $25 
C) $35 
D) $70

Question 2

When Matt has an income of $2,000, he consumes 30 units of good A and 50 units of good B. After Matt's income increases to $3,000, he consumes 25 units of good A and 95 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 3

Utility measures the

Accepted Answer

A) income a consumer receives from consuming a bundle of goods. 
B) satisfaction a consumer receives from consuming a bundle of goods. 
C) satisfaction a consumer places on her budget constraint. 
D) All of the above are correct. 
A) income a consumer receives from consuming a bundle of goods. 
B) satisfaction a consumer receives from consuming a bundle of goods. 
C) satisfaction a consumer places on her budget constraint. 
D) All of the above are correct.

Question 4

Suppose that Sam likes pears twice as much as apples, meaning that he is always indifferent between consuming one pear or two apples. Sam's indifference curves for pears and apples are

Accepted Answer

A) right angles. 
B) bowed inward. 
C) bowed outward. 
D) downward-sloping straight lines. 
A) right angles. 
B) bowed inward. 
C) bowed outward. 
D) downward-sloping straight lines.

Question 5

When indifference curves are bowed inward, the marginal rate of substitution is

Accepted Answer

A) the same at all points along an indifference curve. 
B) increasing as the consumer moves to the right along an indifference curve. 
C) decreasing as the consumer moves to the right along an indifference curve. 
D) constant. 
A) the same at all points along an indifference curve. 
B) increasing as the consumer moves to the right along an indifference curve. 
C) decreasing as the consumer moves to the right along an indifference curve. 
D) constant.

Question 6

Figure 21-5
(a)
(b)    
-Refer to Figure 21-5. In graph (a), if income is equal to $200, then the price of good X is

Accepted Answer

A) $12. 
B) $16. 
C) $20. 
D) $24. 
A) $12. 
B) $16. 
C) $20. 
D) $24.

Question 7

Figure 21-31 The figure shows two indifference curves and two budget constraints for a consumer named Kevin.  
-Refer to Figure 21-31. Suppose Kevin is optimally purchasing 21 shirts and 28 sweaters, and he is spending $1,680 on sweaters. What is the price of a shirt?

Accepted Answer

Given that Kevin is optimally purchasing

Question 8

Figure 21-19  
-Refer to Figure 21-19. Assume that the consumer depicted in the figure has an income of $20. The price of Skittles is $2 and the price of M&M's is $4. The consumer's optimal choice is point

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
A) A. 
B) B. 
C) C. 
D) D.

Question 9

Janet knows that she will ultimately face retirement. Assume that Janet will experience two periods in her life, one in which she works and earns income, and one in which she is retired and earns no income. Janet can earn $250,000 during her working period and nothing in her retirement period. She must both save and consume in her work period and can earn 10 percent interest on her savings.
a.Use a graph to demonstrate Janet's budget constraint.
b.On your graph, show Janet at an optimal level of consumption in the work period equal to $150,000. What is the implied optimal level of consumption in her retirement period?
c.Now, using your graph from part b above, demonstrate how Janet will be affected by an increase in the interest rate on savings to 14 percent. Discuss the role of income and substitution effects in determining whether Janet will increase, or decrease her savings in the work period.

Accepted Answer

a.see graph below
b.see graph below
c.se

Question 10

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...

Question 11

The rate at which a consumer is willing to exchange one good for another while maintaining a constant level of satisfaction is called the

Accepted Answer

A) relative expenditure ratio. 
B) value of marginal product. 
C) marginal rate of substitution. 
D) relative price ratio. 
A) relative expenditure ratio. 
B) value of marginal product. 
C) marginal rate of substitution. 
D) relative price ratio.

Question 12

The slope of the budget constraint is determined by the

Accepted Answer

A) relative price of the goods measured on the axes. 
B) relative price of the goods measured on the axes and the consumer's income. 
C) endowment of productive resources. 
D) preferences of the consumer. 
A) relative price of the goods measured on the axes. 
B) relative price of the goods measured on the axes and the consumer's income. 
C) endowment of productive resources. 
D) preferences of the consumer.

Question 13

On a graph we draw a consumer's budget constraint, measuring the number of pineapples on the horizontal axis and the number of pencils on the vertical axis. If the slope of the budget constraint is -6, then

Accepted Answer

A) a pineapple costs six times as much as a pencil. 
B) the opportunity cost of a pineapple is 6 pencils. 
C) the opportunity cost of a pencil is one-sixth of a pineapple. 
D) All of the above are correct. 
A) a pineapple costs six times as much as a pencil. 
B) the opportunity cost of a pineapple is 6 pencils. 
C) the opportunity cost of a pencil is one-sixth of a pineapple. 
D) All of the above are correct.

Question 14

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 15

Suppose a consumer consumes two goods, X and Y. The slope of the budget constraint equals the

Accepted Answer

A) marginal rate of substitution. 
B) rate at which the consumer will give up X to gain Y while maintaining the same level of utility. 
C) relative price of the two goods. 
D) All of the above are correct. 
A) marginal rate of substitution. 
B) rate at which the consumer will give up X to gain Y while maintaining the same level of utility. 
C) relative price of the two goods. 
D) All of the above are correct.

Question 16

Prince is currently consuming some of good X and some of good Y. If good Y is a normal good for Prince, then an increase in his income will definitely cause him to

Accepted Answer

A) increase his consumption of X. 
B) increase his consumption of Y. 
C) decrease his consumption of X. 
D) decrease his consumption of Y. 
A) increase his consumption of X. 
B) increase his consumption of Y. 
C) decrease his consumption of X. 
D) decrease his consumption of Y.

Question 17

Cashews and asparagus are normal goods. When the price of asparagus falls, the substitution effect by itself causes

Accepted Answer

A) the consumer to feel richer, so the consumer buys more cashews. 
B) the consumer to feel richer, so the consumer buys less cashews. 
C) cashews to be relatively more expensive, so the consumer buys less cashews. 
D) cashews to be relatively less expensive, so the consumer buys more cashews. 
A) the consumer to feel richer, so the consumer buys more cashews. 
B) the consumer to feel richer, so the consumer buys less cashews. 
C) cashews to be relatively more expensive, so the consumer buys less cashews. 
D) cashews to be relatively less expensive, so the consumer buys more cashews.

Question 18

When Stanley has an income of $1,000, he consumes 30 units of good A and 50 units of good B. After Stanley's income increases to $1,500, he consumes 60 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 19

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 20

If Rita's labor-supply curve is downward-sloping, then for Rita​

Accepted Answer

A) ​an increase in the wage creates an income effect that is greater than the substitution effect. 
B) ​an increase in the wage creates a substitution effect that is greater than the income effect. 
C) ​leisure and consumption are perfect substitutes. 
D) ​leisure and consumption are perfect complements. 
A) ​an increase in the wage creates an income effect that is greater than the substitution effect. 
B) ​an increase in the wage creates a substitution effect that is greater than the income effect. 
C) ​leisure and consumption are perfect substitutes. 
D) ​leisure and consumption are perfect complements.

Exam 21: The Theory of Consumer Choice

The following diagram shows a budget constraint for a particular consumer. If the price of X is $20, then what is the price of Y?

When Matt has an income of $2,000, he consumes 30 units of good A and 50 units of good B. After Matt's income increases to $3,000, he consumes 25 units of good A and 95 units of good B. Which of the following statements is correct?

Utility measures the

Suppose that Sam likes pears twice as much as apples, meaning that he is always indifferent between consuming one pear or two apples. Sam's indifference curves for pears and apples are

When indifference curves are bowed inward, the marginal rate of substitution is

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a), if income is equal to $200, then the price of good X is

Figure 21-31 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. -Refer to Figure 21-31. Suppose Kevin is optimally purchasing 21 shirts and 28 sweaters, and he is spending $1,680 on sweaters. What is the price of a shirt?

Figure 21-19 -Refer to Figure 21-19. Assume that the consumer depicted in the figure has an income of $20. The price of Skittles is $2 and the price of M&M's is $4. The consumer's optimal choice is point

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

The rate at which a consumer is willing to exchange one good for another while maintaining a constant level of satisfaction is called the

The slope of the budget constraint is determined by the

On a graph we draw a consumer's budget constraint, measuring the number of pineapples on the horizontal axis and the number of pencils on the vertical axis. If the slope of the budget constraint is -6, then

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

Suppose a consumer consumes two goods, X and Y. The slope of the budget constraint equals the

Prince is currently consuming some of good X and some of good Y. If good Y is a normal good for Prince, then an increase in his income will definitely cause him to

Cashews and asparagus are normal goods. When the price of asparagus falls, the substitution effect by itself causes

When Stanley has an income of $1,000, he consumes 30 units of good A and 50 units of good B. After Stanley's income increases to $1,500, he consumes 60 units of good A and 45 units of good B. Which of the following statements is correct?

When two goods are perfect complements, the indifference curves are

If Rita's labor-supply curve is downward-sloping, then for Rita​

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

If Rita's labor-supply curve is downward-sloping, then for Rita