Question 1

A rise in the interest rate will generally result in people consuming less when they are old if the substitution effect outweighs the income effect.

Accepted Answer

A) True 
 B)False

Question 2

Consider the indifference curve map for nickels and quarters. Assume nickels are on the horizontal axis and quarters are on the vertical axis. The indifference curves for nickels and quarters are

Accepted Answer

A) straight lines with slope of −1/5. 
B) straight lines with a slope of −1. 
C) straight lines with a slope of −5. 
D) L shaped. 
A) straight lines with slope of −1/5. 
B) straight lines with a slope of −1. 
C) straight lines with a slope of −5. 
D) L shaped.

Question 3

An increase in the interest rate today leading to a decrease in consumption today violates the law of demand.​

Accepted Answer

A) True 
 B)False

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

Thomas faces prices of $6 for a unit of good X and $30 for a unit of good Y. At his optimum, Thomas is willing to give up 1 unit of good Y for __________ units of good X.

Accepted Answer

The answer of Thomas faces prices of $6 for a...

Question 6

Figure 21-18
The figure shows two indifference curves and two budget constraints for a consumer named Kevin.
   ​
-Refer to Figure 21-18. If Kevin's income is $1,260, then what is the price of a sweater?

Accepted Answer

The price

Question 7

Scenario 21-3
Scott knows that he will ultimately face retirement. Assume that Scott will experience two periods in his life, one in which he works and earns income, and one in which he is retired and earns no income. Scott can earn $250,000 during his working period and nothing in his retirement period. He must both save and consume in his work period with an interest rate of 10 percent on savings.
-Refer to Scenario 21-3. Assume that Scott decides to consume $100,000 in the work period. How much money will he have available for consumption in his retirement period?

Accepted Answer

A) $100,000 
B) $110,000 
C) $150,000 
D) $165,000 
A) $100,000 
B) $110,000 
C) $150,000 
D) $165,000

Question 8

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 9

If Priscilla regards cheese and crackers as perfect complements, then

Accepted Answer

A) her indifference curves slope upward. 
B) her indifference curves are straight lines. 
C) Priscilla prefers lower indifference curves to higher ones. 
D) for Priscilla a bundle of 5 crackers and 5 ounces of cheese is just as good as a bundle of 5 crackers and 8 ounces of cheese. 
A) her indifference curves slope upward. 
B) her indifference curves are straight lines. 
C) Priscilla prefers lower indifference curves to higher ones. 
D) for Priscilla a bundle of 5 crackers and 5 ounces of cheese is just as good as a bundle of 5 crackers and 8 ounces of cheese.

Question 10

Figure 21-18
The figure shows two indifference curves and two budget constraints for a consumer named Kevin.
   ​
-Refer to Figure 21-18. If the price of a shirt is $20 and point B is Kevin's optimum, then what is Kevin's income?

Accepted Answer

Kevin's in

Question 11

Figure 21-10  
-Refer to Figure 21-10. It would be possible for the consumer to reach I3 if

Accepted Answer

A) the price of Y increases. 
B) the price of X increases. 
C) income decreases. 
D) the price of Y decreases. 
A) the price of Y increases. 
B) the price of X increases. 
C) income decreases. 
D) the price of Y decreases.

Question 12

A consumer's indifference curves are straight lines when, for the consumer, the goods in question are __________.

Accepted Answer

The answer of A consumer's indifference curves are straight lines...

Question 13

The income 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 backward.

Accepted Answer

A) True 
 B)False

Question 14

​A decrease in the price of the good on the horizontal axis rotates the budget constraint counterclockwise.

Accepted Answer

A) True 
 B)False

Question 15

Graphically demonstrate the conditions associated with a consumer optimum. Carefully label all curves and axes.

Accepted Answer

The answer of Graphically demonstrate the conditions associated with a...

Question 16

In order to represent a consumer's choices on a graph, we draw her budget constraint as well as her __________ curves.

Accepted Answer

The answer of In order to represent a consumer's choices...

Question 17

Scenario 21-1
Suppose the price of nachos is $12, the price of water is $3, and the consumer's income is $216. In addition, suppose the consumer's budget constraint illustrates nachos on the horizontal axis and water on the vertical axis.
-Refer to Scenario 21-1. If the price of water doubles to $6, then the

Accepted Answer

A) budget constraint intersects the vertical axis at 36 waters. 
B) slope of the budget constraint rises to −1. 
C) slope of the budget constraint falls to −5. 
D) budget constraint shifts inward in a parallel fashion. 
A) budget constraint intersects the vertical axis at 36 waters. 
B) slope of the budget constraint rises to −1. 
C) slope of the budget constraint falls to −5. 
D) budget constraint shifts inward in a parallel fashion.

Question 18

If goods A and B are perfect substitutes, then the marginal rate of substitution of good A for good B is constant.

Accepted Answer

A) True 
 B)False

Question 19

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 20

The slope of the budget constraint reveals the relative price of good X compared to good Y.

Accepted Answer

A) True 
 B)False

Exam 21: The Theory of Consumer Choice

A rise in the interest rate will generally result in people consuming less when they are old if the substitution effect outweighs the income effect.

Consider the indifference curve map for nickels and quarters. Assume nickels are on the horizontal axis and quarters are on the vertical axis. The indifference curves for nickels and quarters are

An increase in the interest rate today leading to a decrease in consumption today violates the law of demand.​

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?

Thomas faces prices of $6 for a unit of good X and $30 for a unit of good Y. At his optimum, Thomas is willing to give up 1 unit of good Y for __________ units of good X.

Figure 21-18 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. ​ -Refer to Figure 21-18. If Kevin's income is $1,260, then what is the price of a sweater?

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

If Priscilla regards cheese and crackers as perfect complements, then

Figure 21-18 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. ​ -Refer to Figure 21-18. If the price of a shirt is $20 and point B is Kevin's optimum, then what is Kevin's income?

Figure 21-10 -Refer to Figure 21-10. It would be possible for the consumer to reach I3 if

A consumer's indifference curves are straight lines when, for the consumer, the goods in question are __________.

The income 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 backward.

​A decrease in the price of the good on the horizontal axis rotates the budget constraint counterclockwise.

Graphically demonstrate the conditions associated with a consumer optimum. Carefully label all curves and axes.

In order to represent a consumer's choices on a graph, we draw her budget constraint as well as her __________ curves.

If goods A and B are perfect substitutes, then the marginal rate of substitution of good A for good B is constant.

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

The slope of the budget constraint reveals the relative price of good X compared to good Y.

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

Applications: 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

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

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 Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

An increase in the interest rate today leading to a decrease in consumption today violates the law of demand.

Figure 21-18 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. -Refer to Figure 21-18. If Kevin's income is $1,260, then what is the price of a sweater?

Figure 21-18 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. -Refer to Figure 21-18. If the price of a shirt is $20 and point B is Kevin's optimum, then what is Kevin's income?

Figure 21-10 -Refer to Figure 21-10. It would be possible for the consumer to reach I₃ if

A decrease in the price of the good on the horizontal axis rotates the budget constraint counterclockwise.