Question 1

-The above figure gives your budget line between CDs and magazines. The slope of the budget line is _______ CD(s) per magazine.

Accepted Answer

A)  - 2 
B)  - 1/2 
C)  - 1 
D)  1/2 
A)  - 2 
B)  - 1/2 
C)  - 1 
D)  1/2

Question 2

-In the above figure, Brendan originally consumes at point A. If his income rises and compact discs are a normal good but haircuts are an inferior good then he will begin consuming at a point such as

Accepted Answer

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

Question 3

Which of the following statements is FALSE?

Accepted Answer

A)  A consumer possesses a preference map. 
B)  An indifference curve is a curve that shows the combination of goods among which a consumer is indifferent. 
C)  The marginal rate of substitution is the rate at which a consumer will give up good y to get more of good x and remain on the same indifference curve. 
D)  A consumer has only one indifference curve. 
A)  A consumer possesses a preference map. 
B)  An indifference curve is a curve that shows the combination of goods among which a consumer is indifferent. 
C)  The marginal rate of substitution is the rate at which a consumer will give up good y to get more of good x and remain on the same indifference curve. 
D)  A consumer has only one indifference curve.

Question 4

-Consider the change in the price of a book depicted in the above figure. The original budget line is BC. The new budget line is BD. As a result of this price change, the substitution effect can be represented by a movement from

Accepted Answer

A)  point A to point F. 
B)  point F to point G. 
C)  point A to point G. 
D)  point A to point E. 
A)  point A to point F. 
B)  point F to point G. 
C)  point A to point G. 
D)  point A to point E.

Question 5

-The indifference curves in the figure above (I1, I2 and I3) reflect Peter's consumption preferences. If Peter consumes 24 slices of pizza and 24 chocolate bars per month, he is as satisfied as he would be consuming _______ slices of pizza and _______ chocolate bars per month.

Accepted Answer

A)  32; 8 
B)  16; 16 
C)  40; 20 
D)  48; 12 
A)  32; 8 
B)  16; 16 
C)  40; 20 
D)  48; 12

Question 6

-The indifference curves in the figure above (I1, I2 and I3) reflect Peter's consumption preferences. Peter prefers consuming _______ to consuming _______.

Accepted Answer

A)  32 slices of pizza and 8 chocolate bars; 16 slices of pizza and 16 chocolate bars 
B)  24 slices of pizza and 24 chocolate bars; 40 slices of pizza and 20 chocolate bars 
C)  48 slices of pizza and 12 chocolate bars; 24 slices of pizza and 24 chocolate bars 
D)  40 slices of pizza and 20 chocolate bars; 48 slices of pizza and 12 chocolate bars 
A)  32 slices of pizza and 8 chocolate bars; 16 slices of pizza and 16 chocolate bars 
B)  24 slices of pizza and 24 chocolate bars; 40 slices of pizza and 20 chocolate bars 
C)  48 slices of pizza and 12 chocolate bars; 24 slices of pizza and 24 chocolate bars 
D)  40 slices of pizza and 20 chocolate bars; 48 slices of pizza and 12 chocolate bars

Question 7

-Lizzie's preferences are shown in the figure above. Lizzie definitely prefers consuming _______ to consuming _______.

Accepted Answer

A)  4 comic books and 12 cookies; 2 comic books and 12 cookies 
B)  6 comic books and 12 cookies; 8 comic books and 16 cookies 
C)  2 comic books and 12 cookies; 4 comic books and 8 cookies 
D)  1 comic book and 12 cookies; 4 comic books and 4 cookies 
A)  4 comic books and 12 cookies; 2 comic books and 12 cookies 
B)  6 comic books and 12 cookies; 8 comic books and 16 cookies 
C)  2 comic books and 12 cookies; 4 comic books and 8 cookies 
D)  1 comic book and 12 cookies; 4 comic books and 4 cookies

Question 8

Which of the following statements is true?

Accepted Answer

A)  The price effect is shown by moving up or down a fixed budget line. 
B)  To determine a consumer's best affordable point, we need only the budget line or the indifference curve. 
C)  Every point on a budget line lies on an indifference curve. 
D)  Both A and B are true. 
A)  The price effect is shown by moving up or down a fixed budget line. 
B)  To determine a consumer's best affordable point, we need only the budget line or the indifference curve. 
C)  Every point on a budget line lies on an indifference curve. 
D)  Both A and B are true.

Question 9

-The indifference curves in the above figure could represent your indifference curves between

Accepted Answer

A)  Coke and Pepsi, which you consider perfect substitutes. 
B)  eyeglass frames and eyeglass lenses, which you think are perfect complements. 
C)  hot dogs and textbooks, which you think are neither perfect substitutes nor perfect complements. 
D)  None of the above. 
A)  Coke and Pepsi, which you consider perfect substitutes. 
B)  eyeglass frames and eyeglass lenses, which you think are perfect complements. 
C)  hot dogs and textbooks, which you think are neither perfect substitutes nor perfect complements. 
D)  None of the above.

Question 10

Samara's income is $30 a month and she spends all of it on music downloads and petrol. The price of a music download is $3 and the price of a litre of petrol is $3. At Samara's best affordable point, her marginal rate of substitution is _______ litre(s) of petrol per music download.

Accepted Answer

A)  0.5 
B)  1.5 
C)  1 
D)  More information is needed to determine the marginal rate of substitution. 
A)  0.5 
B)  1.5 
C)  1 
D)  More information is needed to determine the marginal rate of substitution.

Question 11

If an individual's income increases,

Accepted Answer

A)  the person's budget line shifts outward in a parallel manner. 
B)  the person's indifference curves shift outward in a parallel manner. 
C)  there will be no impact on the individual's budget line or indifference curves. 
D)  None of the above answers is correct. 
A)  the person's budget line shifts outward in a parallel manner. 
B)  the person's indifference curves shift outward in a parallel manner. 
C)  there will be no impact on the individual's budget line or indifference curves. 
D)  None of the above answers is correct.

Question 12

-The figure above illustrates Elijah's preferences. He is currently at point A. The price of pizza decreases. The move from point A to point _______ is the substitution effect and the move from point _______ to point _______ is the income effect.

Accepted Answer

A)  B; B; C 
B)  E; E; C 
C)  C; C; B 
D)  D; D; B 
A)  B; B; C 
B)  E; E; C 
C)  C; C; B 
D)  D; D; B

Question 13

If your marginal rate of substitution between two goods diminishes continuously as you give up one good for the other, that means the

Accepted Answer

A)  two goods are perfect complements. 
B)  two goods are perfect substitutes. 
C)  two goods are neither perfect substitutes nor perfect complements. 
D)  price per unit of one good declines when you buy it in larger and larger quantities. 
A)  two goods are perfect complements. 
B)  two goods are perfect substitutes. 
C)  two goods are neither perfect substitutes nor perfect complements. 
D)  price per unit of one good declines when you buy it in larger and larger quantities.

Question 14

In order to draw an individual's budget line, we must know

Accepted Answer

A)  prices and income. 
B)  income and preferences. 
C)  prices, income and preferences. 
D)  prices and preferences. 
A)  prices and income. 
B)  income and preferences. 
C)  prices, income and preferences. 
D)  prices and preferences.

Question 15

The marginal rate of substitution is equal to the _______.

Accepted Answer

A)  marginal cost of each good 
B)  relative price of the two goods 
C)  magnitude of the slope of the indifference curve 
D)  inverse of the slope of the budget line 
A)  marginal cost of each good 
B)  relative price of the two goods 
C)  magnitude of the slope of the indifference curve 
D)  inverse of the slope of the budget line

Question 16

When a consumer is consuming at a point where his or her budget line is not as steep as his or her indifference curve, then he or she should

Accepted Answer

A)  consume none of the good that is measured on the horizontal axis. 
B)  consume less of the good that is measured on the horizontal axis. 
C)  not change his or her behaviour. 
D)  consume more of the good that is measured on the horizontal axis. 
A)  consume none of the good that is measured on the horizontal axis. 
B)  consume less of the good that is measured on the horizontal axis. 
C)  not change his or her behaviour. 
D)  consume more of the good that is measured on the horizontal axis.

Question 17

Left shoes and right shoes are perfect complements. An indifference curve for left and right shoes is a line with

Accepted Answer

A)  constant slope. 
B)  a 90- degree angle. 
C)  a 30- degree angle. 
D)  a 45- degree angle. 
A)  constant slope. 
B)  a 90- degree angle. 
C)  a 30- degree angle. 
D)  a 45- degree angle.

Question 18

-The figure above gives your budget line for magazines and CDs per month. Given that your income equals $60 per month, what is the price of a magazine and the price of a CD?

Accepted Answer

A)  The price of a magazine is $4 per magazine and the price of a CD is $12 per CD. 
B)  The price of a magazine is $12 per magazine and the price of a CD is $6 per CD. 
C)  The price of a magazine is $5 per magazine and the price of a CD is $10 per CD. 
D)  It is impossible to tell from the information given. 
A)  The price of a magazine is $4 per magazine and the price of a CD is $12 per CD. 
B)  The price of a magazine is $12 per magazine and the price of a CD is $6 per CD. 
C)  The price of a magazine is $5 per magazine and the price of a CD is $10 per CD. 
D)  It is impossible to tell from the information given.

Question 19

An indifference curve shows combinations of goods _______.

Accepted Answer

A)  that have the same relative price 
B)  that are inside or on the budget line 
C)  that are affordable 
D)  that the consumer prefers equally 
A)  that have the same relative price 
B)  that are inside or on the budget line 
C)  that are affordable 
D)  that the consumer prefers equally

Question 20

In an indifference curve/budget line diagram, generally when the price of a good increases, the consumer purchases _______ of the good and moves to a _______ indifference curve.

Accepted Answer

A)  more; higher 
B)  more; lower 
C)  less; lower 
D)  less; higher 
A)  more; higher 
B)  more; lower 
C)  less; lower 
D)  less; higher

-The above figure gives your budget line between CDs and magazines. The slope of the budget line is _______ CD(s) per magazine.

-In the above figure, Brendan originally consumes at point A. If his income rises and compact discs are a normal good but haircuts are an inferior good then he will begin consuming at a point such as

Which of the following statements is FALSE?

-Consider the change in the price of a book depicted in the above figure. The original budget line is BC. The new budget line is BD. As a result of this price change, the substitution effect can be represented by a movement from

-The indifference curves in the figure above (I₁, I₂ and I₃) reflect Peter's consumption preferences. If Peter consumes 24 slices of pizza and 24 chocolate bars per month, he is as satisfied as he would be consuming _ slices of pizza and _ chocolate bars per month.

-The indifference curves in the figure above (I₁, I₂ and I₃) reflect Peter's consumption preferences. Peter prefers consuming _ to consuming _.

-Lizzie's preferences are shown in the figure above. Lizzie definitely prefers consuming _ to consuming _.

Which of the following statements is true?

-The indifference curves in the above figure could represent your indifference curves between

Samara's income is $30 a month and she spends all of it on music downloads and petrol. The price of a music download is $3 and the price of a litre of petrol is $3. At Samara's best affordable point, her marginal rate of substitution is _______ litre(s) of petrol per music download.

If an individual's income increases,

-The figure above illustrates Elijah's preferences. He is currently at point A. The price of pizza decreases. The move from point A to point ___ is the substitution effect and the move from point _ to point _____ is the income effect.

If your marginal rate of substitution between two goods diminishes continuously as you give up one good for the other, that means the

In order to draw an individual's budget line, we must know

The marginal rate of substitution is equal to the _______.

When a consumer is consuming at a point where his or her budget line is not as steep as his or her indifference curve, then he or she should

Left shoes and right shoes are perfect complements. An indifference curve for left and right shoes is a line with

-The figure above gives your budget line for magazines and CDs per month. Given that your income equals $60 per month, what is the price of a magazine and the price of a CD?

An indifference curve shows combinations of goods _______.

In an indifference curve/budget line diagram, generally when the price of a good increases, the consumer purchases _ of the good and moves to a _ indifference curve.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Public Choices and Public Goods

Economics of the Environment

Monopoly and Its Regulation

Economic Inequality

Producer Choices and Constraints

Perfect Competition

Monopolistic Competition

Oligopoly Games and Strategy

Decisions in Factor Markets

Filters

Exam 12: Consumer Choices and Constraints

-The above figure gives your budget line between CDs and magazines. The slope of the budget line is _______ CD(s) per magazine.

-In the above figure, Brendan originally consumes at point A. If his income rises and compact discs are a normal good but haircuts are an inferior good then he will begin consuming at a point such as

Which of the following statements is FALSE?

-Consider the change in the price of a book depicted in the above figure. The original budget line is BC. The new budget line is BD. As a result of this price change, the substitution effect can be represented by a movement from

-The indifference curves in the figure above (I1, I2 and I3) reflect Peter's consumption preferences. If Peter consumes 24 slices of pizza and 24 chocolate bars per month, he is as satisfied as he would be consuming _______ slices of pizza and _______ chocolate bars per month.

-The indifference curves in the figure above (I1, I2 and I3) reflect Peter's consumption preferences. Peter prefers consuming _______ to consuming _______.

-Lizzie's preferences are shown in the figure above. Lizzie definitely prefers consuming _______ to consuming _______.

Which of the following statements is true?

-The indifference curves in the above figure could represent your indifference curves between

Samara's income is $30 a month and she spends all of it on music downloads and petrol. The price of a music download is $3 and the price of a litre of petrol is $3. At Samara's best affordable point, her marginal rate of substitution is _______ litre(s) of petrol per music download.

If an individual's income increases,

-The figure above illustrates Elijah's preferences. He is currently at point A. The price of pizza decreases. The move from point A to point _______ is the substitution effect and the move from point _______ to point _______ is the income effect.

If your marginal rate of substitution between two goods diminishes continuously as you give up one good for the other, that means the

In order to draw an individual's budget line, we must know

The marginal rate of substitution is equal to the _______.

When a consumer is consuming at a point where his or her budget line is not as steep as his or her indifference curve, then he or she should

Left shoes and right shoes are perfect complements. An indifference curve for left and right shoes is a line with

-The figure above gives your budget line for magazines and CDs per month. Given that your income equals $60 per month, what is the price of a magazine and the price of a CD?

An indifference curve shows combinations of goods _______.

In an indifference curve/budget line diagram, generally when the price of a good increases, the consumer purchases _______ of the good and moves to a _______ indifference curve.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Public Choices and Public Goods

Economics of the Environment

Monopoly and Its Regulation

Economic Inequality

Producer Choices and Constraints

Perfect Competition

Monopolistic Competition

Oligopoly Games and Strategy

Decisions in Factor Markets

Filters

-The indifference curves in the figure above (I₁, I₂ and I₃) reflect Peter's consumption preferences. If Peter consumes 24 slices of pizza and 24 chocolate bars per month, he is as satisfied as he would be consuming _ slices of pizza and _ chocolate bars per month.

-The indifference curves in the figure above (I₁, I₂ and I₃) reflect Peter's consumption preferences. Peter prefers consuming _ to consuming _.

-Lizzie's preferences are shown in the figure above. Lizzie definitely prefers consuming _ to consuming _.

-The figure above illustrates Elijah's preferences. He is currently at point A. The price of pizza decreases. The move from point A to point ___ is the substitution effect and the move from point _ to point _____ is the income effect.

In an indifference curve/budget line diagram, generally when the price of a good increases, the consumer purchases _ of the good and moves to a _ indifference curve.