Question 1

If an indifference map for a consumer is made up of straight, negatively- sloped lines, the goods are

Accepted Answer

A)  perfect substitutes. 
B)  perfect complements. 
C)  not desirable. 
D)  unrelated. 
A)  perfect substitutes. 
B)  perfect complements. 
C)  not desirable. 
D)  unrelated.

Question 2

-Consider the budget line in the above figure. If the consumer's income is $120, then the price of a book is

Accepted Answer

A)  $12 per book. 
B)  $6 per book. 
C)  $10 per book. 
D)  More information is needed to determine the price of a book. 
A)  $12 per book. 
B)  $6 per book. 
C)  $10 per book. 
D)  More information is needed to determine the price of a book.

Question 3

The point where the indifference curve is tangent to the budget line

Accepted Answer

A)  is a point on a consumer's demand curve. 
B)  is the best affordable point. 
C)  is where the marginal rate of substitution exceeds the relative price by as much as possible. 
D)  All of the above answers are correct. 
A)  is a point on a consumer's demand curve. 
B)  is the best affordable point. 
C)  is where the marginal rate of substitution exceeds the relative price by as much as possible. 
D)  All of the above answers are correct.

Question 4

If an indifference curve is a straight line it will not show which of the following?

Accepted Answer

A)  Any marginal rate of substitution 
B)  Combinations of goods among which a consumer is indifferent 
C)  The diminishing marginal rate of substitution 
D)  None of the above answers is correct. 
A)  Any marginal rate of substitution 
B)  Combinations of goods among which a consumer is indifferent 
C)  The diminishing marginal rate of substitution 
D)  None of the above answers is correct.

Question 5

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

Accepted Answer

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

Question 6

Preferences depend on

Accepted Answer

A)  relative prices but not income. 
B)  income but not relative prices. 
C)  neither relative prices nor income. 
D)  both relative prices and income. 
A)  relative prices but not income. 
B)  income but not relative prices. 
C)  neither relative prices nor income. 
D)  both relative prices and income.

Question 7

The income effect for an inferior good

Accepted Answer

A)  is negative. 
B)  is positive. 
C)  is zero. 
D)  could be negative, zero or positive. 
A)  is negative. 
B)  is positive. 
C)  is zero. 
D)  could be negative, zero or positive.

Question 8

-In the above figure, the budget line would rotate in the direction indicated as a result of a

Accepted Answer

A)  decrease in income. 
B)  rise in the price of a movie. 
C)  fall in the price of a movie. 
D)  rise in the price of a book. 
A)  decrease in income. 
B)  rise in the price of a movie. 
C)  fall in the price of a movie. 
D)  rise in the price of a book.

Question 9

Larry spends all his $800 monthly income on pizza and petrol. The price of pizza is $4 a slice, and the price of petrol is $2 per litre. If Larry buys 150 slices of pizza per month, his budget constraint will allow him to buy _______ litres of petrol per month.

Accepted Answer

A)  100 
B)  120 
C)  80 
D)  200 
A)  100 
B)  120 
C)  80 
D)  200

Question 10

-In the figure above, suppose the original budget line is BD. A fall in the price of a compact disc will

Accepted Answer

A)  result in a parallel leftward shift of the budget line. 
B)  not move the budget line. 
C)  rotate the budget line to CD. 
D)  rotate the budget line to AD. 
A)  result in a parallel leftward shift of the budget line. 
B)  not move the budget line. 
C)  rotate the budget line to CD. 
D)  rotate the budget line to AD.

Question 11

-The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if the price of a lobster dinner falls?

Accepted Answer

A)  It would rotate outward, pivoting around the vertical intercept 10 lobster dinners. 
B)  It would rotate outward, pivoting around the horizontal intercept 20 steak dinners. 
C)  It would rotate inward, pivoting around the horizontal intercept 20 steak dinners. 
D)  It would rotate inward, pivoting around the vertical intercept 10 lobster dinners. 
A)  It would rotate outward, pivoting around the vertical intercept 10 lobster dinners. 
B)  It would rotate outward, pivoting around the horizontal intercept 20 steak dinners. 
C)  It would rotate inward, pivoting around the horizontal intercept 20 steak dinners. 
D)  It would rotate inward, pivoting around the vertical intercept 10 lobster dinners.

Question 12

Julie's demand curve for video downloads is downward- sloping because as the price of a download decreases, _______ and she watches _______ videos.

Accepted Answer

A)  her budget line shifts inward; fewer 
B)  the slope of her budget line changes; more 
C)  the slope of her budget line changes; fewer 
D)  her budget line shifts outward; more 
A)  her budget line shifts inward; fewer 
B)  the slope of her budget line changes; more 
C)  the slope of her budget line changes; fewer 
D)  her budget line shifts outward; more

Question 13

If Sam has $80.00 each week to spend on tacos and magazines, and their respective prices are $.50 per taco and $4.00 per magazine, which of the following equations represents his budget line?

Accepted Answer

A)  $80.00 = $0.50(Qt) + $4.00(Qm) 
B)  $80.00 = Qt/Qm + $0.50 /$4.00 
C)  $80.00 = $0.50(Qm) + $4.00(Qt) 
D)  $80.00 = $0.50/Qt + $4.00/Qm 
A)  $80.00 = $0.50(Qt) + $4.00(Qm) 
B)  $80.00 = Qt/Qm + $0.50 /$4.00 
C)  $80.00 = $0.50(Qm) + $4.00(Qt) 
D)  $80.00 = $0.50/Qt + $4.00/Qm

Question 14

Goods that can be bought in any quantity desired are called

Accepted Answer

A)  invisible goods. 
B)  divisible goods. 
C)  inferior goods. 
D)  indivisible goods. 
A)  invisible goods. 
B)  divisible goods. 
C)  inferior goods. 
D)  indivisible goods.

Question 15

If all prices rise by 5 per cent and money income remains constant, the new budget line will have

Accepted Answer

A)  the same slope. 
B)  a steeper slope. 
C)  a flatter slope. 
D)  a positive slope. 
A)  the same slope. 
B)  a steeper slope. 
C)  a flatter slope. 
D)  a positive slope.

Question 16

-In the above figure, Mark's monthly budget line for movies and plays changed, as shown by the arrow. Responding to this change, Mark probably will see

Accepted Answer

A)  more movies and more plays. 
B)  fewer movies and fewer plays. 
C)  fewer movies and more plays. 
D)  more movies and fewer plays. 
A)  more movies and more plays. 
B)  fewer movies and fewer plays. 
C)  fewer movies and more plays. 
D)  more movies and fewer plays.

Question 17

Joe has $50 to spend on pizza and movies. If movies are $5 each and a pizza is $10 then, assuming he spends all his money, he can buy which of the following bundle of goods?

Accepted Answer

A)  6 movies and 4 pizzas 
B)  2 movies and 6 pizzas 
C)  6 movies and 2 pizzas 
D)  8 movies and 4 pizzas 
A)  6 movies and 4 pizzas 
B)  2 movies and 6 pizzas 
C)  6 movies and 2 pizzas 
D)  8 movies and 4 pizzas

Question 18

-In the above figure, Brendan originally consumes at point A. If his income falls 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)  G. 
D)  F. 
A)  E. 
B)  B. 
C)  G. 
D)  F.

Question 19

Real income can be measured by

Accepted Answer

A)  an intercept of the budget line. 
B)  the slope of the budget line. 
C)  the area under the budget line. 
D)  the length of the budget line. 
A)  an intercept of the budget line. 
B)  the slope of the budget line. 
C)  the area under the budget line. 
D)  the length of the budget line.

Question 20

Which of the following will change the slopes of your indifference curves between petrol and movie rentals?

Accepted Answer

A)  Only a change in the price of either of the two goods. 
B)  A change in your preferences for either of the two goods. 
C)  Only a change in your income. 
D)  Both a change in the price of either good and a change in income will change the slopes of your indifference curves. 
A)  Only a change in the price of either of the two goods. 
B)  A change in your preferences for either of the two goods. 
C)  Only a change in your income. 
D)  Both a change in the price of either good and a change in income will change the slopes of your indifference curves.

If an indifference map for a consumer is made up of straight, negatively- sloped lines, the goods are

-Consider the budget line in the above figure. If the consumer's income is $120, then the price of a book is

The point where the indifference curve is tangent to the budget line

If an indifference curve is a straight line it will not show which of the following?

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

Preferences depend on

The income effect for an inferior good

-In the above figure, the budget line would rotate in the direction indicated as a result of a

Larry spends all his $800 monthly income on pizza and petrol. The price of pizza is $4 a slice, and the price of petrol is $2 per litre. If Larry buys 150 slices of pizza per month, his budget constraint will allow him to buy _______ litres of petrol per month.

-In the figure above, suppose the original budget line is BD. A fall in the price of a compact disc will

-The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if the price of a lobster dinner falls?

Julie's demand curve for video downloads is downward- sloping because as the price of a download decreases, _ and she watches _ videos.

If Sam has $80.00 each week to spend on tacos and magazines, and their respective prices are $.50 per taco and $4.00 per magazine, which of the following equations represents his budget line?

Goods that can be bought in any quantity desired are called

If all prices rise by 5 per cent and money income remains constant, the new budget line will have

-In the above figure, Mark's monthly budget line for movies and plays changed, as shown by the arrow. Responding to this change, Mark probably will see

Joe has $50 to spend on pizza and movies. If movies are $5 each and a pizza is $10 then, assuming he spends all his money, he can buy which of the following bundle of goods?

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

Real income can be measured by

Which of the following will change the slopes of your indifference curves between petrol and movie rentals?

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

If an indifference map for a consumer is made up of straight, negatively- sloped lines, the goods are

-Consider the budget line in the above figure. If the consumer's income is $120, then the price of a book is

The point where the indifference curve is tangent to the budget line

If an indifference curve is a straight line it will not show which of the following?

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

Preferences depend on

The income effect for an inferior good

-In the above figure, the budget line would rotate in the direction indicated as a result of a

Larry spends all his $800 monthly income on pizza and petrol. The price of pizza is $4 a slice, and the price of petrol is $2 per litre. If Larry buys 150 slices of pizza per month, his budget constraint will allow him to buy _______ litres of petrol per month.

-In the figure above, suppose the original budget line is BD. A fall in the price of a compact disc will

-The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if the price of a lobster dinner falls?

Julie's demand curve for video downloads is downward- sloping because as the price of a download decreases, _______ and she watches _______ videos.

If Sam has $80.00 each week to spend on tacos and magazines, and their respective prices are $.50 per taco and $4.00 per magazine, which of the following equations represents his budget line?

Goods that can be bought in any quantity desired are called

If all prices rise by 5 per cent and money income remains constant, the new budget line will have

-In the above figure, Mark's monthly budget line for movies and plays changed, as shown by the arrow. Responding to this change, Mark probably will see

Joe has $50 to spend on pizza and movies. If movies are $5 each and a pizza is $10 then, assuming he spends all his money, he can buy which of the following bundle of goods?

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

Real income can be measured by

Which of the following will change the slopes of your indifference curves between petrol and movie rentals?

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

Julie's demand curve for video downloads is downward- sloping because as the price of a download decreases, _ and she watches _ videos.