Question 1

If the price of good X rises and X is a normal good, then

Accepted Answer

A)  the income effect will induce the consumer to demand less of X and the substitution effect will induce him to demand more. 
B)  the income effect will induce the consumer to demand more of X and the substitution effect will induce him to demand less. 
C)  the income and substitution effects will both induce the consumer to demand more of X. 
D)  the income and substitution effects will both induce the consumer to demand less of X. 
A)  the income effect will induce the consumer to demand less of X and the substitution effect will induce him to demand more. 
B)  the income effect will induce the consumer to demand more of X and the substitution effect will induce him to demand less. 
C)  the income and substitution effects will both induce the consumer to demand more of X. 
D)  the income and substitution effects will both induce the consumer to demand less of X. D

Question 2

Use the following graph showing two budget lines, LR and LZ to answer the following questions. The consumer's income is $720.
  
-For budget line LR the price of Y is $______ and the price of X is $______. The equation for budget line LR is ________________________.

Accepted Answer

$12; $18; Y= 60- 3/2X

Question 3

F A. The rate at which a consumer is able to substitute one good for another is determined by the ______. The rate at which a consumer is willing to substitute one good for another is given by the ______.
B.	If a consumer is choosing a bundle of goods that maximizes utility subject to a budget constraint the ratio of ______ to ______ is the same for every good and the ______ equals the ______ ratio for every pair of goods.
C.	A consumer's demand curve for a good shows the ______ choice of the good at each ______.

Accepted Answer

A. price ratio; MRS
B. marginal utility; price; MRS; price
C. utility maximizing; price

Question 4

refer to the following figure:
   The consumer's income is $2,600.
-The substitution effect of the increase in the price of X is (approximately)

Accepted Answer

A)  X rises 20 units. 
B)  X falls 40 units. 
C)  X falls 130 units. 
D)  X falls 16 units. 
E)  X rises 40 units. 
A)  X rises 20 units. 
B)  X falls 40 units. 
C)  X falls 130 units. 
D)  X falls 16 units. 
E)  X rises 40 units.

Question 5

Fill-in-the-Blank
-The rate at which a consumer is willing to substitute one good for another, holding utility constant, is given by the ____________ of an indifference curve. This rate is called the _________________________________.

Accepted Answer

slope; mar

Question 6

The following questions refer to the following graph of a consumer's indifference curve.
  
-What is the consumer's marginal rate of substitution between points A and C? ______. Moving between these points, the consumer is willing to give up ______ units of Y for another X or ______ units of X for another Y.

Accepted Answer

The answer of The following questions refer to the following...

Question 7

refer to the following graphs:

The price of Y is $15 per unit.
-What

Accepted Answer

A)  12 
B)  15 
C)  20 
D)  25 
E)  none of the above 
A)  12 
B)  15 
C)  20 
D)  25 
E)  none of the above

Question 8

If the price of a good decreases, the income effect

Accepted Answer

A)  reinforces the substitution effect if the good is inferior. 
B)  offsets the substitution effect if the good is normal. 
C)  shows the change in the quantity demanded of the good, income held constant. 
D)  a and b 
E)  none of the above 
A)  reinforces the substitution effect if the good is inferior. 
B)  offsets the substitution effect if the good is normal. 
C)  shows the change in the quantity demanded of the good, income held constant. 
D)  a and b 
E)  none of the above

Question 9

The following questions refer to the following graph of a consumer's indifference curve.
  
-What is the consumer's marginal rate of substitution between points C and B? ______. Moving between these points the consumer is willing to give up ______ units of Y for another X or ______ units of X for another Y.

Accepted Answer

The answer of The following questions refer to the following...

Question 10

refer to the following graph:
 
-The consumer's demand curve for X is

Accepted Answer

A)  D1. 
B)  D2. 
C)  D3. 
D)  D4. 
A)  D1. 
B)  D2. 
C)  D3. 
D)  D4.

Question 11

Fill-in-the-Blank
-If a consumer is choosing the levels of goods X and Y in order to maximize utility with a given budget the _________ equals the ____________ ratio of the goods.

Accepted Answer

The answer of Fill-in-the-Blank
-If a consumer is choosing the levels...

Question 12

The Giffen Paradox results whenever

Accepted Answer

A)  the substitution effect is positive. 
B)  the substitution effect is negative. 
C)  the income effect is positive. 
D)  the income effect is negative. 
E)  none of the above 
A)  the substitution effect is positive. 
B)  the substitution effect is negative. 
C)  the income effect is positive. 
D)  the income effect is negative. 
E)  none of the above

Question 13

An individual's demand curve for X

Accepted Answer

A)  shows that the income effect is always negative. 
B)  depends on how the individual's utility-maximizing choices change when the price of X changes. 
C)  depends on how the individual's money income changes when the price of X changes. 
D)  depends on how the individual's preferences change when the price of X changes. 
E)  both a and c 
A)  shows that the income effect is always negative. 
B)  depends on how the individual's utility-maximizing choices change when the price of X changes. 
C)  depends on how the individual's money income changes when the price of X changes. 
D)  depends on how the individual's preferences change when the price of X changes. 
E)  both a and c

Question 14

The following figure shows a portion of a consumer's indifference map and budget lines. The price of good Y is $7 and the consumer's income is $700.
   Let the consumer begin in utility maximizing equilibrium at point A on indifference curve I. Next the price of good X changes so that the consumer moves to a new utility maximizing equilibrium at point B on indifference curve II.
-Two points on this consumer's demand for good X are PX = $______ and X = ______; and PX = $______ and X = ______.

Accepted Answer

Question 15

A. Demand curves slope downward because the __________________ effect of a price change is negative and dominates the _____________________ effect, which can be either positive or negative. Thus the ______ effect is negative.
B.	Market demand is the _____________ summation of the ______________ of all the consumers in the market.

Accepted Answer

A. substitution; inc

Question 16

refer to the following figure that shows the effect of an INCREASE in the price of X.
  
-The substitution effect of the price change is the change in the consumption of X from

Accepted Answer

A)  5 to 3. 
B)  6 to 3. 
C)  6 to 5. 
D)  6 to 8. 
E)  none of the above 
A)  5 to 3. 
B)  6 to 3. 
C)  6 to 5. 
D)  6 to 8. 
E)  none of the above

Question 17

The marginal rate of substitution of X for Y is 3, the price of X is $4, and the price of Y is $2.
-The consumer is willing to give up ______ units of Y to obtain another X. The consumer is willing to give up ______ units of X to obtain another Y.

Accepted Answer

The answer of The marginal rate of substitution of X...

Question 18

refer to the following figure that shows the effect of an INCREASE in the price of X.
  
-Good X is

Accepted Answer

A)  normal. 
B)  inferior. 
C)  a Giffen good. 
D)  both b and c 
A)  normal. 
B)  inferior. 
C)  a Giffen good. 
D)  both b and c

Question 19

The following figure shows a portion of a consumer's indifference map and budget lines. The price of good Y is $7 and the consumer's income is $700.
   Let the consumer begin in utility maximizing equilibrium at point A on indifference curve I. Next the price of good X changes so that the consumer moves to a new utility maximizing equilibrium at point B on indifference curve II.
-The substitution effect of the change in the price of X is ______; the income effect is ______; the total effect is ______.

Accepted Answer

The answer of The following figure shows a portion of...

Question 20

Fill-in-the-Blank
-If at a given combination of X and Y, a consumer's marginal rate of substitution is 4, this means that the consumer is willing to give up ______ units of Y for another X or ______ units of X for another Y.

Accepted Answer

The answer of Fill-in-the-Blank
-If at a given combination of X...

If the price of good X rises and X is a normal good, then

Use the following graph showing two budget lines, LR and LZ to answer the following questions. The consumer's income is $720. -For budget line LR the price of Y is $ and the price of X is $. The equation for budget line LR is ____________________.

refer to the following figure: The consumer's income is $2,600. -The substitution effect of the increase in the price of X is (approximately)

Fill-in-the-Blank -The rate at which a consumer is willing to substitute one good for another, holding utility constant, is given by the of an indifference curve. This rate is called the _____________________.

The following questions refer to the following graph of a consumer's indifference curve. -What is the consumer's marginal rate of substitution between points A and C? . Moving between these points, the consumer is willing to give up units of Y for another X or __ units of X for another Y.

refer to the following graphs: The price of Y is $15 per unit. -What is

If the price of a good decreases, the income effect

The following questions refer to the following graph of a consumer's indifference curve. -What is the consumer's marginal rate of substitution between points C and B? . Moving between these points the consumer is willing to give up units of Y for another X or __ units of X for another Y.

refer to the following graph: -The consumer's demand curve for X is

Fill-in-the-Blank -If a consumer is choosing the levels of goods X and Y in order to maximize utility with a given budget the _ equals the ____ ratio of the goods.

The Giffen Paradox results whenever

An individual's demand curve for X

A. Demand curves slope downward because the ______ effect of a price change is negative and dominates the _ effect, which can be either positive or negative. Thus the effect is negative. B. Market demand is the _ summation of the ________ of all the consumers in the market.

refer to the following figure that shows the effect of an INCREASE in the price of X. -The substitution effect of the price change is the change in the consumption of X from

The marginal rate of substitution of X for Y is 3, the price of X is $4, and the price of Y is $2. -The consumer is willing to give up units of Y to obtain another X. The consumer is willing to give up units of X to obtain another Y.

refer to the following figure that shows the effect of an INCREASE in the price of X. -Good X is

Fill-in-the-Blank -If at a given combination of X and Y, a consumer's marginal rate of substitution is 4, this means that the consumer is willing to give up units of Y for another X or units of X for another Y.

Managers, Profits, and Markets

Demand, Supply, and Market Equilibrium

Marginal Analysis for Optimal Decision Making

Basic Estimation Techniques

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Techniques for Profit Maximization

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters

Exam 5: Theory of Consumer Behavior

If the price of good X rises and X is a normal good, then

Use the following graph showing two budget lines, LR and LZ to answer the following questions. The consumer's income is $720. -For budget line LR the price of Y is $______ and the price of X is $______. The equation for budget line LR is ________________________.

refer to the following figure: The consumer's income is $2,600. -The substitution effect of the increase in the price of X is (approximately)

Fill-in-the-Blank -The rate at which a consumer is willing to substitute one good for another, holding utility constant, is given by the ____________ of an indifference curve. This rate is called the _________________________________.

refer to the following graphs: The price of Y is $15 per unit. -What is

If the price of a good decreases, the income effect

refer to the following graph: -The consumer's demand curve for X is

Fill-in-the-Blank -If a consumer is choosing the levels of goods X and Y in order to maximize utility with a given budget the _________ equals the ____________ ratio of the goods.

The Giffen Paradox results whenever

An individual's demand curve for X

refer to the following figure that shows the effect of an INCREASE in the price of X. -The substitution effect of the price change is the change in the consumption of X from

The marginal rate of substitution of X for Y is 3, the price of X is $4, and the price of Y is $2. -The consumer is willing to give up ______ units of Y to obtain another X. The consumer is willing to give up ______ units of X to obtain another Y.

refer to the following figure that shows the effect of an INCREASE in the price of X. -Good X is

Fill-in-the-Blank -If at a given combination of X and Y, a consumer's marginal rate of substitution is 4, this means that the consumer is willing to give up ______ units of Y for another X or ______ units of X for another Y.

Managers, Profits, and Markets

Demand, Supply, and Market Equilibrium

Marginal Analysis for Optimal Decision Making

Basic Estimation Techniques

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Techniques for Profit Maximization

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters

Use the following graph showing two budget lines, LR and LZ to answer the following questions. The consumer's income is $720. -For budget line LR the price of Y is $ and the price of X is $. The equation for budget line LR is ____________________.

Fill-in-the-Blank -The rate at which a consumer is willing to substitute one good for another, holding utility constant, is given by the of an indifference curve. This rate is called the _____________________.

Fill-in-the-Blank -If a consumer is choosing the levels of goods X and Y in order to maximize utility with a given budget the _ equals the ____ ratio of the goods.

The marginal rate of substitution of X for Y is 3, the price of X is $4, and the price of Y is $2. -The consumer is willing to give up units of Y to obtain another X. The consumer is willing to give up units of X to obtain another Y.

Fill-in-the-Blank -If at a given combination of X and Y, a consumer's marginal rate of substitution is 4, this means that the consumer is willing to give up units of Y for another X or units of X for another Y.