Question 1

Figure 21-1
  
-Refer to Figure 21-1.At what point in the figure is a consumer choosing to spend less than her total income

Accepted Answer

A) point B 
B) point C 
C) point D 
D) point E 
A) point B 
B) point C 
C) point D 
D) point E

Question 2

Figure 21-3
  
-Refer to Figure 21-3.Assume that a consumer faces both budget constraints in graph (a) and graph (b) on two different occasions.If her income has remained constant,what has happened to prices

Accepted Answer

A) The price of X in graph (a) is higher than the price of X in graph (b). 
B) The price of Y in graph (a) is higher than the price of Y in graph (b). 
C) The prices of both X and Y are lower in graph (a). 
D) The prices of both X and Y are lower in graph (b). 
A) The price of X in graph (a) is higher than the price of X in graph (b). 
B) The price of Y in graph (a) is higher than the price of Y in graph (b). 
C) The prices of both X and Y are lower in graph (a). 
D) The prices of both X and Y are lower in graph (b).

Question 3

Explain the difference between inferior and normal goods.As a developing economy experiences increases in income (measured by GDP),what would you predict to happen to demand for inferior goods

Accepted Answer

Normal goods are those in which consumpt

Question 4

Given a consumer's indifference map,how may the demand curve for a good be derived

Accepted Answer

A) by moving a consumer's budget constraint as her income increases 
B) by moving a consumer's budget constraint as her income decreases 
C) by moving a consumer's budget constraint as the market price increases 
D) by moving a consumer's budget constraint as the market supply increases 
A) by moving a consumer's budget constraint as her income increases 
B) by moving a consumer's budget constraint as her income decreases 
C) by moving a consumer's budget constraint as the market price increases 
D) by moving a consumer's budget constraint as the market supply increases

Question 5

Table 21-1
The relationship between the marginal utility that George gets from eating a bag of cookies and the number of bags he eats per month is as follows:

-Refer to Table 21-1.George consumes two goods,milk and cookies.He has maximized his utility given his income.Milk costs $2 per litre and he consumes it to the point where the marginal utility he receives from milk is 8.Cookies cost $5 per bag.How many bags of cookies does George buy each month

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 6

Figure 21-8
  
-Refer to Figure 21-8.Assume that the consumer depicted has an income of $50.Which price-quantity combination would be on her demand curve for marshmallows if the price of a bag of chocolate chips is $5

Accepted Answer

A) $2.50, 4 
B) $2.50, 10 
C) $5.00, 4 
D) $5.00, 10 
A) $2.50, 4 
B) $2.50, 10 
C) $5.00, 4 
D) $5.00, 10

Question 7

Assume that a person consumes two goods,coffee and candy bars.Use a graph to demonstrate how the consumer adjusts his/her optimal consumption bundle when the price of coffee decreases.Carefully label all curves and axes.What will happen to consumption if coffee is a normal good
 What will happen to consumption if coffee is an inferior good
 (Remember to explain the possible change when the income effect dominates and when the substitution effect dominates.)

Accepted Answer

If coffee is a normal good,the consumpti

Question 8

Draw indifference curves that reflect the following:
a.pencils with white erasers and pencils with pink erasers
b.left shoes and right shoes
c.potatoes and rice
d.income and polluted water

Accepted Answer

The answer of Draw indifference curves that reflect the following:
a.pencils...

Question 9

What is the substitution effect from an increase in wages evident in

Accepted Answer

A) a decrease in labour demand 
B) a desire to consume less leisure 
C) a desire to consume more leisure 
D) a backward-bending labour supply curve 
A) a decrease in labour demand 
B) a desire to consume less leisure 
C) a desire to consume more leisure 
D) a backward-bending labour supply curve

Question 10

In which way will an increase in income cause a consumer's budget constraint to change

Accepted Answer

A) It will shift outward, parallel to its initial position. 
B) It will shift inward, parallel to its initial position. 
C) It will pivot around the "Y" axis. 
D) It will pivot around the "X" axis. 
A) It will shift outward, parallel to its initial position. 
B) It will shift inward, parallel to its initial position. 
C) It will pivot around the "Y" axis. 
D) It will pivot around the "X" axis.

Question 11

When leisure is a normal good,what is the income effect from an increase in wages evident in

Accepted Answer

A) a desire to consume more leisure 
B) a desire to consume less leisure 
C) an upward-sloping labour supply curve 
D) a shift in labour demand 
A) a desire to consume more leisure 
B) a desire to consume less leisure 
C) an upward-sloping labour supply curve 
D) a shift in labour demand

Figure 21-1 -Refer to Figure 21-1.At what point in the figure is a consumer choosing to spend less than her total income

Figure 21-3 -Refer to Figure 21-3.Assume that a consumer faces both budget constraints in graph (a) and graph (b) on two different occasions.If her income has remained constant,what has happened to prices

Explain the difference between inferior and normal goods.As a developing economy experiences increases in income (measured by GDP),what would you predict to happen to demand for inferior goods

Given a consumer's indifference map,how may the demand curve for a good be derived

Figure 21-8 -Refer to Figure 21-8.Assume that the consumer depicted has an income of $50.Which price-quantity combination would be on her demand curve for marshmallows if the price of a bag of chocolate chips is $5

Draw indifference curves that reflect the following: a.pencils with white erasers and pencils with pink erasers b.left shoes and right shoes c.potatoes and rice d.income and polluted water

What is the substitution effect from an increase in wages evident in

In which way will an increase in income cause a consumer's budget constraint to change

When leisure is a normal good,what is the income effect from an increase in wages evident in

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 of Microeconomics

Filters

Exam 21: The Theory of Consumer Choice

Figure 21-1 -Refer to Figure 21-1.At what point in the figure is a consumer choosing to spend less than her total income

Figure 21-3 -Refer to Figure 21-3.Assume that a consumer faces both budget constraints in graph (a) and graph (b) on two different occasions.If her income has remained constant,what has happened to prices

Explain the difference between inferior and normal goods.As a developing economy experiences increases in income (measured by GDP),what would you predict to happen to demand for inferior goods

Given a consumer's indifference map,how may the demand curve for a good be derived

Figure 21-8 -Refer to Figure 21-8.Assume that the consumer depicted has an income of $50.Which price-quantity combination would be on her demand curve for marshmallows if the price of a bag of chocolate chips is $5

Draw indifference curves that reflect the following: a.pencils with white erasers and pencils with pink erasers b.left shoes and right shoes c.potatoes and rice d.income and polluted water

What is the substitution effect from an increase in wages evident in

In which way will an increase in income cause a consumer's budget constraint to change

When leisure is a normal good,what is the income effect from an increase in wages evident in

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 of Microeconomics

Filters