Question 1

Figure 21-9
  
-Refer to Figure 21-9.If point B is the consumer's optimum and her income is $100,what is the price of a bag of chocolate chips

Accepted Answer

A) $4 
B) $5 
C) $8 
D) $10 
A) $4 
B) $5 
C) $8 
D) $10

Question 2

Using the graph shown,construct a demand curve for yogurt given an income of $10.

Accepted Answer

The answer of Using the graph shown,construct a demand curve...

Question 3

Figure 21-6
  
-Refer to Figure 21-6.Assume that the consumer depicted in the figure has an income of $20 to spend entirely on yogurt and granola bars.The price of a tub of yogurt is $2,and the price of a pack of granola bars is $2.This consumer will choose to optimize by consuming which bundle

Accepted Answer

A) bundle A 
B) bundle B 
C) bundle C 
D) bundle D 
A) bundle A 
B) bundle B 
C) bundle C 
D) bundle D

Question 4

Figure 21-3
  
-Refer to Figure 21-3.In graph (b),what is the price of good X relative to good Y (i.e.,PX/PY)

Accepted Answer

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

Question 5

A highly bowed inward set of indifference curves represents two goods which can be described as which of the following

Accepted Answer

A) easily substitutable 
B) strongly complementary 
C) weakly substitutable 
D) weakly complementary 
A) easily substitutable 
B) strongly complementary 
C) weakly substitutable 
D) weakly complementary

Question 6

Figure 21-1
  
-Refer to Figure 21-1.What point does NOT represent a possible consumption option

Accepted Answer

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

Question 7

What will a consumer buy if there is a shift outward in the budget constraint

Accepted Answer

A) less of normal goods and more of inferior goods 
B) more of normal goods and less of inferior goods 
C) more of both normal goods and inferior goods 
D) less of both normal goods and inferior goods 
A) less of normal goods and more of inferior goods 
B) more of normal goods and less of inferior goods 
C) more of both normal goods and inferior goods 
D) less of both normal goods and inferior goods

Question 8

Using indifference curves and budget constraints,graphically illustrate the substitution and income effects that would result from a change in the price of one good.

Accepted Answer

The answer of Using indifference curves and budget constraints,graphically illustrate...

Question 9

Figure 21-5
  
-Refer to Figure 21-5.What occurs at point C

Accepted Answer

A) MRSXY > PY/PX B) MRSXY = PX/PY C) MRSXY < PX/PY D) MRSXY < PY/PX A) MRSXY > PY/PX B) MRSXY = PX/PY C) MRSXY < PX/PY D) MRSXY < PY/PX

Question 10

Lucy wants to go on a special diet to lose weight. The diet requires 1 serving of protein and 10 servings of vegetables/fruits per meal. Lucy has a budget of $900 per month on food items.
a.  If the price for 1 serving of protein is $10 and 10 servings of vegetables/fruits is $20, how many meals will she buy?
b.  If the price for 1 serving of protein changes to $5 and 10 servings of vegetables/fruits is $20, how many meals will she buy? What is the income and substitution effect after the price change?

Accepted Answer

a.In this question,protein and vegetable

Question 11

Figure 21-3
  
-Refer to Figure 21-3.In graph (a),if income is equal to $180,what is the price of good Y

Accepted Answer

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

Question 12

What can we say about a consumption bundle selected by an optimizing consumer

Accepted Answer

A) Utility is maximized, and income is minimized. 
B) Utility is maximized, and prices are minimized. 
C) Utility is maximized subject to budget constraints. 
D) Utility is maximized, and indifference curves are linear. 
A) Utility is maximized, and income is minimized. 
B) Utility is maximized, and prices are minimized. 
C) Utility is maximized subject to budget constraints. 
D) Utility is maximized, and indifference curves are linear.

Question 13

Which characterization is NOT applicable to the slope of the budget constraint

Accepted Answer

A) It shows the relative price of two goods. 
B) It shows the rate at which a consumer can trade one good for another. 
C) It is equal to the slope of the highest indifference curve. 
D) It is constant. 
A) It shows the relative price of two goods. 
B) It shows the rate at which a consumer can trade one good for another. 
C) It is equal to the slope of the highest indifference curve. 
D) It is constant.

Question 14

What does the bowed shape of the indifference curve reflect about the consumer's willingness

Accepted Answer

A) It reflects his unwillingness to give up a good that he already has in large quantity. 
B) It reflects his unwillingness to purchase a good that he already has in large quantity. 
C) It reflects his greater willingness to give up a good that he already has in large quantity. 
D) It reflects his greater willingness to purchase a good that he already has in large quantity. 
A) It reflects his unwillingness to give up a good that he already has in large quantity. 
B) It reflects his unwillingness to purchase a good that he already has in large quantity. 
C) It reflects his greater willingness to give up a good that he already has in large quantity. 
D) It reflects his greater willingness to purchase a good that he already has in large quantity.

Question 15

For normal goods like cola and pizza,what is a likely result of the income effect when the price of pizza falls

Accepted Answer

A) The consumer feels richer, so he buys more cola. 
B) The consumer feels richer, so he buys less cola. 
C) Cola becomes relatively more expensive, so the consumer buys more cola. 
D) Cola becomes relatively less expensive, so the consumer buys less cola. 
A) The consumer feels richer, so he buys more cola. 
B) The consumer feels richer, so he buys less cola. 
C) Cola becomes relatively more expensive, so the consumer buys more cola. 
D) Cola becomes relatively less expensive, so the consumer buys less cola.

Question 16

If goods X and Y are perfect complements,and the price of good Y falls,what are changes in the amount of goods X and Y purchased due to

Accepted Answer

A) the substitution effect 
B) the income effect 
C) the cross-substitution effect 
D) the complement effect 
A) the substitution effect 
B) the income effect 
C) the cross-substitution effect 
D) the complement effect

Question 17

As one moves down a typical indifference curve,how does the marginal rate of substitution change

Accepted Answer

A) It increases. 
B) It decreases. 
C) It is constant. 
D) It switches from positive to negative. 
A) It increases. 
B) It decreases. 
C) It is constant. 
D) It switches from positive to negative.

Question 18

The substitution effect of a price change is the change in consumption that results from the movement to a different indifference curve.

Accepted Answer

A) True 
 B)False

Question 19

Figure 21-6
  
-Refer to Figure 21-6.Assume that the consumer depicted in the figure faces prices and income such that she optimizes at point B.According to the graph,what change forces the consumer to move to point A

Accepted Answer

A) a decrease in the price of yogurt 
B) a decrease in the price of granola bars 
C) an increase in the price of yogurt 
D) an increase in the price of granola bars 
A) a decrease in the price of yogurt 
B) a decrease in the price of granola bars 
C) an increase in the price of yogurt 
D) an increase in the price of granola bars

Question 20

What do economists studying the policy of taxation of interest and other capital income find

Accepted Answer

A) Theory and evidence support the reduction of taxation. 
B) Theory and evidence refute the reduction of taxation. 
C) There is no consensus in theory or research. 
D) The income and substitution effects dominate. 
A) Theory and evidence support the reduction of taxation. 
B) Theory and evidence refute the reduction of taxation. 
C) There is no consensus in theory or research. 
D) The income and substitution effects dominate.

Exam 21: The Theory of Consumer Choice

Figure 21-9 -Refer to Figure 21-9.If point B is the consumer's optimum and her income is $100,what is the price of a bag of chocolate chips

Using the graph shown,construct a demand curve for yogurt given an income of $10.

Figure 21-6 -Refer to Figure 21-6.Assume that the consumer depicted in the figure has an income of $20 to spend entirely on yogurt and granola bars.The price of a tub of yogurt is $2,and the price of a pack of granola bars is $2.This consumer will choose to optimize by consuming which bundle

Figure 21-3 -Refer to Figure 21-3.In graph (b),what is the price of good X relative to good Y (i.e.,PX/PY)

A highly bowed inward set of indifference curves represents two goods which can be described as which of the following

Figure 21-1 -Refer to Figure 21-1.What point does NOT represent a possible consumption option

What will a consumer buy if there is a shift outward in the budget constraint

Using indifference curves and budget constraints,graphically illustrate the substitution and income effects that would result from a change in the price of one good.

Figure 21-5 -Refer to Figure 21-5.What occurs at point C

Figure 21-3 -Refer to Figure 21-3.In graph (a),if income is equal to $180,what is the price of good Y

What can we say about a consumption bundle selected by an optimizing consumer

Which characterization is NOT applicable to the slope of the budget constraint

What does the bowed shape of the indifference curve reflect about the consumer's willingness

For normal goods like cola and pizza,what is a likely result of the income effect when the price of pizza falls

If goods X and Y are perfect complements,and the price of good Y falls,what are changes in the amount of goods X and Y purchased due to

As one moves down a typical indifference curve,how does the marginal rate of substitution change

The substitution effect of a price change is the change in consumption that results from the movement to a different indifference curve.

Figure 21-6 -Refer to Figure 21-6.Assume that the consumer depicted in the figure faces prices and income such that she optimizes at point B.According to the graph,what change forces the consumer to move to point A

What do economists studying the policy of taxation of interest and other capital income find

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