Question 1

A consumer buys food (F)and shelter (S).If the consumer's income rises and there is no change in the prices of F or S,the marginal rate of transformation of F for S will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  change, but there is not enough information to know how. 
A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  change, but there is not enough information to know how. C

Question 2

What is the intuition that an expansion of an individual's budget set represents a gain?

Accepted Answer

A)  More options are preferred to less. 
B)  Money is the root of all happiness. 
C)  Information is power. 
D)  Scarcity is avoidable with prosperity. 
A)  More options are preferred to less. 
B)  Money is the root of all happiness. 
C)  Information is power. 
D)  Scarcity is avoidable with prosperity. A

Question 3

If a consumer prefers apples to bananas and prefers bananas to citrus fruit,in order to satisfy assumptions about preferences she has to prefer

Accepted Answer

A)  bananas to apples. 
B)  citrus fruit to bananas. 
C)  apples to citrus fruit. 
D)  citrus fruit to apples. 
A)  bananas to apples. 
B)  citrus fruit to bananas. 
C)  apples to citrus fruit. 
D)  citrus fruit to apples. C

Question 4

In behavioral economics,the term salience refers to

Accepted Answer

A)  relevance to the problem being investigated. 
B)  people only consider information when it is conveyed in a subtle manner. 
C)  how an experiment is designed. 
D)  people consider information when it is presented in an "eye grabbing" manner. 
A)  relevance to the problem being investigated. 
B)  people only consider information when it is conveyed in a subtle manner. 
C)  how an experiment is designed. 
D)  people consider information when it is presented in an "eye grabbing" manner.

Question 5

The indifference curves for left shoes and right shoes would most likely be

Accepted Answer

A)  upward sloping and concave to the origin. 
B)  downward sloping and convex to the origin. 
C)  downward sloping and straight lines. 
D)  L-shaped. 
A)  upward sloping and concave to the origin. 
B)  downward sloping and convex to the origin. 
C)  downward sloping and straight lines. 
D)  L-shaped.

Question 6

What is the difference between ordinal and cardinal measurement?

Accepted Answer

Prices are measured in money,which is a

Question 7

In behavioral economics,the endowment effect refers to

Accepted Answer

A)  most people believe that most wealthy people inherit their wealth. 
B)  many people would be indifferent between being endowed with money or knowledge. 
C)  many people place a higher value on what they own than when they consider purchasing. 
D)  most people respond to tax incentives to provide an endowment for their children. 
A)  most people believe that most wealthy people inherit their wealth. 
B)  many people would be indifferent between being endowed with money or knowledge. 
C)  many people place a higher value on what they own than when they consider purchasing. 
D)  most people respond to tax incentives to provide an endowment for their children.

Question 8

An interior solution to a consumer's utility maximization problem implies

Accepted Answer

A)  consuming a positive amount of all goods. 
B)  consuming negative amounts of all goods. 
C)  consuming less than optimal amounts of all goods. 
D)  consuming more than an optimal amount of at least one good. 
A)  consuming a positive amount of all goods. 
B)  consuming negative amounts of all goods. 
C)  consuming less than optimal amounts of all goods. 
D)  consuming more than an optimal amount of at least one good.

Question 9

An increase in the price of a good causes

Accepted Answer

A)  a change in the slope of the budget line. 
B)  an increase in the consumption of that good. 
C)  a rightward shift of the demand curve for that good. 
D)  a parallel rightward shift of the budget line. 
A)  a change in the slope of the budget line. 
B)  an increase in the consumption of that good. 
C)  a rightward shift of the demand curve for that good. 
D)  a parallel rightward shift of the budget line.

Question 10

Indifference curves close to the origin are ________ those farther from the origin because of ________.

Accepted Answer

A)  better than; transitivity 
B)  worse than; nonsatiation 
C)  better than; completeness 
D)  worse than; transitivity 
A)  better than; transitivity 
B)  worse than; nonsatiation 
C)  better than; completeness 
D)  worse than; transitivity

Question 11

The marginal rate of transformation of y for x represents

Accepted Answer

A)  the slope of the budget constraint. 
B)  the rate at which the consumer must give up y to get one more x. 
C)    -/   . 
D)  All of the above. 
A)  the slope of the budget constraint. 
B)  the rate at which the consumer must give up y to get one more x. 
C)    -/   . 
D)  All of the above.

Question 12

As the price of a good rises,the consumer will experience

Accepted Answer

A)  a desire to consume a different bundle. 
B)  a decrease in utility. 
C)  a southern or western movement on the indifference map. 
D)  All of the above. 
A)  a desire to consume a different bundle. 
B)  a decrease in utility. 
C)  a southern or western movement on the indifference map. 
D)  All of the above.

Question 13

A consumer's willingness to trade one good for another can be expressed by the consumer's

Accepted Answer

A)  indifference curve. 
B)  marginal rate of substitution. 
C)  Both A and B above. 
D)  None of the above. 
A)  indifference curve. 
B)  marginal rate of substitution. 
C)  Both A and B above. 
D)  None of the above.

Question 14

Convexity of indifference curves implies that consumers are willing to

Accepted Answer

A)  give up more "y" to get an extra "x" the more "x" they have. 
B)  give up more "y" to get an extra "x" the less "x" they have. 
C)  settle for less of both "x" and "y." 
D)  acquire more "x" only if they do not have to give up any "y." 
A)  give up more "y" to get an extra "x" the more "x" they have. 
B)  give up more "y" to get an extra "x" the less "x" they have. 
C)  settle for less of both "x" and "y." 
D)  acquire more "x" only if they do not have to give up any "y."

Question 15

The principle that "More is better" results in indifference curves

Accepted Answer

A)  sloping down. 
B)  not intersecting. 
C)  reflecting greater preferences the further they are from the origin. 
D)  All of the above. 
A)  sloping down. 
B)  not intersecting. 
C)  reflecting greater preferences the further they are from the origin. 
D)  All of the above.

Question 16

An indifference curve represents bundles of goods that a consumer

Accepted Answer

A)  views as equally desirable. 
B)  ranks from most preferred to least preferred. 
C)  refers to any other bundle of goods. 
D)  All of the above. 
A)  views as equally desirable. 
B)  ranks from most preferred to least preferred. 
C)  refers to any other bundle of goods. 
D)  All of the above.

Question 17

Lisa eats both pizzas and burritos.If the price of a pizza increases,Lisa's opportunity set

Accepted Answer

A)  becomes larger. 
B)  becomes smaller. 
C)  is unchanged. 
D)  cannot be determined without more information. 
A)  becomes larger. 
B)  becomes smaller. 
C)  is unchanged. 
D)  cannot be determined without more information.

Question 18

The assumption of completeness means that

Accepted Answer

A)  the consumer can rank all possible consumption bundles. 
B)  more of a good is always better. 
C)  the consumers can rank all affordable consumption bundles. 
D)  all preferences conditions are met. 
A)  the consumer can rank all possible consumption bundles. 
B)  more of a good is always better. 
C)  the consumers can rank all affordable consumption bundles. 
D)  all preferences conditions are met.

Question 19

If more is better,how can you explain that more pollution doesn't violate this principle?

Accepted Answer

When dealing with a "bad," we recast it

Question 20

The consumer is in equilibrium when

Accepted Answer

A)  MRT = MRS. 
B)    
C)  the budget line is tangent to the indifference curve at the bundle chosen. 
D)  All of the above. 
A)  MRT = MRS. 
B)    
C)  the budget line is tangent to the indifference curve at the bundle chosen. 
D)  All of the above.

A consumer buys food (F)and shelter (S).If the consumer's income rises and there is no change in the prices of F or S,the marginal rate of transformation of F for S will

What is the intuition that an expansion of an individual's budget set represents a gain?

If a consumer prefers apples to bananas and prefers bananas to citrus fruit,in order to satisfy assumptions about preferences she has to prefer

In behavioral economics,the term salience refers to

The indifference curves for left shoes and right shoes would most likely be

What is the difference between ordinal and cardinal measurement?

In behavioral economics,the endowment effect refers to

An interior solution to a consumer's utility maximization problem implies

An increase in the price of a good causes

Indifference curves close to the origin are those farther from the origin because of .

The marginal rate of transformation of y for x represents

As the price of a good rises,the consumer will experience

A consumer's willingness to trade one good for another can be expressed by the consumer's

Convexity of indifference curves implies that consumers are willing to

The principle that "More is better" results in indifference curves

An indifference curve represents bundles of goods that a consumer

Lisa eats both pizzas and burritos.If the price of a pizza increases,Lisa's opportunity set

The assumption of completeness means that

If more is better,how can you explain that more pollution doesn't violate this principle?

The consumer is in equilibrium when

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 4: Consumer Choice

A consumer buys food (F)and shelter (S).If the consumer's income rises and there is no change in the prices of F or S,the marginal rate of transformation of F for S will

What is the intuition that an expansion of an individual's budget set represents a gain?

If a consumer prefers apples to bananas and prefers bananas to citrus fruit,in order to satisfy assumptions about preferences she has to prefer

In behavioral economics,the term salience refers to

The indifference curves for left shoes and right shoes would most likely be

What is the difference between ordinal and cardinal measurement?

In behavioral economics,the endowment effect refers to

An interior solution to a consumer's utility maximization problem implies

An increase in the price of a good causes

Indifference curves close to the origin are ________ those farther from the origin because of ________.

The marginal rate of transformation of y for x represents

As the price of a good rises,the consumer will experience

A consumer's willingness to trade one good for another can be expressed by the consumer's

Convexity of indifference curves implies that consumers are willing to

The principle that "More is better" results in indifference curves

An indifference curve represents bundles of goods that a consumer

Lisa eats both pizzas and burritos.If the price of a pizza increases,Lisa's opportunity set

The assumption of completeness means that

If more is better,how can you explain that more pollution doesn't violate this principle?

The consumer is in equilibrium when

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Indifference curves close to the origin are those farther from the origin because of .