Question 1

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 2

Adrian's total utilities of two consumption bundles are 50 and 100.This implies that

Accepted Answer

A)  the consumer prefers the first bundle. 
B)  the consumer prefers the second bundle. 
C)  the consumer likes the second bundle twice as much. 
D)  the consumer likes the first bundle twice as much. 
A)  the consumer prefers the first bundle. 
B)  the consumer prefers the second bundle. 
C)  the consumer likes the second bundle twice as much. 
D)  the consumer likes the first bundle twice as much. B

Question 3

For the following, please answer "True" or "False" and explain why.
-If MRS > MRT,then the consumer is better off than at equilibrium.

Accepted Answer

A) True 
 B)False  False

Question 4

Consider Jen,a consumer with preferences U(H,F)= F¹/³H²/³,where H is the quantity of housing and F is the quantity of food (per month).Suppose Jen has a stipend of $600/month which she uses to purchase food at a price of $1/unit and housing at a price of $10/unit.
a.Compute Jen's utility-maximizing bundle of goods.
b.Suppose that Jen's employer subsidizes housing by paying 50% of her total housing costs,thereby effectively lowering the price Jen pays for housing to $5/unit.Compute Jen's new optimal consumption bundle.
c.How much does Jen's employer pay in total for this subsidy? How much utility does Jen enjoy with this subsidy (compute her utility at the optimal bundle).
d.Suppose that her employer simply gave Jen the dollar cost you found in (c)as a lump sum (instead of subsidizing housing).Will Jen gain a higher utility from the housing subsidy or the lump-sum equivalent transfer?

Accepted Answer

a.Jen will consume 40 units of housing a

Question 5

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

Question 6

-Max has allocated $100 toward meats for his barbecue.His budget line and indifference map are shown in the above figure.If Max's current MRS=-1,then Max

Accepted Answer

A)  is at point e. 
B)  is maximizing his utility. 
C)  will be better off by purchasing more burgers. 
D)  None of above. 
A)  is at point e. 
B)  is maximizing his utility. 
C)  will be better off by purchasing more burgers. 
D)  None of above.

Question 7

Clifford lives by the motto "Eat,drink and be merry today,for tomorrow doesn't matter." If today's consumption is measured on the horizontal axis and tomorrow's consumption is measured on the vertical axis,Clifford's indifference curves

Accepted Answer

A)  are horizontal straight lines. 
B)  are vertical straight lines. 
C)  show decreasing utility as one moves upward. 
D)  cannot be determined from the information given. 
A)  are horizontal straight lines. 
B)  are vertical straight lines. 
C)  show decreasing utility as one moves upward. 
D)  cannot be determined from the information given.

Question 8

Joe's income is $500,the price of food (F)is $2 per unit,and the price of shelter (S)is $100.Which of the following represents his marginal rate of transformation of food for shelter?

Accepted Answer

A)  -5 
B)  -50 
C)  -.02 
D)  None of the above 
A)  -5 
B)  -50 
C)  -.02 
D)  None of the above

Question 9

Draw the indifference curves for rock concerts and food for each of the following:
a.a typical 17-year-old
b.a typical 75-year-old

Accepted Answer

@#IMG-DLM& a.and b.See the above figures

Question 10

If the utility function (U)between food (F)and clothing (C)can be represented as U =   ,the marginal utility of food

Accepted Answer

A)  is not positive. 
B)  does not diminish as food increases. 
C)  is not affected by the amount clothing. 
D)  increases as one obtains more clothing. 
A)  is not positive. 
B)  does not diminish as food increases. 
C)  is not affected by the amount clothing. 
D)  increases as one obtains more clothing.

Question 11

A friend whom you are studying with for this class has drawn three sets of indifference curves.Explain what he has done wrong on each graph and what assumption of preferences is violated by each particular graph.
(a) (b) (c)

Accepted Answer

The first graph (a)has portions that are

Question 12

Suppose Charley only purchases boardgames (B)and haircuts (H)with his income.If the price of boardgames increases by 100% while the price of haircuts increases by 300%,how will the MRT change (consider the budget constraint drawn on a graph with boardgames on the horizontal axis)?

Accepted Answer

Before the price change,the MR

Question 13

For which of the following pairs of goods would most people likely have convex indifference curves?

Accepted Answer

A)  nickels and dimes 
B)  left shoes and right shoes 
C)  movie tickets and concert tickets 
D)  None of the above. 
A)  nickels and dimes 
B)  left shoes and right shoes 
C)  movie tickets and concert tickets 
D)  None of the above.

Question 14

With respect to consuming food and shelter,two consumers choose the same bundles and both claim to be in equilibrium.We therefore know that

Accepted Answer

A)  they both have the same MRS of food for shelter. 
B)  they both face the same prices. 
C)  they both face the same budget lines. 
D)  None of above. 
A)  they both have the same MRS of food for shelter. 
B)  they both face the same prices. 
C)  they both face the same budget lines. 
D)  None of above.

Question 15

If the utility for two goods "x" and "y" can be measured as U = y,then it can be concluded that

Accepted Answer

A)  "x" and "y" are perfect complements. 
B)  "x" is a "bad". 
C)  the indifference curves on the x,y graph are upward sloping where "x" is measured on the horizontal axis. 
D)  the indifference curves on the x,y graph are horizontal where "x" is measured on the horizontal axis. 
A)  "x" and "y" are perfect complements. 
B)  "x" is a "bad". 
C)  the indifference curves on the x,y graph are upward sloping where "x" is measured on the horizontal axis. 
D)  the indifference curves on the x,y graph are horizontal where "x" is measured on the horizontal axis.

Question 16

Joe subscribes to an Internet provider that charges $2 per hour.Draw his budget line for Internet access on the horizontal axis and money spent on all other goods on the vertical axis assuming he has $100 per month to spend.Another company offers unlimited Internet access for a flat monthly fee of $20.Draw this budget line.

Accepted Answer

The answer of Joe subscribes to an Internet provider that...

Question 17

The rate at which a consumer must give up y to get one more x is equal to

Accepted Answer

A)  -Pₓ/Pᵧ. 
B)  -Pᵧ/Pₓ. 
C)  -MUₓ/MUᵧ. 
D)  MUᵧ/MUₓ. 
A)  -Pₓ/Pᵧ. 
B)  -Pᵧ/Pₓ. 
C)  -MUₓ/MUᵧ. 
D)  MUᵧ/MUₓ.

Question 18

Joe's budget constraint equals 500 = 2F + 100S,where $500 is Joe's income,$2 is the price of food (F)and $100 is the price of shelter (S).How much food can Joe buy if he buys one unit of shelter?

Accepted Answer

A)  two units 
B)  200 units 
C)  250 units 
D)  400 units 
A)  two units 
B)  200 units 
C)  250 units 
D)  400 units

Question 19

If the utility function (U)between food (F)and clothing (C)can be represented as U =   ,the marginal utility of food equals

Accepted Answer

A)    
B)    
C)  1/2   
D)  1/2   
A)    
B)    
C)  1/2   
D)  1/2

Question 20

If Fred's marginal rate of substitution of salad for pizza equals five,then

Accepted Answer

A)  he would give up five pizzas to get the next salad. 
B)  he would give up five salads to get the next pizza. 
C)  he will eat five times as much pizza as salad. 
D)  he will eat five times as much salad as pizza. 
A)  he would give up five pizzas to get the next salad. 
B)  he would give up five salads to get the next pizza. 
C)  he will eat five times as much pizza as salad. 
D)  he will eat five times as much salad as pizza.

If a consumer prefers Apples to Bananas and prefers Bananas to Citrus Fruit,in order to satisfy assumptions about preferences,she has to prefer

Adrian's total utilities of two consumption bundles are 50 and 100.This implies that

For the following, please answer "True" or "False" and explain why. -If MRS > MRT,then the consumer is better off than at equilibrium.

The marginal rate of transformation of y for x represents

-Max has allocated $100 toward meats for his barbecue.His budget line and indifference map are shown in the above figure.If Max's current MRS=-1,then Max

Clifford lives by the motto "Eat,drink and be merry today,for tomorrow doesn't matter." If today's consumption is measured on the horizontal axis and tomorrow's consumption is measured on the vertical axis,Clifford's indifference curves

Joe's income is $500,the price of food (F)is $2 per unit,and the price of shelter (S)is $100.Which of the following represents his marginal rate of transformation of food for shelter?

Draw the indifference curves for rock concerts and food for each of the following: a.a typical 17-year-old b.a typical 75-year-old

If the utility function (U)between food (F)and clothing (C)can be represented as U = ,the marginal utility of food

A friend whom you are studying with for this class has drawn three sets of indifference curves.Explain what he has done wrong on each graph and what assumption of preferences is violated by each particular graph. (a) (b) (c)

Suppose Charley only purchases boardgames (B)and haircuts (H)with his income.If the price of boardgames increases by 100% while the price of haircuts increases by 300%,how will the MRT change (consider the budget constraint drawn on a graph with boardgames on the horizontal axis)?

For which of the following pairs of goods would most people likely have convex indifference curves?

With respect to consuming food and shelter,two consumers choose the same bundles and both claim to be in equilibrium.We therefore know that

If the utility for two goods "x" and "y" can be measured as U = y,then it can be concluded that

The rate at which a consumer must give up y to get one more x is equal to

Joe's budget constraint equals 500 = 2F + 100S,where $500 is Joe's income,$2 is the price of food (F)and $100 is the price of shelter (S).How much food can Joe buy if he buys one unit of shelter?

If the utility function (U)between food (F)and clothing (C)can be represented as U = ,the marginal utility of food equals

If Fred's marginal rate of substitution of salad for pizza equals five,then

Introduction

Supply and Demand

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 3: A Consumers Constrained Choice

If a consumer prefers Apples to Bananas and prefers Bananas to Citrus Fruit,in order to satisfy assumptions about preferences,she has to prefer

Adrian's total utilities of two consumption bundles are 50 and 100.This implies that

For the following, please answer "True" or "False" and explain why. -If MRS > MRT,then the consumer is better off than at equilibrium.

The marginal rate of transformation of y for x represents

-Max has allocated $100 toward meats for his barbecue.His budget line and indifference map are shown in the above figure.If Max's current MRS=-1,then Max

Clifford lives by the motto "Eat,drink and be merry today,for tomorrow doesn't matter." If today's consumption is measured on the horizontal axis and tomorrow's consumption is measured on the vertical axis,Clifford's indifference curves

Joe's income is $500,the price of food (F)is $2 per unit,and the price of shelter (S)is $100.Which of the following represents his marginal rate of transformation of food for shelter?

Draw the indifference curves for rock concerts and food for each of the following: a.a typical 17-year-old b.a typical 75-year-old

If the utility function (U)between food (F)and clothing (C)can be represented as U = ,the marginal utility of food

A friend whom you are studying with for this class has drawn three sets of indifference curves.Explain what he has done wrong on each graph and what assumption of preferences is violated by each particular graph. (a) (b) (c)

Suppose Charley only purchases boardgames (B)and haircuts (H)with his income.If the price of boardgames increases by 100% while the price of haircuts increases by 300%,how will the MRT change (consider the budget constraint drawn on a graph with boardgames on the horizontal axis)?

For which of the following pairs of goods would most people likely have convex indifference curves?

With respect to consuming food and shelter,two consumers choose the same bundles and both claim to be in equilibrium.We therefore know that

If the utility for two goods "x" and "y" can be measured as U = y,then it can be concluded that

The rate at which a consumer must give up y to get one more x is equal to

Joe's budget constraint equals 500 = 2F + 100S,where $500 is Joe's income,$2 is the price of food (F)and $100 is the price of shelter (S).How much food can Joe buy if he buys one unit of shelter?

If the utility function (U)between food (F)and clothing (C)can be represented as U = ,the marginal utility of food equals

If Fred's marginal rate of substitution of salad for pizza equals five,then

Introduction

Supply and Demand

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters