Question 1

Why is it true that indifference curves farther from the origin contain higher levels of utility?

Accepted Answer

This rule follows from the nonsatiation

Question 2

The optimal allocation of time for studying for final exams is always situated at a tangency point between an indifference curve and the

Accepted Answer

A)  time constraint line 
B)  origin 
C)  indifference curve with the maximum value of utility 
A)  time constraint line 
B)  origin 
C)  indifference curve with the maximum value of utility

Question 3

The optimal consumption bundle is the bundle the consumer chooses in order to maximize utility within the economically feasible set.

Accepted Answer

A) True 
 B)False

Question 4

-Refer to Exhibit 3-2. Which figure illustrates goods that are perfect substitutes?

Accepted Answer

A)  (a) 
B)  (b) 
C)  (c) 
D)  (d) 
A)  (a) 
B)  (b) 
C)  (c) 
D)  (d)

Question 5

Indifference curves cannot slope

Accepted Answer

A)  downward 
B)  horizontally 
C)  upward 
A)  downward 
B)  horizontally 
C)  upward

Question 6

-Refer to Exhibit 3-2. Which figure illustrates goods that yield no utility?

Accepted Answer

A)  (a) 
B)  (b) 
C)  (c) 
D)  (d) 
A)  (a) 
B)  (b) 
C)  (c) 
D)  (d)

Question 7

Describe the shape of indifference curves for a good that yields no utility.

Accepted Answer

The indifference curves will be flat. Th

Question 8

An indifference curve is a curve or locus of bundles in the consumption set for a consumer among which the consumer is indifferent.

Accepted Answer

A) True 
 B)False

Question 9

A locus of bundles in the consumption set for a consumer, all of which are equally preferred, is called a(n)

Accepted Answer

A)  difference curve 
B)  budget line 
C)  indifference curve 
A)  difference curve 
B)  budget line 
C)  indifference curve

Question 10

Given a student's indifference map, we will always find that the optimal allocation of time for studying for final exams is situated at a tangency point between an indifference curve and the time constraint line.

Accepted Answer

A) True 
 B)False

Question 11

The rate of exchange that would just maintain the consumer's original utility is called the marginal rate of

Accepted Answer

A)  multiplication 
B)  additivity 
C)  substitution 
A)  multiplication 
B)  additivity 
C)  substitution

Question 12

What is the name of the axiom that modifies SARP to allow for the possibility that the person making choices may have convex indifference curves, but not strictly convex ones?

Accepted Answer

A)  Weak Axiom of Revealed Preference (WARP) 
B)  Strong Axiom of Revealed Preference (SARP) 
C)  Generalized Axiom of Revealed Preference (GARP) 
A)  Weak Axiom of Revealed Preference (WARP) 
B)  Strong Axiom of Revealed Preference (SARP) 
C)  Generalized Axiom of Revealed Preference (GARP)

Question 13

Because of the convexity assumption and the fact that indifference curves farther from the origin contain higher levels of utility, indifference curves

Accepted Answer

A)  are bowed out from the origin 
B)  are bowed in toward the origin 
C)  all pass through the origin 
A)  are bowed out from the origin 
B)  are bowed in toward the origin 
C)  all pass through the origin

Question 14

Explain what convexity of preferences implies about marginal rates of substitution.

Accepted Answer

Convexity implies diminishing marginal r

Question 15

At a particular point on the indifference map, the ratio at which a consumer would be willing to exchange one good for another is the marginal rate of substitution.

Accepted Answer

A) True 
 B)False

Question 16

Indifference curves farther from the origin contain

Accepted Answer

A)  unknown levels of utility 
B)  higher levels of utility 
C)  lower levels of utility 
A)  unknown levels of utility 
B)  higher levels of utility 
C)  lower levels of utility

Question 17

-Refer to Exhibit 3-2. Which figure illustrates goods for which the consumer has nonconvex preferences?

Accepted Answer

A)  (a) 
B)  (b) 
C)  (c) 
D)  (d) 
A)  (a) 
B)  (b) 
C)  (c) 
D)  (d)

Question 18

-Refer to Exhibit 3-1. The indifference curves violate the

Accepted Answer

A)  selfishness assumption 
B)  convexity of preferences 
C)  rationality principle 
A)  selfishness assumption 
B)  convexity of preferences 
C)  rationality principle

Question 19

The Weak Axiom of Revealed Preference (WARP) states that, if bundle x is ever directly revealed to be preferred to bundle y when the two bundles are not identical, then y can never be directly revealed to be preferred to x.

Accepted Answer

A) True 
 B)False

Question 20

-Refer to Exhibit 3-3. Which point is the optimal consumption bundle?

Accepted Answer

A)  (a) 
B)  (b) 
C)  (c) 
A)  (a) 
B)  (b) 
C)  (c)

Exam 3: Utilities Indifference Curves

Why is it true that indifference curves farther from the origin contain higher levels of utility?

The optimal allocation of time for studying for final exams is always situated at a tangency point between an indifference curve and the

The optimal consumption bundle is the bundle the consumer chooses in order to maximize utility within the economically feasible set.

-Refer to Exhibit 3-2. Which figure illustrates goods that are perfect substitutes?

Indifference curves cannot slope

-Refer to Exhibit 3-2. Which figure illustrates goods that yield no utility?

Describe the shape of indifference curves for a good that yields no utility.

An indifference curve is a curve or locus of bundles in the consumption set for a consumer among which the consumer is indifferent.

A locus of bundles in the consumption set for a consumer, all of which are equally preferred, is called a(n)

Given a student's indifference map, we will always find that the optimal allocation of time for studying for final exams is situated at a tangency point between an indifference curve and the time constraint line.

The rate of exchange that would just maintain the consumer's original utility is called the marginal rate of

What is the name of the axiom that modifies SARP to allow for the possibility that the person making choices may have convex indifference curves, but not strictly convex ones?

Because of the convexity assumption and the fact that indifference curves farther from the origin contain higher levels of utility, indifference curves

Explain what convexity of preferences implies about marginal rates of substitution.

At a particular point on the indifference map, the ratio at which a consumer would be willing to exchange one good for another is the marginal rate of substitution.

Indifference curves farther from the origin contain

-Refer to Exhibit 3-2. Which figure illustrates goods for which the consumer has nonconvex preferences?

-Refer to Exhibit 3-1. The indifference curves violate the

The Weak Axiom of Revealed Preference (WARP) states that, if bundle x is ever directly revealed to be preferred to bundle y when the two bundles are not identical, then y can never be directly revealed to be preferred to x.

-Refer to Exhibit 3-3. Which point is the optimal consumption bundle?

Economics and Institutions: a Shift of Emphasis

Consumers and Their Preferences

Demand and Behavior in Markets

Some Applications of Consumer Demand, and Welfare Analysis

Uncertainty and the Emergence of Insurance

Uncertainty Applications and Criticisms

The Discovery of Production and Its Technology

Cost and Choice

Cost Curves

Game Theory and the Tools of Strategic Business Analysis

Decision Making Over Time

The Internal Organization of the Firm

Perfectly Competitive Markets: Short-Run Analysis

Competitive Markets in the Long Run

Market Institutions and Auctions

The Age of Entrepreneurship: Monopoly

Natural Monopoly and the Economics of Regulation

The World of Oligopoly: Preliminaries to Successful Entry

Market Entry and the Emergence of Perfect Competition

The Problem of Exchange

General Equilibrium and the Origins of the Free Market and Interventionist Ideologies

Moral Hazard and Adverse Selection: Informational Market Failures

Externalities: the Free Market Interventionist Battle Continues

Public Goods, the Consequences of Strategic Voting Behavior, and the Role of Government

Input Markets and the Origins of Class Conflict

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