Question 1

Which of the following statements is true?

Accepted Answer

A)  As we consume more of a good,utility will increase even if the good is subject to diminishing marginal utility. 
B)  As we consume more of a good,utility will increase unless the good is subject to diminishing marginal utility. 
C)  Marginal utility is just another name for utility. 
D)  We cannot rank utility from two different consumption bundles. 
A)  As we consume more of a good,utility will increase even if the good is subject to diminishing marginal utility. 
B)  As we consume more of a good,utility will increase unless the good is subject to diminishing marginal utility. 
C)  Marginal utility is just another name for utility. 
D)  We cannot rank utility from two different consumption bundles. A

Question 2

If consumers' income increases by one dollar and consumers consume both food and non-food,________.

Accepted Answer

A)  spending on food consumption will always increase. 
B)  spending on food consumption will increase but by less than one dollar if both food and non-food are normal goods. 
C)  spending on food consumption will increase only if non-food is inferior good. 
D)  spending on food consumption will increase only if non-food is normal good. 
A)  spending on food consumption will always increase. 
B)  spending on food consumption will increase but by less than one dollar if both food and non-food are normal goods. 
C)  spending on food consumption will increase only if non-food is inferior good. 
D)  spending on food consumption will increase only if non-food is normal good. B

Question 3

If the prices of food and non-food stay constant and consumers income doubles,what will happen to the budget line?

Accepted Answer

A)  The budget line will stay unchanged. 
B)  The budget line will shift in toward the origin in a parallel fashion. 
C)  The budget line will shift out from the origin in a parallel fashion. 
D)  The budget line will change but we need more information to know how. 
A)  The budget line will stay unchanged. 
B)  The budget line will shift in toward the origin in a parallel fashion. 
C)  The budget line will shift out from the origin in a parallel fashion. 
D)  The budget line will change but we need more information to know how. C

Question 4

Suppose there is a reduction in the price of food while consumers' income and the price of non-food stay the same,which of the following statement is true?

Accepted Answer

A)  spending on food consumption will always increase. 
B)  budget line will rotate out from the endpoint on the axis of food. 
C)  budget line will rotate out from the endpoint on the axis of non-food. 
D)  the slope of the budget line will stay the same. 
A)  spending on food consumption will always increase. 
B)  budget line will rotate out from the endpoint on the axis of food. 
C)  budget line will rotate out from the endpoint on the axis of non-food. 
D)  the slope of the budget line will stay the same.

Question 5

All of the following statements are true except:

Accepted Answer

A)  People can make choices that help determine development outcomes. 
B)  Decision makers possess accurate and complete information. 
C)  Information is costly and difficult to obtain,especially in developing countries. 
D)  People cannot take advantage of new investment opportunities 
A)  People can make choices that help determine development outcomes. 
B)  Decision makers possess accurate and complete information. 
C)  Information is costly and difficult to obtain,especially in developing countries. 
D)  People cannot take advantage of new investment opportunities

Question 6

If consumers' income increases and the consumption for food decreases,then we can conclude:

Accepted Answer

A)  food is a normal good. 
B)  food is an inferior good. 
C)  consumers are not rational. 
D)  this situation does not happen in developing countries. 
A)  food is a normal good. 
B)  food is an inferior good. 
C)  consumers are not rational. 
D)  this situation does not happen in developing countries.

Question 7

Joshua has income endowment of $1,000,the price of food is $2 per unit and the price of non-food is $4 per unit.If he spent all of his income on food,how many units of food can he buy?

Accepted Answer

A)  1,000 units. 
B)  250 units. 
C)  500 units. 
D)  0 unit. 
A)  1,000 units. 
B)  250 units. 
C)  500 units. 
D)  0 unit.

Question 8

If one worker suppliers fewer hours of labor when wage increases,we can conclude that ________.

Accepted Answer

A)  the substitution effect is greater than the income effect 
B)  the income effect is greater than the substitution effect 
C)  the income effect is the same as the substitution effect 
D)  this worker is not efficient. 
A)  the substitution effect is greater than the income effect 
B)  the income effect is greater than the substitution effect 
C)  the income effect is the same as the substitution effect 
D)  this worker is not efficient.

Question 9

If George treats home time as normal good and he receives gift money of $10,000 from his family,suppose his hourly wage working as a electrician stays the same,what will mostly likely to happen?

Accepted Answer

A)  George will work less hours. 
B)  George will work more hours. 
C)  George will work the same amount. 
D)  We cannot predict George's reaction. 
A)  George will work less hours. 
B)  George will work more hours. 
C)  George will work the same amount. 
D)  We cannot predict George's reaction.

Question 10

A reduction in the price of good A reduces the consumption of good B,then ________.

Accepted Answer

A)  A and B are substitutes. 
B)  A and B are complements. 
C)  A is a normal good. 
D)  A is an inferior good. 
A)  A and B are substitutes. 
B)  A and B are complements. 
C)  A is a normal good. 
D)  A is an inferior good.

Question 11

Joshua has income endowment of $1,000,the price of food is $2 per unit and the price of non-food is $4 per unit.Which of the following is his budget constraint?

Accepted Answer

A)  $$2 \mathrm {~F} + 4 \mathrm {~N} \leq 1,000$$ 
B)  $$F \leq 500 - 2 N$$ 
C)  $$N \leq 250 - 1 / 2 F$$ 
D)  All of the above 
A)  $$2 \mathrm {~F} + 4 \mathrm {~N} \leq 1,000$$ 
B)  $$F \leq 500 - 2 N$$ 
C)  $$N \leq 250 - 1 / 2 F$$ 
D)  All of the above

Question 12

An increase in hourly wage will ________ the wage line and will lead to ________in the quantity of low-skill labor demanded.

Accepted Answer

A)  shift up; an increase 
B)  shift up; a decrease 
C)  shift down; an increase 
D)  shift down; a decrease 
A)  shift up; an increase 
B)  shift up; a decrease 
C)  shift down; an increase 
D)  shift down; a decrease

Question 13

Why is labor demand a derived demand? Explain.What is a linkage between markets?

Accepted Answer

Basic producer theory highlights that la

Question 14

The price of home time is ________.

Accepted Answer

A)  not measurable 
B)  the opportunity cost of time 
C)  increasing with higher income 
D)  depends on how many hours the labor supplier works 
A)  not measurable 
B)  the opportunity cost of time 
C)  increasing with higher income 
D)  depends on how many hours the labor supplier works

Question 15

When labor suppliers choose how much time to allocate to wage labor and to other activities seeking to maximize utility ,their utility is often assumed to be a function of ________.

Accepted Answer

A)  consumption of goods and services 
B)  time spent in non-labor activities. 
C)  both consumption of goods and services and time spent in non-labor activities. 
D)  neither consumption of goods and services nor time spent in non-labor activities. 
A)  consumption of goods and services 
B)  time spent in non-labor activities. 
C)  both consumption of goods and services and time spent in non-labor activities. 
D)  neither consumption of goods and services nor time spent in non-labor activities.

Question 16

The substitution effect can be measured by holding ________constant.

Accepted Answer

A)  income 
B)  price of food 
C)  price of non-food 
D)  utility 
A)  income 
B)  price of food 
C)  price of non-food 
D)  utility

Question 17

An indifference curve is ________.

Accepted Answer

A)  all the combinations of food and non-food that consumers are able to afford. 
B)  all the combinations of food and non-food that consumers prefer equally. 
C)  a straight line. 
D)  downward sloping and concave (bowed out from the origin). 
A)  all the combinations of food and non-food that consumers are able to afford. 
B)  all the combinations of food and non-food that consumers prefer equally. 
C)  a straight line. 
D)  downward sloping and concave (bowed out from the origin).

Question 18

Utility is a measure of

Accepted Answer

A)  the satisfaction from consuming goods and services. 
B)  the amount of money value people are willing to pay for goods and services. 
C)  the usefulness of goods and services. 
D)  the prices of goods and services. 
A)  the satisfaction from consuming goods and services. 
B)  the amount of money value people are willing to pay for goods and services. 
C)  the usefulness of goods and services. 
D)  the prices of goods and services.

Question 19

Most analysts agree that if prices and wages had held constant,adoption of Green Revolution seed varieties would have increased the quantity of labor demanded in agriculture.Discuss.

Accepted Answer

The yields of the new varieties were muc

Question 20

According to the assumption of the basic consumer theory,which of the following is true?

Accepted Answer

A)  If April consumes more pizza,her marginal utility of consuming pizza is decreasing. 
B)  If April consumes more pizza,her marginal utility of consuming pizza is increasing. 
C)  If April consumes more pizza,her marginal utility of consuming pizza is constant. 
D)  Eating more pizza does not increase April' utility. 
A)  If April consumes more pizza,her marginal utility of consuming pizza is decreasing. 
B)  If April consumes more pizza,her marginal utility of consuming pizza is increasing. 
C)  If April consumes more pizza,her marginal utility of consuming pizza is constant. 
D)  Eating more pizza does not increase April' utility.

Exam 6: Consumption, Time Allocation and Production Choices

Which of the following statements is true?

If consumers' income increases by one dollar and consumers consume both food and non-food,________.

If the prices of food and non-food stay constant and consumers income doubles,what will happen to the budget line?

Suppose there is a reduction in the price of food while consumers' income and the price of non-food stay the same,which of the following statement is true?

All of the following statements are true except:

If consumers' income increases and the consumption for food decreases,then we can conclude:

Joshua has income endowment of $1,000,the price of food is $2 per unit and the price of non-food is $4 per unit.If he spent all of his income on food,how many units of food can he buy?

If one worker suppliers fewer hours of labor when wage increases,we can conclude that ________.

If George treats home time as normal good and he receives gift money of $10,000 from his family,suppose his hourly wage working as a electrician stays the same,what will mostly likely to happen?

A reduction in the price of good A reduces the consumption of good B,then ________.

Joshua has income endowment of $1,000,the price of food is $2 per unit and the price of non-food is $4 per unit.Which of the following is his budget constraint?

An increase in hourly wage will ________ the wage line and will lead to ________in the quantity of low-skill labor demanded.

Why is labor demand a derived demand? Explain.What is a linkage between markets?

The price of home time is ________.

When labor suppliers choose how much time to allocate to wage labor and to other activities seeking to maximize utility ,their utility is often assumed to be a function of ________.

The substitution effect can be measured by holding ________constant.

An indifference curve is ________.

Utility is a measure of

Most analysts agree that if prices and wages had held constant,adoption of Green Revolution seed varieties would have increased the quantity of labor demanded in agriculture.Discuss.

According to the assumption of the basic consumer theory,which of the following is true?

What Is Development Economics Good for

Well-Being

Economic Growth

Economic Growth Theory in Historical Perspective

Poverty,Inequality and Vulnerability

Houesholds

Domestic Markets for Goods and Services

Labor Markets

Investment and Financial Markets

International Markets and General Equilibrium

Institutions and Cooperation

Policy Governance and Political Economy

Policy Analysis

Targeted Transfer Programs

Workfare

Agricultural Market Interactions and Reforms

Infrastructure Policies and Programs

Education

Agricultural Research and Extension

Microfinance

Public Health, Health Care and Health Insurance

Filters

An increase in hourly wage will the wage line and will lead to in the quantity of low-skill labor demanded.