Question 1

-Max has allocated $100 toward meats for his barbecue.His budget line and indifference map are shown in the above figure.If Max is currently at point e,

Accepted Answer

A)  the absolute value of his MRS is less than the trade-off offered by the market. 
B)  he is willing to give up more burger than he has to, given market prices. 
C)  he is not maximizing his utility. 
D)  All of the above. 
A)  the absolute value of his MRS is less than the trade-off offered by the market. 
B)  he is willing to give up more burger than he has to, given market prices. 
C)  he is not maximizing his utility. 
D)  All of the above.

Question 2

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What happens if Max's mother gives him 30 pounds of burger?

Accepted Answer

A)  Max would have preferred receiving the dollar value of the burger. 
B)  Max is indifferent between this gift and the dollar value of the burger. 
C)  Max prefers this gift to the dollar value of the burger. 
D)  None of the above. 
A)  Max would have preferred receiving the dollar value of the burger. 
B)  Max is indifferent between this gift and the dollar value of the burger. 
C)  Max prefers this gift to the dollar value of the burger. 
D)  None of the above.

Question 3

Researchers have found that tax increases may have a small effect in the quantity purchased because

Accepted Answer

A)  individuals might forget about the tax (salience). 
B)  individuals are rational. 
C)  individuals are credit constrained. 
D)  individuals do not care about prices. 
A)  individuals might forget about the tax (salience). 
B)  individuals are rational. 
C)  individuals are credit constrained. 
D)  individuals do not care about prices.

Question 4

-Max has allocated $100 toward meats for his barbecue.His budget line and indifference map are shown in the above figure.If the price of burger increases,which of the following bundles are in Max's opportunity set?

Accepted Answer

A)  b, d, e 
B)  d, e 
C)  a, b, c, d, e 
D)  None of the labeled points are in Max's opportunity set. 
A)  b, d, e 
B)  d, e 
C)  a, b, c, d, e 
D)  None of the labeled points are in Max's opportunity set.

Question 5

Indifference curves cannot ever be concave for two goods.

Accepted Answer

A) True 
 B)False

Question 6

Johnny has $100 to spend on books and all other goods.Books cost $20 each and Johnny is at equilibrium consuming 3 books and $40 worth of other goods.Johnny's grandmom wants to give Johnny either a book or $20 for his birthday.Which gift does Johnny prefer? Explain using an indifference map and budget lines.

Accepted Answer

@#IMG-DLM& See the above figure.Since Johnny's equ

Question 7

If two goods,"x" and "y",are perfect substitutes,then which of the following best represents the utility function for the two goods?

Accepted Answer

A)  U = x + y 
B)  U = x ∗ y 
C)  U =   +   
D)  Any of the above. 
A)  U = x + y 
B)  U = x ∗ y 
C)  U =   +   
D)  Any of the above.

Question 8

By selecting a bundle where MRS = MRT,the consumer is

Accepted Answer

A)  achieving a corner solution. 
B)  reaching the highest possible indifference curve she can afford. 
C)  not behaving in an optimal way. 
D)  All of the above. 
A)  achieving a corner solution. 
B)  reaching the highest possible indifference curve she can afford. 
C)  not behaving in an optimal way. 
D)  All of the above.

Question 9

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

Accepted Answer

A)  "x" and "y" are perfect substitutes. 
B)  "x" and "y" are perfect complements. 
C)  "x" and "y" are both bads. 
D)  the indifference curves on the x,y graph will be upward sloping. 
A)  "x" and "y" are perfect substitutes. 
B)  "x" and "y" are perfect complements. 
C)  "x" and "y" are both bads. 
D)  the indifference curves on the x,y graph will be upward sloping.

Question 10

Bounded rationality suggests that

Accepted Answer

A)  individuals might make "incorrect" decisions because they are unable to consider all possible options. 
B)  individuals would rather have less choice to more choice. 
C)  rational decisions can only be made when choices are restricted. 
D)  individuals are happier when their choices are restricted or "bounded." 
A)  individuals might make "incorrect" decisions because they are unable to consider all possible options. 
B)  individuals would rather have less choice to more choice. 
C)  rational decisions can only be made when choices are restricted. 
D)  individuals are happier when their choices are restricted or "bounded."

Question 11

Indifference curves for perfect substitutes must be parallel lines with a slope of negative one.

Accepted Answer

A) True 
 B)False

Question 12

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 13

An optimal choice in which a consumer does not consume all types of goods

Accepted Answer

A)  is a corner solution. 
B)  cannot be an equilibrium. 
C)  cannot exhaust the budget constraint. 
D)  is an interior solution. 
A)  is a corner solution. 
B)  cannot be an equilibrium. 
C)  cannot exhaust the budget constraint. 
D)  is an interior solution.

Question 14

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.If the price of burger increases,

Accepted Answer

A)  Max will buy less burger and more chicken. 
B)  Max will buy less burger and the same quantity of chicken. 
C)  Max will buy less of both meats. 
D)  More information is needed to answer the question. 
A)  Max will buy less burger and more chicken. 
B)  Max will buy less burger and the same quantity of chicken. 
C)  Max will buy less of both meats. 
D)  More information is needed to answer the question.

Question 15

By selecting a bundle where MRS = MRT,the consumer is saying

Accepted Answer

A)  "I value my last unit of each good equally." 
B)  "I am willing to trade one good for the other at the same rate that I am required to do so." 
C)  "I will equate the amounts spent on all goods consumed." 
D)  All of the above. 
A)  "I value my last unit of each good equally." 
B)  "I am willing to trade one good for the other at the same rate that I am required to do so." 
C)  "I will equate the amounts spent on all goods consumed." 
D)  All of the above.

Question 16

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 17

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

@#IMG-DLM& See the a

Question 18

Explain the difference between the marginal rate of substitution and the marginal rate of transformation.

Accepted Answer

The marginal rate of substitution is a c

Question 19

Economists use a preference map to illustrate that

Accepted Answer

A)  more is better than less. 
B)  preferences are transitive. 
C)  preferences are complete. 
D)  All of the above. 
A)  more is better than less. 
B)  preferences are transitive. 
C)  preferences are complete. 
D)  All of the above.

Question 20

If the utility function (U)between bananas (B)and jam (J)can be represented as U = 3ln(B)+4ln(J)the marginal utility of jam equals

Accepted Answer

A)  4B. 
B)  3B/J. 
C)  4/J. 
D)  B/J. 
A)  4B. 
B)  3B/J. 
C)  4/J. 
D)  B/J.

-Max has allocated $100 toward meats for his barbecue.His budget line and indifference map are shown in the above figure.If Max is currently at point e,

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What happens if Max's mother gives him 30 pounds of burger?

Researchers have found that tax increases may have a small effect in the quantity purchased because

-Max has allocated $100 toward meats for his barbecue.His budget line and indifference map are shown in the above figure.If the price of burger increases,which of the following bundles are in Max's opportunity set?

Indifference curves cannot ever be concave for two goods.

If two goods,"x" and "y",are perfect substitutes,then which of the following best represents the utility function for the two goods?

By selecting a bundle where MRS = MRT,the consumer is

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

Bounded rationality suggests that

Indifference curves for perfect substitutes must be parallel lines with a slope of negative one.

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?

An optimal choice in which a consumer does not consume all types of goods

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.If the price of burger increases,

By selecting a bundle where MRS = MRT,the consumer is saying

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

Explain the difference between the marginal rate of substitution and the marginal rate of transformation.

Economists use a preference map to illustrate that

If the utility function (U)between bananas (B)and jam (J)can be represented as U = 3ln(B)+4ln(J)the marginal utility of jam equals

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 4: Consumer Choice

-Max has allocated $100 toward meats for his barbecue.His budget line and indifference map are shown in the above figure.If Max is currently at point e,

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What happens if Max's mother gives him 30 pounds of burger?

Researchers have found that tax increases may have a small effect in the quantity purchased because

-Max has allocated $100 toward meats for his barbecue.His budget line and indifference map are shown in the above figure.If the price of burger increases,which of the following bundles are in Max's opportunity set?

Indifference curves cannot ever be concave for two goods.

If two goods,"x" and "y",are perfect substitutes,then which of the following best represents the utility function for the two goods?

By selecting a bundle where MRS = MRT,the consumer is

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

Bounded rationality suggests that

Indifference curves for perfect substitutes must be parallel lines with a slope of negative one.

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?

An optimal choice in which a consumer does not consume all types of goods

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.If the price of burger increases,

By selecting a bundle where MRS = MRT,the consumer is saying

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

Explain the difference between the marginal rate of substitution and the marginal rate of transformation.

Economists use a preference map to illustrate that

If the utility function (U)between bananas (B)and jam (J)can be represented as U = 3ln(B)+4ln(J)the marginal utility of jam equals

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters