Question 1

If the consumer's income increases while the prices of both goods remain unchanged,what will happen to the budget line?

Accepted Answer

A)  The budget line rotates inward from the intercept on the horizontal axis. 
B)  The budget line rotates outward from the intercept on the vertical axis. 
C)  The budget line shifts inward without a change in slope. 
D)  The budget line shifts outward without a change in slope. 
A)  The budget line rotates inward from the intercept on the horizontal axis. 
B)  The budget line rotates outward from the intercept on the vertical axis. 
C)  The budget line shifts inward without a change in slope. 
D)  The budget line shifts outward without a change in slope. D

Question 2

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. A

Question 3

Indifference curves on the same indifference map can have different shapes.

Accepted Answer

A) True 
 B)False  True

Question 4

Draw the indifference curves for nickels and dimes.Would they ever have a non-constant slope? Explain.

Accepted Answer

@#IMG-DLM& See the above figure.Two nickels are wo

Question 5

Lisa consumes only pizzas and burritos.In equilibrium,her marginal utility of pizza is 20 and her marginal utility of a burrito is 10.The price of a pizza is $4.What is the price of a burrito?

Accepted Answer

In equilibrium,the ratio of the marginal

Question 6

Behavioral economists use which technique to test economic theory?

Accepted Answer

A)  controlled experiments 
B)  price theory 
C)  environmental economics 
D)  lie detector tests 
A)  controlled experiments 
B)  price theory 
C)  environmental economics 
D)  lie detector tests

Question 7

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)  2 units 
B)  200 units 
C)  250 units 
D)  400 units 
A)  2 units 
B)  200 units 
C)  250 units 
D)  400 units

Question 8

If income increases due to a decrease in taxes,then

Accepted Answer

A)  utility will increase because consumers can afford a larger bundle of goods. 
B)  utility will fall because consumers will be forced to buy a smaller bundle of goods. 
C)  utility will remain constant. 
D)  utility will increase because consumers will be forced to buy a smaller bundle of goods. 
A)  utility will increase because consumers can afford a larger bundle of goods. 
B)  utility will fall because consumers will be forced to buy a smaller bundle of goods. 
C)  utility will remain constant. 
D)  utility will increase because consumers will be forced to buy a smaller bundle of goods.

Question 9

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 10

If MRS > MRT,then the consumer is better off than at equilibrium.

Accepted Answer

A) True 
 B)False

Question 11

The intuition behind the budget constraint is that

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.

Question 12

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

Accepted Answer

A)  they both have the same marginal utility for food. 
B)  they both have the same marginal utility for shelter. 
C)  they both have the same MRS of food for shelter. 
D)  All of the above. 
A)  they both have the same marginal utility for food. 
B)  they both have the same marginal utility for shelter. 
C)  they both have the same MRS of food for shelter. 
D)  All of the above.

Question 13

The absolute value of the slope of an indifference curve equals the ratio of the marginal utilities of the two goods involved.

Accepted Answer

A) True 
 B)False

Question 14

If both prices decreases by 50%,

Accepted Answer

A)  budget constraint will be unchanged. 
B)  slope of the budget constraint will increase. 
C)  slope of the budget constraint will decrease. 
D)  budget constraint will shift outward in a parallel fashion. 
A)  budget constraint will be unchanged. 
B)  slope of the budget constraint will increase. 
C)  slope of the budget constraint will decrease. 
D)  budget constraint will shift outward in a parallel fashion.

Question 15

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& See the above figure.These gr

Question 16

-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 receives a $100 cash grant to buy either meat or chicken?

Accepted Answer

A)  Max will double his consumption of both meats. 
B)  Max will spend it all on burger. Because of its lower price, he can buy more of it. 
C)  Max will take advantage of the gift by buying all chicken because it is the more expensive meat. 
D)  There is not enough information to answer the question. 
A)  Max will double his consumption of both meats. 
B)  Max will spend it all on burger. Because of its lower price, he can buy more of it. 
C)  Max will take advantage of the gift by buying all chicken because it is the more expensive meat. 
D)  There is not enough information to answer the question.

Question 17

If both prices increases by 50%,

Accepted Answer

A)  budget constraint will be unchanged. 
B)  slope of the budget constraint stay the same. 
C)  slope of the budget constraint will decrease. 
D)  budget constraint will shift outward in a parallel fashion. 
A)  budget constraint will be unchanged. 
B)  slope of the budget constraint stay the same. 
C)  slope of the budget constraint will decrease. 
D)  budget constraint will shift outward in a parallel fashion.

Question 18

If Fred's marginal rate of substitution of salad for pizza equals 5,then

Accepted Answer

A)  he would give up 5 pizzas to get the next salad. 
B)  he would give up 5 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 5 pizzas to get the next salad. 
B)  he would give up 5 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.

Question 19

Joe's indifference map for lobster and soda is shown in the above figure along with his budget line.Will Joe choose point a? Explain your answer in terms both of MRS and the level of utility.

Accepted Answer

Joe will not choose point a.Since the sl

Question 20

In behavioral economics,salience is best exemplified by

Accepted Answer

A)  consumers responding differently when posted prices increase rather than when prices increase because of sales tax increases. 
B)  consumers responding the same regardless of how prices change. 
C)  the end of a controlled experiment. 
D)  consumers responding differently when income increases permanently rather than temporarily. 
A)  consumers responding differently when posted prices increase rather than when prices increase because of sales tax increases. 
B)  consumers responding the same regardless of how prices change. 
C)  the end of a controlled experiment. 
D)  consumers responding differently when income increases permanently rather than temporarily.

If the consumer's income increases while the prices of both goods remain unchanged,what will happen to the budget line?

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

Indifference curves on the same indifference map can have different shapes.

Draw the indifference curves for nickels and dimes.Would they ever have a non-constant slope? Explain.

Lisa consumes only pizzas and burritos.In equilibrium,her marginal utility of pizza is 20 and her marginal utility of a burrito is 10.The price of a pizza is $4.What is the price of a burrito?

Behavioral economists use which technique to test economic theory?

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 income increases due to a decrease in taxes,then

Convexity of indifference curves implies that consumers are willing to

If MRS > MRT,then the consumer is better off than at equilibrium.

The intuition behind the budget constraint is that

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

The absolute value of the slope of an indifference curve equals the ratio of the marginal utilities of the two goods involved.

If both prices decreases by 50%,

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

-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 receives a $100 cash grant to buy either meat or chicken?

If both prices increases by 50%,

If Fred's marginal rate of substitution of salad for pizza equals 5,then

Joe's indifference map for lobster and soda is shown in the above figure along with his budget line.Will Joe choose point a? Explain your answer in terms both of MRS and the level of utility.

In behavioral economics,salience is best exemplified by

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

If the consumer's income increases while the prices of both goods remain unchanged,what will happen to the budget line?

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

Indifference curves on the same indifference map can have different shapes.

Draw the indifference curves for nickels and dimes.Would they ever have a non-constant slope? Explain.

Lisa consumes only pizzas and burritos.In equilibrium,her marginal utility of pizza is 20 and her marginal utility of a burrito is 10.The price of a pizza is $4.What is the price of a burrito?

Behavioral economists use which technique to test economic theory?

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 income increases due to a decrease in taxes,then

Convexity of indifference curves implies that consumers are willing to

If MRS > MRT,then the consumer is better off than at equilibrium.

The intuition behind the budget constraint is that

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

The absolute value of the slope of an indifference curve equals the ratio of the marginal utilities of the two goods involved.

If both prices decreases by 50%,

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

-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 receives a $100 cash grant to buy either meat or chicken?

If both prices increases by 50%,

If Fred's marginal rate of substitution of salad for pizza equals 5,then

Joe's indifference map for lobster and soda is shown in the above figure along with his budget line.Will Joe choose point a? Explain your answer in terms both of MRS and the level of utility.

In behavioral economics,salience is best exemplified by

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