Question 1

Lisa eats both pizzas and burritos.If the price of a pizza increases,Lisa's opportunity set

Accepted Answer

A)  becomes larger. 
B)  becomes smaller. 
C)  is unchanged. 
D)  cannot be determined without more information. 
A)  becomes larger. 
B)  becomes smaller. 
C)  is unchanged. 
D)  cannot be determined without more information.

Question 2

Johnny has allocated $30 toward coffee and tea and feels that coffee and tea are perfect substitutes.Due to differences in caffeine levels,his MRS of tea for coffee equals 2.If coffee and tea sell for the same price,Johnny will

Accepted Answer

A)  spend all $30 on tea. 
B)  spend all $30 on coffee. 
C)  spend $20 on coffee and $10 on tea. 
D)  be indifferent between any bundle of coffee and tea costing $30. 
A)  spend all $30 on tea. 
B)  spend all $30 on coffee. 
C)  spend $20 on coffee and $10 on tea. 
D)  be indifferent between any bundle of coffee and tea costing $30.

Question 3

An indifference curve represents bundles of goods that a consumer

Accepted Answer

A)  views as equally desirable. 
B)  ranks from most preferred to least preferred. 
C)  refers to any other bundle of goods. 
D)  All of the above. 
A)  views as equally desirable. 
B)  ranks from most preferred to least preferred. 
C)  refers to any other bundle of goods. 
D)  All of the above.

Question 4

Indifference curves cannot ever be concave for two goods.

Accepted Answer

A) True 
 B)False

Question 5

Data shows that United States college students purchase more e-books than German college students.Assuming that all students have identical preferences for e-books and textbooks,what is the likely explanation for this result?

Accepted Answer

A)  Taxes on textbooks are higher in the United States than taxes on textbooks in Germany. 
B)  Taxes on textbooks are lower in the United States than taxes on textbooks in Germany. 
C)  The price of textbooks is cheaper in the United States than textbooks in Germany. 
D)  Both A and C. 
A)  Taxes on textbooks are higher in the United States than taxes on textbooks in Germany. 
B)  Taxes on textbooks are lower in the United States than taxes on textbooks in Germany. 
C)  The price of textbooks is cheaper in the United States than textbooks in Germany. 
D)  Both A and C.

Question 6

Measuring "y" on the vertical axis and "x" on the horizontal axis,convexity of indifference curves implies that the MRS of "y" for "x"

Accepted Answer

A)  is decreasing as "x" increases. 
B)  is increasing as "x" increases. 
C)  is constant as "x" increases. 
D)  cannot be calculated for large levels of "x". 
A)  is decreasing as "x" increases. 
B)  is increasing as "x" increases. 
C)  is constant as "x" increases. 
D)  cannot be calculated for large levels of "x".

Question 7

John is indifferent between canned soup and fresh soup.Canned soup sells for $1 per serving and fresh soup sells for $2 per serving.Assuming that John has allocated $4 toward soup,how will he spend it? Explain your answer by drawing John's budget line and indifference curves.

Accepted Answer

@#IMG-DLM& See the above figure.Canned a

Question 8

The principle that "More is better" results in indifference curves

Accepted Answer

A)  sloping down. 
B)  not intersecting. 
C)  reflecting greater preferences the further they are from the origin. 
D)  All of the above. 
A)  sloping down. 
B)  not intersecting. 
C)  reflecting greater preferences the further they are from the origin. 
D)  All of the above.

Question 9

If two goods are perfect substitutes,then the indifference curves for those two goods would be

Accepted Answer

A)  upward sloping and concave to the origin. 
B)  downward sloping and convex to the origin. 
C)  downward sloping and straight. 
D)  L-shaped. 
A)  upward sloping and concave to the origin. 
B)  downward sloping and convex to the origin. 
C)  downward sloping and straight. 
D)  L-shaped.

Question 10

If the food stamp program in the United States moved from coupons redeemable for food to cash payments

Accepted Answer

A)  everyone would buy less food and more of other goods. 
B)  everyone would buy more food and less of other goods. 
C)  some people might buy less food and obtain a higher level of utility. 
D)  some people might buy less food and obtain a lower level of utility. 
A)  everyone would buy less food and more of other goods. 
B)  everyone would buy more food and less of other goods. 
C)  some people might buy less food and obtain a higher level of utility. 
D)  some people might buy less food and obtain a lower level of utility.

Question 11

In behavioral economics,the endowment effect refers to

Accepted Answer

A)  most people believe that most wealthy people inherit their wealth. 
B)  many people would be indifferent between being endowed with money or knowledge. 
C)  many people place a higher value on what they own than when they consider purchasing. 
D)  most people respond to tax incentives to provide an endowment for their children. 
A)  most people believe that most wealthy people inherit their wealth. 
B)  many people would be indifferent between being endowed with money or knowledge. 
C)  many people place a higher value on what they own than when they consider purchasing. 
D)  most people respond to tax incentives to provide an endowment for their children.

Question 12

If the price of one good increases while the price of the other good and the consumer's income remain unchanged,what will happen to the budget line?

Accepted Answer

A)  The budget line rotates inward from the intercept on the axis of the good that did not change in price. 
B)  The budget line rotates outward from the intercept on the axis of the good that did not change in price. 
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 axis of the good that did not change in price. 
B)  The budget line rotates outward from the intercept on the axis of the good that did not change in price. 
C)  The budget line shifts inward without a change in slope. 
D)  The budget line shifts outward without a change in slope.

Question 13

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

Accepted Answer

A)  -C/F. 
B)  -F/C. 
C)  -   
D)  -   
A)  -C/F. 
B)  -F/C. 
C)  -   
D)  -

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Question 16

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 17

Suppose that left shoes and right shoes must be purchased separately.Ingrid needs an equal number of each type of shoe and has a budget of $100 for shoes.Left shoes always cost $1.If right shoes cost $19 each,how many of each will Ingrid buy? If the price of right shoes increases to $49 each,how will Ingrid react? Explain your answer by drawing the indifference curves-budget lines.

Accepted Answer

@#IMG-DLM& See the above figure.Since Ingrid needs

Question 18

If two bundles are on the same indifference curve,then

Accepted Answer

A)  the consumer derives the same level of utility from each. 
B)  the consumer derives the same level of ordinal utility from each but not the same level of cardinal utility. 
C)  no comparison can be made between the two bundles since utility cannot really be measured. 
D)  B and C. 
A)  the consumer derives the same level of utility from each. 
B)  the consumer derives the same level of ordinal utility from each but not the same level of cardinal utility. 
C)  no comparison can be made between the two bundles since utility cannot really be measured. 
D)  B and C.

Question 19

Robinson Crusoe is stranded on an island.He finds that coconuts are freely available (zero harvest cost),but fish are difficult to harvest and require a lot of energy.As a result,harvesting fish has a high price.If coconuts and fish are imperfect substitutes,what is Robinson Crusoe likely to consume?

Accepted Answer

A)  He will consume more coconuts than fish. 
B)  He will consume more fish than coconuts. 
C)  He will consume equal amounts of both goods. 
D)  Not enough information is given. 
A)  He will consume more coconuts than fish. 
B)  He will consume more fish than coconuts. 
C)  He will consume equal amounts of both goods. 
D)  Not enough information is given.

Question 20

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.

Lisa eats both pizzas and burritos.If the price of a pizza increases,Lisa's opportunity set

Johnny has allocated $30 toward coffee and tea and feels that coffee and tea are perfect substitutes.Due to differences in caffeine levels,his MRS of tea for coffee equals 2.If coffee and tea sell for the same price,Johnny will

An indifference curve represents bundles of goods that a consumer

Indifference curves cannot ever be concave for two goods.

Data shows that United States college students purchase more e-books than German college students.Assuming that all students have identical preferences for e-books and textbooks,what is the likely explanation for this result?

Measuring "y" on the vertical axis and "x" on the horizontal axis,convexity of indifference curves implies that the MRS of "y" for "x"

John is indifferent between canned soup and fresh soup.Canned soup sells for $1 per serving and fresh soup sells for $2 per serving.Assuming that John has allocated $4 toward soup,how will he spend it? Explain your answer by drawing John's budget line and indifference curves.

The principle that "More is better" results in indifference curves

If two goods are perfect substitutes,then the indifference curves for those two goods would be

If the food stamp program in the United States moved from coupons redeemable for food to cash payments

In behavioral economics,the endowment effect refers to

If the price of one good increases while the price of the other good and the consumer's income remain unchanged,what will happen to the budget line?

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

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

The marginal rate of transformation of y for x represents

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

If two bundles are on the same indifference curve,then

Economists use a preference map to illustrate that

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

Lisa eats both pizzas and burritos.If the price of a pizza increases,Lisa's opportunity set

Johnny has allocated $30 toward coffee and tea and feels that coffee and tea are perfect substitutes.Due to differences in caffeine levels,his MRS of tea for coffee equals 2.If coffee and tea sell for the same price,Johnny will

An indifference curve represents bundles of goods that a consumer

Indifference curves cannot ever be concave for two goods.

Data shows that United States college students purchase more e-books than German college students.Assuming that all students have identical preferences for e-books and textbooks,what is the likely explanation for this result?

Measuring "y" on the vertical axis and "x" on the horizontal axis,convexity of indifference curves implies that the MRS of "y" for "x"

John is indifferent between canned soup and fresh soup.Canned soup sells for $1 per serving and fresh soup sells for $2 per serving.Assuming that John has allocated $4 toward soup,how will he spend it? Explain your answer by drawing John's budget line and indifference curves.

The principle that "More is better" results in indifference curves

If two goods are perfect substitutes,then the indifference curves for those two goods would be

If the food stamp program in the United States moved from coupons redeemable for food to cash payments

In behavioral economics,the endowment effect refers to

If the price of one good increases while the price of the other good and the consumer's income remain unchanged,what will happen to the budget line?

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

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

The marginal rate of transformation of y for x represents

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

If two bundles are on the same indifference curve,then

Economists use a preference map to illustrate that

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