Question 1

Consumers do not prefer gifts-in-kind to cash gifts.

Accepted Answer

A) True 
 B)False

Question 2

Cash may be preferred to food stamps because additional cash

Accepted Answer

A)  rotates the budget constraint. 
B)  shifts out the budget constraint at every point. 
C)  provides a smaller opportunity set. 
D)  allows the purchase of more food. 
A)  rotates the budget constraint. 
B)  shifts out the budget constraint at every point. 
C)  provides a smaller opportunity set. 
D)  allows the purchase of more food.

Question 3

Individuals derive utility from picnics,p,and kayak trips,k.Assuming that an individual's utility is U(p,k)= k0.5p0.5 and income is $100,what is the marginal rate of substitution (MRS)between picnics and kayak trips?

Accepted Answer

A)  MRS = 1. 
B)  MRS = -1. 
C)  MRS = -   
D)  There is no substitution because picnics and kayak trips are perfect complements. 
A)  MRS = 1. 
B)  MRS = -1. 
C)  MRS = -   
D)  There is no substitution because picnics and kayak trips are perfect complements.

Question 4

Quotas,such as limiting the amount of residential water use during a drought,restricts an individual's preference set and

Accepted Answer

A)  reduces utility because an individual cannot consume as much as they would without the quota. 
B)  increases utility because quotas restrict output and raise profits for the water company. 
C)  reduces utility because an individual is forced to substitute to other goods. 
D)  does not affect overall utility. 
A)  reduces utility because an individual cannot consume as much as they would without the quota. 
B)  increases utility because quotas restrict output and raise profits for the water company. 
C)  reduces utility because an individual is forced to substitute to other goods. 
D)  does not affect overall utility.

Question 5

Clifford lives by the motto "Eat drink and be merry today,for tomorrow doesn't matter." If today's consumption is represented by "x" and tomorrow's consumption is represented by "y",then which of the following best represents Clifford's utility function?

Accepted Answer

A)  U = x - y 
B)  U = x/y 
C)  U = x 
D)  U = y 
A)  U = x - y 
B)  U = x/y 
C)  U = x 
D)  U = y

Question 6

Lisa views pizzas and burritos as goods.If she prefers a bundle of 4 burritos and 4 pizzas to a bundle of 4 burritos and 5 pizzas,which property of consumer preference is violated? What change in the assumptions could lead a rational consumer to prefer the first bundle?

Accepted Answer

The property of more-is-better

Question 7

What is the difference between ordinal and cardinal measurement?

Accepted Answer

Prices are measured in money,which is a

Question 8

If a consumer's budget line for food (F)and shelter (S)is represented as F = 250 - 5S,we know that

Accepted Answer

A)  the consumer's income is 250. 
B)  the price of shelter is 5. 
C)  the price of shelter is 5 times the price of food. 
D)  All of the above. 
A)  the consumer's income is 250. 
B)  the price of shelter is 5. 
C)  the price of shelter is 5 times the price of food. 
D)  All of the above.

Question 9

A consumer derives utility for "all other goods," g,and cigarettes,s.The price of "all other goods" equals $9 and the price of cigarettes is $10.Now suppose the government implements a $0.50 per-unit tax on cigarettes to encourage a decrease in smoking.How does the tax affect the marginal rate of transformation,MRT?

Accepted Answer

A)  The MRT will decrease to -   . 
B)  The MRT will increase to -   . 
C)  The MRT will increase to -   + 0.05. 
D)  The MRT will decrease to -   - 0.05. 
A)  The MRT will decrease to -   . 
B)  The MRT will increase to -   . 
C)  The MRT will increase to -   + 0.05. 
D)  The MRT will decrease to -   - 0.05.

Question 10

An interior solution to a consumer's utility maximization problem implies

Accepted Answer

A)  consuming a positive amount of all goods. 
B)  consuming negative amounts of all goods. 
C)  consuming less than optimal amounts of all goods. 
D)  consuming more than an optimal amount of at least one good. 
A)  consuming a positive amount of all goods. 
B)  consuming negative amounts of all goods. 
C)  consuming less than optimal amounts of all goods. 
D)  consuming more than an optimal amount of at least one good.

Question 11

In Spain,people are considered organ donors unless the explicitly indicate they do not want to be.In the United States,people are only considered organ donors if they explicitly indicate they wish to be.Behavioral economics would suggest that

Accepted Answer

A)  everything else equal, the opt-in system of Spain would generate more organ donors as a percentage of the adult population. 
B)  everything else equal, the opt-in system of the United States would generate more organ donors as a percentage of the adult population. 
C)  everything else equal, the opt-out system of Spain would generate more organ donors as a percentage of the adult population. 
D)  everything else equal, the opt-out system of the United States would generate more organ donors as a percentage of the adult population. 
A)  everything else equal, the opt-in system of Spain would generate more organ donors as a percentage of the adult population. 
B)  everything else equal, the opt-in system of the United States would generate more organ donors as a percentage of the adult population. 
C)  everything else equal, the opt-out system of Spain would generate more organ donors as a percentage of the adult population. 
D)  everything else equal, the opt-out system of the United States would generate more organ donors as a percentage of the adult population.

Question 12

If the prices of both goods and income increase by the same percentage,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 outward without a change in slope. 
D)  Nothing. 
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 outward without a change in slope. 
D)  Nothing.

Question 13

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 14

Behavioral economics extends traditional economic models by

Accepted Answer

A)  including insights from psychology and human cognition models. 
B)  modeling behavior rather than prices. 
C)  admitting that individuals are irrational. 
D)  admitting that incentives are very important. 
A)  including insights from psychology and human cognition models. 
B)  modeling behavior rather than prices. 
C)  admitting that individuals are irrational. 
D)  admitting that incentives are very important.

Question 15

Behavioral economists have discovered that

Accepted Answer

A)  transitivity of preferences always holds, even in animals. 
B)  the law of demand does not hold in controlled experiments. 
C)  transitivity of preferences does not always hold, especially for young people. 
D)  reflexivity of preferences is not true. 
A)  transitivity of preferences always holds, even in animals. 
B)  the law of demand does not hold in controlled experiments. 
C)  transitivity of preferences does not always hold, especially for young people. 
D)  reflexivity of preferences is not true.

Question 16

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 17

-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 d,

Accepted Answer

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

Question 18

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

Accepted Answer

A)  is not positive. 
B)  does not diminish as food increases. 
C)  is not affected by the amount clothing. 
D)  increases as one obtains more clothing. 
A)  is not positive. 
B)  does not diminish as food increases. 
C)  is not affected by the amount clothing. 
D)  increases as one obtains more clothing.

Question 19

-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 20

-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.

Consumers do not prefer gifts-in-kind to cash gifts.

Cash may be preferred to food stamps because additional cash

Individuals derive utility from picnics,p,and kayak trips,k.Assuming that an individual's utility is U(p,k)= k^0.5p^0.⁵ and income is $100,what is the marginal rate of substitution (MRS)between picnics and kayak trips?

Quotas,such as limiting the amount of residential water use during a drought,restricts an individual's preference set and

Clifford lives by the motto "Eat drink and be merry today,for tomorrow doesn't matter." If today's consumption is represented by "x" and tomorrow's consumption is represented by "y",then which of the following best represents Clifford's utility function?

Lisa views pizzas and burritos as goods.If she prefers a bundle of 4 burritos and 4 pizzas to a bundle of 4 burritos and 5 pizzas,which property of consumer preference is violated? What change in the assumptions could lead a rational consumer to prefer the first bundle?

What is the difference between ordinal and cardinal measurement?

If a consumer's budget line for food (F)and shelter (S)is represented as F = 250 - 5S,we know that

An interior solution to a consumer's utility maximization problem implies

In Spain,people are considered organ donors unless the explicitly indicate they do not want to be.In the United States,people are only considered organ donors if they explicitly indicate they wish to be.Behavioral economics would suggest that

If the prices of both goods and income increase by the same percentage,what will happen to the budget line?

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

Behavioral economics extends traditional economic models by

Behavioral economists have discovered that

-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 d,

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

-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 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?

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

Consumers do not prefer gifts-in-kind to cash gifts.

Cash may be preferred to food stamps because additional cash

Individuals derive utility from picnics,p,and kayak trips,k.Assuming that an individual's utility is U(p,k)= k0.5p0.5 and income is $100,what is the marginal rate of substitution (MRS)between picnics and kayak trips?

Quotas,such as limiting the amount of residential water use during a drought,restricts an individual's preference set and

Clifford lives by the motto "Eat drink and be merry today,for tomorrow doesn't matter." If today's consumption is represented by "x" and tomorrow's consumption is represented by "y",then which of the following best represents Clifford's utility function?

Lisa views pizzas and burritos as goods.If she prefers a bundle of 4 burritos and 4 pizzas to a bundle of 4 burritos and 5 pizzas,which property of consumer preference is violated? What change in the assumptions could lead a rational consumer to prefer the first bundle?

What is the difference between ordinal and cardinal measurement?

If a consumer's budget line for food (F)and shelter (S)is represented as F = 250 - 5S,we know that

An interior solution to a consumer's utility maximization problem implies

In Spain,people are considered organ donors unless the explicitly indicate they do not want to be.In the United States,people are only considered organ donors if they explicitly indicate they wish to be.Behavioral economics would suggest that

If the prices of both goods and income increase by the same percentage,what will happen to the budget line?

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

Behavioral economics extends traditional economic models by

Behavioral economists have discovered that

-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 d,

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

-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 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?

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

Individuals derive utility from picnics,p,and kayak trips,k.Assuming that an individual's utility is U(p,k)= k^0.5p^0.⁵ and income is $100,what is the marginal rate of substitution (MRS)between picnics and kayak trips?