Question 1

If two indifference curves were to intersect at a point,this would violate the assumption of

Accepted Answer

A)  transitivity. 
B)  completeness. 
C)  Both A and B above. 
D)  None of the above. 
A)  transitivity. 
B)  completeness. 
C)  Both A and B above. 
D)  None 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

A consumer buys food (F)and shelter (S).If the consumer's income rises and there is no change in the prices of F or S,the marginal rate of transformation of F for S will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  change, but there is not enough information to know how. 
A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  change, but there is not enough information to know how.

Question 4

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 5

Rank-order the following three gifts in terms of potentially providing the highest utility to the lowest: 1)A new video game; 2)A gift card to a video game store; 3)Cash.

Accepted Answer

A)  1, 2, 3 
B)  2, 3, 1 
C)  3, 2, 1 
D)  1, 3, 2 
A)  1, 2, 3 
B)  2, 3, 1 
C)  3, 2, 1 
D)  1, 3, 2

Question 6

Joe subscribes to an Internet provider that charges $2 per hour.He has $100 per month to spend and is at equilibrium by buying 10 hours of Internet access and $80 worth of other goods.Draw the indifference curve-budget line.If the company switches to a $20 monthly fee for unlimited Internet access,is Joe better off?

Accepted Answer

@#IMG-DLM& See the above figure.Under the new plan

Question 7

Assume the price of beer is $4,the price of pizza is $10 and the consumer's income is $250.Which consumption bundle will NOT be the consumer's choice?

Accepted Answer

A)  5 Beer, 5 Pizza 
B)  0 Beer, 25 Pizza 
C)  25 Beer, 15 Pizza 
D)  None of the bundle will be chosen. 
A)  5 Beer, 5 Pizza 
B)  0 Beer, 25 Pizza 
C)  25 Beer, 15 Pizza 
D)  None of the bundle will be chosen.

Question 8

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 budget constraint?

Accepted Answer

A)  500 = 2F + 100S 
B)  F = 250 - 50S 
C)  S = 5 - .02F 
D)  All of the above. 
A)  500 = 2F + 100S 
B)  F = 250 - 50S 
C)  S = 5 - .02F 
D)  All of the above.

Question 9

-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 10 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 10

In behavioral economics,the term salience refers to

Accepted Answer

A)  relevance to the problem being investigated. 
B)  people only consider information when it is conveyed in a subtle manner. 
C)  how an experiment is designed. 
D)  people consider information when it is presented in an "eye grabbing" manner. 
A)  relevance to the problem being investigated. 
B)  people only consider information when it is conveyed in a subtle manner. 
C)  how an experiment is designed. 
D)  people consider information when it is presented in an "eye grabbing" manner.

Question 11

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 budget constraint?

Accepted Answer

A)  500 = 100F + 2S 
B)  500 = 2F + 100S 
C)  S = 500 - 2F 
D)  All of the above. 
A)  500 = 100F + 2S 
B)  500 = 2F + 100S 
C)  S = 500 - 2F 
D)  All of the above.

Question 12

If Johnny likes homework (H)but hates exercise (E),which of the following might best represent his utility function for homework and exercise?

Accepted Answer

A)  U = H + E 
B)  U = H/E 
C)  U = H2 +   
D)  U = H2 ×   
A)  U = H + E 
B)  U = H/E 
C)  U = H2 +   
D)  U = H2 ×

Question 13

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 = x2 + y2 
D)  Any of the above. 
A)  U = x + y 
B)  U = x ∗ y 
C)  U = x2 + y2 
D)  Any of the above.

Question 14

Indifference curves that are thick violate

Accepted Answer

A)  the assumption of transitivity. 
B)  the assumption that more is better. 
C)  the assumption of completeness. 
D)  none of the assumptions. 
A)  the assumption of transitivity. 
B)  the assumption that more is better. 
C)  the assumption of completeness. 
D)  none of the assumptions.

Question 15

Clifford lives by the motto "Eat,drink and be merry today,for tomorrow doesn't matter." If today's consumption is measured on the horizontal axis and tomorrow's consumption is measured on the vertical axis,Clifford's indifference curves

Accepted Answer

A)  are horizontal straight lines. 
B)  are vertical straight lines. 
C)  show decreasing utility as one moves upward. 
D)  cannot be determined from the information given. 
A)  are horizontal straight lines. 
B)  are vertical straight lines. 
C)  show decreasing utility as one moves upward. 
D)  cannot be determined from the information given.

If two indifference curves were to intersect at a point,this would violate the assumption of

-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?

A consumer buys food (F)and shelter (S).If the consumer's income rises and there is no change in the prices of F or S,the marginal rate of transformation of F for S will

Rank-order the following three gifts in terms of potentially providing the highest utility to the lowest: 1)A new video game; 2)A gift card to a video game store; 3)Cash.

Assume the price of beer is $4,the price of pizza is $10 and the consumer's income is $250.Which consumption bundle will NOT be the consumer's choice?

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 budget constraint?

-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 10 pounds of burger?

In behavioral economics,the term salience refers to

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 budget constraint?

If Johnny likes homework (H)but hates exercise (E),which of the following might best represent his utility function for homework and exercise?

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

Indifference curves that are thick violate

Clifford lives by the motto "Eat,drink and be merry today,for tomorrow doesn't matter." If today's consumption is measured on the horizontal axis and tomorrow's consumption is measured on the vertical axis,Clifford's indifference curves

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 two indifference curves were to intersect at a point,this would violate the assumption of

-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?

A consumer buys food (F)and shelter (S).If the consumer's income rises and there is no change in the prices of F or S,the marginal rate of transformation of F for S will

Rank-order the following three gifts in terms of potentially providing the highest utility to the lowest: 1)A new video game; 2)A gift card to a video game store; 3)Cash.

Assume the price of beer is $4,the price of pizza is $10 and the consumer's income is $250.Which consumption bundle will NOT be the consumer's choice?

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 budget constraint?

-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 10 pounds of burger?

In behavioral economics,the term salience refers to

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 budget constraint?

If Johnny likes homework (H)but hates exercise (E),which of the following might best represent his utility function for homework and exercise?

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

Indifference curves that are thick violate

Clifford lives by the motto "Eat,drink and be merry today,for tomorrow doesn't matter." If today's consumption is measured on the horizontal axis and tomorrow's consumption is measured on the vertical axis,Clifford's indifference curves

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