Question 1

A consumer's preferences for right shoes and left shoes can be represented by indifference curves that are

Accepted Answer

A)  bowed out from the origin 
B)  bowed in toward the origin 
C)  straight lines 
D)  right angles 
A)  bowed out from the origin 
B)  bowed in toward the origin 
C)  straight lines 
D)  right angles

Question 2

Figure 21-7  
-Refer to Figure 21-7.Which of the following statements is correct?

Accepted Answer

A)  If a consumer moves from bundle C to bundle A,her loss of cake cannot be compensated for by an increase in donuts. 
B)  Bundle E is preferred to all other points identified in the figure. 
C)  Since more is preferred to less,bundle C may be preferred to bundle E in some circumstances for this consumer. 
D)  Even though bundle E has more of both goods than bundle B,we could draw a different set of indifference curves in which bundle B is preferred to bundle E. 
A)  If a consumer moves from bundle C to bundle A,her loss of cake cannot be compensated for by an increase in donuts. 
B)  Bundle E is preferred to all other points identified in the figure. 
C)  Since more is preferred to less,bundle C may be preferred to bundle E in some circumstances for this consumer. 
D)  Even though bundle E has more of both goods than bundle B,we could draw a different set of indifference curves in which bundle B is preferred to bundle E.

Question 3

The two "goods" used when economists analyze labor supply are

Accepted Answer

A)  work and leisure. 
B)  work and consumption. 
C)  saving and consumption. 
D)  leisure and consumption. 
A)  work and leisure. 
B)  work and consumption. 
C)  saving and consumption. 
D)  leisure and consumption.

Question 4

A consumer

Accepted Answer

A)  is equally satisfied with any indifference curve. 
B)  prefers indifference curves with positive slopes. 
C)  prefers higher indifference curves to lower indifference curves. 
D)  prefers indifference curves that are straight lines to indifference curves that are right angles.. 
A)  is equally satisfied with any indifference curve. 
B)  prefers indifference curves with positive slopes. 
C)  prefers higher indifference curves to lower indifference curves. 
D)  prefers indifference curves that are straight lines to indifference curves that are right angles..

Question 5

Scenario 21-1
Suppose the price of hot wings is $10,the price of beer is $1,and the consumer's income is $50.In addition,suppose the consumer's budget constraint illustrates hot wings on the horizontal axis and beer on the vertical axis.
-Refer to Scenario 21-1.If the price of beer doubles to $2,then the

Accepted Answer

A)  budget constraint intersects the vertical axis at 25 beers. 
B)  slope of the budget constraint rises to -2. 
C)  budget constraint intersects the vertical axis at 100 beers. 
D)  budget constraint shifts inward in a parallel fashion. 
A)  budget constraint intersects the vertical axis at 25 beers. 
B)  slope of the budget constraint rises to -2. 
C)  budget constraint intersects the vertical axis at 100 beers. 
D)  budget constraint shifts inward in a parallel fashion.

Question 6

Carlos goes to the movies every Sunday afternoon.The movie theater offers 4 combinations of popcorn and beverages: the "mini-combo" costs $5 and includes a small popcorn and a small drink,the "medium-combo" costs $7 and includes a medium popcorn and a medium drink,the "value-combo" also costs $7 and includes a small popcorn and a large drink,and the "large-combo" costs $9 and includes a large popcorn and a large drink.Carlos always purchases the "value-combo." We can conclude that

Accepted Answer

A)  Carlos cannot afford the "large-combo." 
B)  Carlos cannot afford the "medium-combo." 
C)  Carlos prefers a combo with a larger popcorn-to-beverage ratio. 
D)  Carlos prefers a combo with a smaller popcorn-to-beverage ratio. 
A)  Carlos cannot afford the "large-combo." 
B)  Carlos cannot afford the "medium-combo." 
C)  Carlos prefers a combo with a larger popcorn-to-beverage ratio. 
D)  Carlos prefers a combo with a smaller popcorn-to-beverage ratio.

Question 7

The opportunity cost of current household consumption is the

Accepted Answer

A)  wage rate. 
B)  market interest rate. 
C)  price of the goods consumed. 
D)  explicit cost of consumption. 
A)  wage rate. 
B)  market interest rate. 
C)  price of the goods consumed. 
D)  explicit cost of consumption.

Question 8

An optimizing consumer will select a consumption bundle in which

Accepted Answer

A)  income is maximized,and prices are minimized. 
B)  utility is maximized,and prices are minimized. 
C)  utility is maximized,subject to budget constraints. 
D)  utility is maximized,and indifference curves are linear. 
A)  income is maximized,and prices are minimized. 
B)  utility is maximized,and prices are minimized. 
C)  utility is maximized,subject to budget constraints. 
D)  utility is maximized,and indifference curves are linear.

Question 9

Figure 21-4  
-Refer to Figure 21-4.In graph (a),if income is equal to $120,the price of good Y is

Accepted Answer

A)  $1 
B)  $2 
C)  $3 
D)  $4 
A)  $1 
B)  $2 
C)  $3 
D)  $4

Question 10

A rational consumer maximizes her

Accepted Answer

A)  preferences. 
B)  marginal rate of substitution. 
C)  utility. 
D)  budget constraint. 
A)  preferences. 
B)  marginal rate of substitution. 
C)  utility. 
D)  budget constraint.

Question 11

An inferior good is one in which

Accepted Answer

A)  the average consumer chooses not to consume. 
B)  the good is not equally valued by all consumers. 
C)  an increase in income increases consumption of the good. 
D)  an increase in income decreases consumption of the good. 
A)  the average consumer chooses not to consume. 
B)  the good is not equally valued by all consumers. 
C)  an increase in income increases consumption of the good. 
D)  an increase in income decreases consumption of the good.

Question 12

Suppose the price of good X falls.As a result,the quantity demanded for good X increases for a particular consumer.For this consumer,the substitution effect induced the consumer to purchase more X while the income effect induced the consumer to purchase less X.We can infer that X is a(n)

Accepted Answer

A)  normal good. 
B)  inferior good. 
C)  Giffen good. 
D)  luxury good. 
A)  normal good. 
B)  inferior good. 
C)  Giffen good. 
D)  luxury good.

Question 13

Ken consumes two goods,Sprite and potato chips.Sprite costs $2 per can,and he consumes it to the point where the marginal utility he receives from his last Sprite is 4.Potato chips cost $3 per bag,and the relationship between the marginal utility he gets from eating a bag of potato chips and the number of bags he eats per month is as follows:
 
If Ken is maximizing his utility,how many bags of potato chips does he buy each month?

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  5 
A)  2 
B)  3 
C)  4 
D)  5

Question 14

If Walter has one hour of leisure time in which to watch a sporting event on television,his preferences are as follows: Walter prefers watching football to watching baseball,but he prefers watching baseball to watching basketball.He is indifferent between watching baseball and watching hockey.Bundle A contains one hour of football and zero hours of all other sports.Bundle B contains one hour of baseball and zero hours of all other sports.Bundle C contains one hour of basketball and zero hours of all other sports.Bundle D contains one hour of hockey and zero hours of all other sports.If we were to graph Walter's preferences using indifference curves,which of the following bundles would be on the same indifference curve?

Accepted Answer

A)  A,B,and C only 
B)  B and D only 
C)  A and D only 
D)  There is no combination of the sports that could be drawn on the same indifference curve. 
A)  A,B,and C only 
B)  B and D only 
C)  A and D only 
D)  There is no combination of the sports that could be drawn on the same indifference curve.

Exam 21: The Theory of Consumer Choice

A consumer's preferences for right shoes and left shoes can be represented by indifference curves that are

Figure 21-7 -Refer to Figure 21-7.Which of the following statements is correct?

The two "goods" used when economists analyze labor supply are

A consumer

The opportunity cost of current household consumption is the

An optimizing consumer will select a consumption bundle in which

Figure 21-4 -Refer to Figure 21-4.In graph (a),if income is equal to $120,the price of good Y is

A rational consumer maximizes her

An inferior good is one in which

Suppose the price of good X falls.As a result,the quantity demanded for good X increases for a particular consumer.For this consumer,the substitution effect induced the consumer to purchase more X while the income effect induced the consumer to purchase less X.We can infer that X is a(n)

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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