Question 1

Which of the following is NOT given in the text as a problem with using surveys to determine consumer preferences?

Accepted Answer

A)  Subjects are asked to imagine choices that they do not actually face, and few people take hypothetical questions as seriously as they would actual choices. 
B)  Some people have difficulty forecasting their own behavior. 
C)  People may answer with what they think they ought to do, not what they think they actually would do. 
D)  Many people maliciously try to tamper with survey results by giving false answers. 
A)  Subjects are asked to imagine choices that they do not actually face, and few people take hypothetical questions as seriously as they would actual choices. 
B)  Some people have difficulty forecasting their own behavior. 
C)  People may answer with what they think they ought to do, not what they think they actually would do. 
D)  Many people maliciously try to tamper with survey results by giving false answers.

Question 2

Refer to Figure 5.5.Which diagram shows the price-consumption curve resulting from a decrease in the price of good X?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 3

Refer to Figure 5.6.Which diagram shows a decrease in income with bread being normal and soup being inferior?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 4

Which of the following statements is true?

Accepted Answer

A)  No good can be inferior at all levels of income. 
B)  The income elasticity of demand is negative for normal goods. 
C)  It is possible for a good to be inferior at all income levels. 
D)  It is possible for all of the goods a consumer buys to be inferior. 
A)  No good can be inferior at all levels of income. 
B)  The income elasticity of demand is negative for normal goods. 
C)  It is possible for a good to be inferior at all income levels. 
D)  It is possible for all of the goods a consumer buys to be inferior.

Question 5

Suppose a consumer buys pizza (P)and soft drinks (S).The price of pizza is $10,the price of soft drinks is $2 and the consumer's income is $100.If pizza is measured on the vertical axis and soft drinks are measured on the horizontal axis,then the consumer's budget constraint is given by:

Accepted Answer

A)  P = 10 - (1/5)S 
B)  S = 10 - (1/5)P 
C)  P = 100 - 5S 
D)  P = 10 - 5S 
A)  P = 10 - (1/5)S 
B)  S = 10 - (1/5)P 
C)  P = 100 - 5S 
D)  P = 10 - 5S

Question 6

Refer to Table 5.1,which shows Madeline's preference ranking for various consumption bundles of bread and soup,where 1 represents her first choice,2 her second,and so on.If the price of soup is $3 per bowl,the price of bread is $3 per loaf and Madeline's income is $9 per day,which combination of bread and soup will she choose?

Accepted Answer

A)  2 loaves of bread and 1 bowl of soup 
B)  1 loaf of bread and 2 bowls of soup 
C)  3 loaves of bread and 0 bowls of soup 
D)  0 loaves of bread and 3 bowls of soup 
A)  2 loaves of bread and 1 bowl of soup 
B)  1 loaf of bread and 2 bowls of soup 
C)  3 loaves of bread and 0 bowls of soup 
D)  0 loaves of bread and 3 bowls of soup

Question 7

Refer to Figure 5.7.Which diagram best represents an income-consumption curve where bread is an inferior good?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 8

Choices that do not exhaust the consumer's budget lie to the ______ of the budget line.

Accepted Answer

A)  southwest 
B)  northeast 
C)  northwest 
D)  southeast 
A)  southwest 
B)  northeast 
C)  northwest 
D)  southeast

Question 9

Refer to Figure 5.7.Which diagram best represents an income-consumption curve where soup is a normal good?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 10

Refer to Figure 5.6.Which diagram shows an increase in income with bread being inferior and soup being normal?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 11

A curve that describes the relationship between the price of a good and the amount a particular consumer purchases (holding the consumer's income,preferences and all other prices fixed)is called:

Accepted Answer

A)  a price-consumption curve. 
B)  an individual demand curve. 
C)  an income-consumption curve. 
D)  a budget line. 
A)  a price-consumption curve. 
B)  an individual demand curve. 
C)  an income-consumption curve. 
D)  a budget line.

Question 12

Refer to Figure 5.4.Which consumption bundle would maximize the consumer's utility?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 13

When the government provides food stamps to low-income households:

Accepted Answer

A)  the household definitely purchases more food. 
B)  the household purchases less food. 
C)  purchases of food may increase or decrease. 
D)  the household's utility is greater than if they received cash aid. 
A)  the household definitely purchases more food. 
B)  the household purchases less food. 
C)  purchases of food may increase or decrease. 
D)  the household's utility is greater than if they received cash aid.

Question 14

Suppose that an individual consumes just hamburgers and soft drinks.Using a carefully-labeled diagram,derive the price-consumption curve that would result from a decrease in the price of hamburgers.

Accepted Answer

See Figure 5.11.The initial budget line

Which of the following is NOT given in the text as a problem with using surveys to determine consumer preferences?

Refer to Figure 5.5.Which diagram shows the price-consumption curve resulting from a decrease in the price of good X?

Refer to Figure 5.6.Which diagram shows a decrease in income with bread being normal and soup being inferior?

Which of the following statements is true?

Suppose a consumer buys pizza (P)and soft drinks (S).The price of pizza is $10,the price of soft drinks is $2 and the consumer's income is $100.If pizza is measured on the vertical axis and soft drinks are measured on the horizontal axis,then the consumer's budget constraint is given by:

Refer to Figure 5.7.Which diagram best represents an income-consumption curve where bread is an inferior good?

Choices that do not exhaust the consumer's budget lie to the ______ of the budget line.

Refer to Figure 5.7.Which diagram best represents an income-consumption curve where soup is a normal good?

Refer to Figure 5.6.Which diagram shows an increase in income with bread being inferior and soup being normal?

A curve that describes the relationship between the price of a good and the amount a particular consumer purchases (holding the consumer's income,preferences and all other prices fixed)is called:

Refer to Figure 5.4.Which consumption bundle would maximize the consumer's utility?

When the government provides food stamps to low-income households:

Suppose that an individual consumes just hamburgers and soft drinks.Using a carefully-labeled diagram,derive the price-consumption curve that would result from a decrease in the price of hamburgers.

Introduction

Supply and Demand

Balancing Benefits and Costs

Consumer Preferences

Demand and Welfare

Technology and Production

Cost

Profit Maximization

Choices Involving Time

Choices Involving Risk

Choices Involving Strategy

Behavioral Economics

Equilibrium and Efficiency

Market Intervention

General Equilibrium, Efficiency, and Equity

Monopoly

Pricing Policies

Oligopoly

Externalities and Public Goods

Asymmetric Information

Filters

Exam 5: Constraints, Choices, and Demand

Which of the following is NOT given in the text as a problem with using surveys to determine consumer preferences?

Refer to Figure 5.5.Which diagram shows the price-consumption curve resulting from a decrease in the price of good X?

Refer to Figure 5.6.Which diagram shows a decrease in income with bread being normal and soup being inferior?

Which of the following statements is true?

Suppose a consumer buys pizza (P)and soft drinks (S).The price of pizza is $10,the price of soft drinks is $2 and the consumer's income is $100.If pizza is measured on the vertical axis and soft drinks are measured on the horizontal axis,then the consumer's budget constraint is given by:

Refer to Figure 5.7.Which diagram best represents an income-consumption curve where bread is an inferior good?

Choices that do not exhaust the consumer's budget lie to the ______ of the budget line.

Refer to Figure 5.7.Which diagram best represents an income-consumption curve where soup is a normal good?

Refer to Figure 5.6.Which diagram shows an increase in income with bread being inferior and soup being normal?

A curve that describes the relationship between the price of a good and the amount a particular consumer purchases (holding the consumer's income,preferences and all other prices fixed)is called:

Refer to Figure 5.4.Which consumption bundle would maximize the consumer's utility?

When the government provides food stamps to low-income households:

Suppose that an individual consumes just hamburgers and soft drinks.Using a carefully-labeled diagram,derive the price-consumption curve that would result from a decrease in the price of hamburgers.

Introduction

Supply and Demand

Balancing Benefits and Costs

Consumer Preferences

Demand and Welfare

Technology and Production

Cost

Profit Maximization

Choices Involving Time

Choices Involving Risk

Choices Involving Strategy

Behavioral Economics

Equilibrium and Efficiency

Market Intervention

General Equilibrium, Efficiency, and Equity

Monopoly

Pricing Policies

Oligopoly

Externalities and Public Goods

Asymmetric Information

Filters