Question 1

Show, using a sketch graph, why a consumer prefers a cash gift rather than a larger gift of merchandise.

Accepted Answer

The answer of Show, using a sketch graph, why a...

Question 2

If the opportunity cost of a unit of current consumption is exactly 1 unit of future consumption then you must sacrifice $10 of current consumption to finance

Accepted Answer

A) $9 of future consumption 
B) $10 of future consumption 
C) $11 of future consumption 
D) $1 of future consumption 
A) $9 of future consumption 
B) $10 of future consumption 
C) $11 of future consumption 
D) $1 of future consumption B

Question 3

Say the bus authority in your city increased the typical bus fare from $1.00 to $1.50, and that due to this increase total revenue increased by 20%. Based on this we know that the price elasticity of bus rides in your neighborhood is (assume demand curve is linear):

Accepted Answer

A) 0.4 
B) 0.8 
C) 1 
D) 1.5 
A) 0.4 
B) 0.8 
C) 1 
D) 1.5 A

Question 4

Show with a sketch graph on each graph what the market does to correct the disequilibrium.

Accepted Answer

Rotate the budget line as described abov

Question 5

If you wear your favorite clothes first and eat your favorite food before the food you prefer less you most likely have a

Accepted Answer

A) Positive time preference 
B) A negative time preference 
C) A neutral time preference 
D) Time preference that varies depending on whether you are eating or dressing 
A) Positive time preference 
B) A negative time preference 
C) A neutral time preference 
D) Time preference that varies depending on whether you are eating or dressing

Question 6

Suppose you receive Y1 of your income this period and Y2 of your income in the next period.If you can either borrow or lend at an interest rate r, what is the most you can consume in the future period?

Accepted Answer

A) Y1(1 + r) + Y2 
B) Y2(1 + r) + Y1 
C) Y1/(1 + r) + Y2 
D) Y2/(1 + r) + Y1 
A) Y1(1 + r) + Y2 
B) Y2(1 + r) + Y1 
C) Y1/(1 + r) + Y2 
D) Y2/(1 + r) + Y1

Question 7

Describe in words why the consumer price index overestimates inflation.

Accepted Answer

The CPI assumes the consumer is unable t

Question 8

If the demand function for city bus rides is P = 100 - 10Q and the present price of a ride is 50, then

Accepted Answer

A) Raising prices will increase city revenue 
B) Raising prices will decrease city revenue 
C) Raising prices will not change city revenue 
D) From the information given it is not clear what would happen to city revenue if price is increased 
A) Raising prices will increase city revenue 
B) Raising prices will decrease city revenue 
C) Raising prices will not change city revenue 
D) From the information given it is not clear what would happen to city revenue if price is increased

Question 9

Use the following to answer the next two questions.

Accepted Answer

These questions compare two co

Question 10

If the demand function for apples is P = 1 - Q, how much consumer surplus does the consumer gain when the price of the apples equals 5?

Accepted Answer

A) 25 
B) 5 
C) 20 
D) 12.5 
A) 25 
B) 5 
C) 20 
D) 12.5

Question 11

The horizontal intercept of the intertemporal budget constraint is referred to as

Accepted Answer

A) The present value of lifetime income 
B) The current value of future income 
C) The future value of lifetime income 
D) The future value of present income 
A) The present value of lifetime income 
B) The current value of future income 
C) The future value of lifetime income 
D) The future value of present income

Question 12

A decrease in the interest rate will

Accepted Answer

A) Produce an increase in current savings 
B) Produce an increase in current consumption 
C) Produce a decrease in current savings 
D) Depend on the particular consumer's preferences 
A) Produce an increase in current savings 
B) Produce an increase in current consumption 
C) Produce a decrease in current savings 
D) Depend on the particular consumer's preferences

Question 13

Say an individual demand curve was given by P = 50 - 5Q. When the price is $25, consumer surplus is around:

Accepted Answer

A) $63 
B) $188 
C) $125 
D) $100 
A) $63 
B) $188 
C) $125 
D) $100

Question 14

When people choose to wait for a kiss that they have won from a favorite movie star, they are clearly

Accepted Answer

A) Exhibiting a negative time preference 
B) Exhibiting a positive time preference 
C) Exhibiting a zero time preference 
D) Illustrating that the anticipatory pleasure of the kiss exceeds the value lost by waiting for it 
A) Exhibiting a negative time preference 
B) Exhibiting a positive time preference 
C) Exhibiting a zero time preference 
D) Illustrating that the anticipatory pleasure of the kiss exceeds the value lost by waiting for it

Question 15

If the interest rate increases to 4 percent will cause you to

Accepted Answer

A) Save more of your income 
B) Save less of your income 
C) Be more time patient 
D) Be more time impatient 
A) Save more of your income 
B) Save less of your income 
C) Be more time patient 
D) Be more time impatient

Question 16

If I get 10 units of pleasure from my first ice cream cone and 2 less units than before from each succeeding cone, I will buy ____ cones and gain _____ units of consumer surplus if the price of a cone = to 5 units of pleasure.

Accepted Answer

A) 4, 28 
B) 6, 30 
C) 2, 18 
D) 3, 9 
A) 4, 28 
B) 6, 30 
C) 2, 18 
D) 3, 9

Question 17

Why is the market for loanable funds not in equilibrium?

Accepted Answer

The supply of loanable funds e

Question 18

The consumer price index overestimates inflation because it

Accepted Answer

A) Compares prices of what consumers actually buy rather than a fixed basket of goods 
B) Allows consumers to move along a given indifference curve from one year to the next 
C) Measures the cost of a market basket in the second year that has too many units of the most inflated items 
D) Uses the second year's market basket as the base rather than the first year's basket 
A) Compares prices of what consumers actually buy rather than a fixed basket of goods 
B) Allows consumers to move along a given indifference curve from one year to the next 
C) Measures the cost of a market basket in the second year that has too many units of the most inflated items 
D) Uses the second year's market basket as the base rather than the first year's basket

Question 19

According to the analysis in your text, the school voucher program would

Accepted Answer

A) Increase the quality of education 
B) Decrease the quality of education 
C) Not affect education quality, but would make lower income families better off 
D) Increase the quality of education, but not improve the welfare of low income families 
A) Increase the quality of education 
B) Decrease the quality of education 
C) Not affect education quality, but would make lower income families better off 
D) Increase the quality of education, but not improve the welfare of low income families

Question 20

When you allocate consumption optimally between the two periods the marginal rate of time preference between the two periods is:

Accepted Answer

A) -1.02 
B) -1.00 
C) -1.80 
D) 0.80 
A) -1.02 
B) -1.00 
C) -1.80 
D) 0.80

Show, using a sketch graph, why a consumer prefers a cash gift rather than a larger gift of merchandise.

If the opportunity cost of a unit of current consumption is exactly 1 unit of future consumption then you must sacrifice $10 of current consumption to finance

Say the bus authority in your city increased the typical bus fare from $1.00 to $1.50, and that due to this increase total revenue increased by 20%. Based on this we know that the price elasticity of bus rides in your neighborhood is (assume demand curve is linear):

Show with a sketch graph on each graph what the market does to correct the disequilibrium.

If you wear your favorite clothes first and eat your favorite food before the food you prefer less you most likely have a

Suppose you receive Y1 of your income this period and Y2 of your income in the next period.If you can either borrow or lend at an interest rate r, what is the most you can consume in the future period?

Describe in words why the consumer price index overestimates inflation.

If the demand function for city bus rides is P = 100 - 10Q and the present price of a ride is 50, then

Use the following to answer the next two questions.

If the demand function for apples is P = 1 - Q, how much consumer surplus does the consumer gain when the price of the apples equals 5?

The horizontal intercept of the intertemporal budget constraint is referred to as

A decrease in the interest rate will

Say an individual demand curve was given by P = 50 - 5Q. When the price is $25, consumer surplus is around:

When people choose to wait for a kiss that they have won from a favorite movie star, they are clearly

If the interest rate increases to 4 percent will cause you to

If I get 10 units of pleasure from my first ice cream cone and 2 less units than before from each succeeding cone, I will buy cones and gain _ units of consumer surplus if the price of a cone = to 5 units of pleasure.

Why is the market for loanable funds not in equilibrium?

The consumer price index overestimates inflation because it

According to the analysis in your text, the school voucher program would

When you allocate consumption optimally between the two periods the marginal rate of time preference between the two periods is:

Thinking Like an Economist

Supply and Demand

Rational Consumer Choice

Individual and Market Demand

The Economics of Information and Choice Under Uncertainty

Explaining Tastes: The Importance of Altruism and

Cognitive Limitations and Consumer Behavior

Production

Costs

Perfect Competition

Monopoly

Imperfect Competition: a Game-Theoretic Approach

Labor

Capital

Externalities Property Rights and the Coase Theorem

Explaining Tastes: The Importance of Altruism and

General Equilibrium and Market Efficiency

Filters

Exam 5: Applications of Rational Choice and Demand Theories

Show, using a sketch graph, why a consumer prefers a cash gift rather than a larger gift of merchandise.

If the opportunity cost of a unit of current consumption is exactly 1 unit of future consumption then you must sacrifice $10 of current consumption to finance

Say the bus authority in your city increased the typical bus fare from $1.00 to $1.50, and that due to this increase total revenue increased by 20%. Based on this we know that the price elasticity of bus rides in your neighborhood is (assume demand curve is linear):

Show with a sketch graph on each graph what the market does to correct the disequilibrium.

If you wear your favorite clothes first and eat your favorite food before the food you prefer less you most likely have a

Suppose you receive Y1 of your income this period and Y2 of your income in the next period.If you can either borrow or lend at an interest rate r, what is the most you can consume in the future period?

Describe in words why the consumer price index overestimates inflation.

If the demand function for city bus rides is P = 100 - 10Q and the present price of a ride is 50, then

Use the following to answer the next two questions.

If the demand function for apples is P = 1 - Q, how much consumer surplus does the consumer gain when the price of the apples equals 5?

The horizontal intercept of the intertemporal budget constraint is referred to as

A decrease in the interest rate will

Say an individual demand curve was given by P = 50 - 5Q. When the price is $25, consumer surplus is around:

When people choose to wait for a kiss that they have won from a favorite movie star, they are clearly

If the interest rate increases to 4 percent will cause you to

If I get 10 units of pleasure from my first ice cream cone and 2 less units than before from each succeeding cone, I will buy ____ cones and gain _____ units of consumer surplus if the price of a cone = to 5 units of pleasure.

Why is the market for loanable funds not in equilibrium?

The consumer price index overestimates inflation because it

According to the analysis in your text, the school voucher program would

When you allocate consumption optimally between the two periods the marginal rate of time preference between the two periods is:

Thinking Like an Economist

Supply and Demand

Rational Consumer Choice

Individual and Market Demand

The Economics of Information and Choice Under Uncertainty

Explaining Tastes: The Importance of Altruism and

Cognitive Limitations and Consumer Behavior

Production

Costs

Perfect Competition

Monopoly

Imperfect Competition: a Game-Theoretic Approach

Labor

Capital

Externalities Property Rights and the Coase Theorem

Explaining Tastes: The Importance of Altruism and

General Equilibrium and Market Efficiency

Filters

If I get 10 units of pleasure from my first ice cream cone and 2 less units than before from each succeeding cone, I will buy cones and gain _ units of consumer surplus if the price of a cone = to 5 units of pleasure.