Question 1

The local golf course has upgraded seven of its 18 holes and raised its rates from 20 to 24 dollars.It would be correct to say that

Accepted Answer

A) The true inflation rate for golf is more than 20% 
B) The true inflation rate for golf is 20% 
C) The true inflation rate for golf is less than 20% 
D) More information is needed to answer this question 
A) The true inflation rate for golf is more than 20% 
B) The true inflation rate for golf is 20% 
C) The true inflation rate for golf is less than 20% 
D) More information is needed to answer this question

Question 2

If you had a windfall of $5,000 in the present time period and you save some of it, your saving behavior would likely be due to the fact that

Accepted Answer

A) Your marginal utility of present income falls as your income goes up 
B) The extra income changes the slope of your time preference indifference curves making then steeper 
C) Your indifference curves for present and future income are vertical 
D) Your indifference curves for present and future are horizontal 
A) Your marginal utility of present income falls as your income goes up 
B) The extra income changes the slope of your time preference indifference curves making then steeper 
C) Your indifference curves for present and future income are vertical 
D) Your indifference curves for present and future are horizontal

Question 3

What will happen in the market to bring about equilibrium?

Accepted Answer

The interest rate will fall ro

Question 4

What is the maximum amount you could consume in the future?

Accepted Answer

A) 65,400 
B) 69,000 
C) 20,400 
D) 65,000 
A) 65,400 
B) 69,000 
C) 20,400 
D) 65,000

Question 5

Colin's demand for golf at his local club each season is P = 50 - 2Q.If the golf course charges $26 dollars per round of golf, how much could it charge Colin in a membership fee before he would not play there?

Accepted Answer

A) $1,250 
B) $144 
C) $288 
D) $312 
A) $1,250 
B) $144 
C) $288 
D) $312

Question 6

If you buy food which then is put on special at half price just after you paid,

Accepted Answer

A) You will be disappointed and be worse off 
B) You will be better off because you will go back to get some more food at bargain prices 
C) Your welfare will not change since you just finished your shopping 
D) Logic can not lead to an answer to this question even if you have a typical preference pattern 
A) You will be disappointed and be worse off 
B) You will be better off because you will go back to get some more food at bargain prices 
C) Your welfare will not change since you just finished your shopping 
D) Logic can not lead to an answer to this question even if you have a typical preference pattern

Question 7

Differences in time preferences depend on

Accepted Answer

A) Uncertainty regarding the future 
B) Social preference 
C) Differences in the relative size of expected future incomes 
D) The time 
A) Uncertainty regarding the future 
B) Social preference 
C) Differences in the relative size of expected future incomes 
D) The time

Question 8

The Permanent Income and Life-Cycle Hypotheses imply that

Accepted Answer

A) Consumers generally favor current consumption over future consumption 
B) The primary determinant of current consumption is permanent income 
C) The primary determinant of permanent income is current consumption 
D) Consumers are more likely to save if they are uncertain about the future 
A) Consumers generally favor current consumption over future consumption 
B) The primary determinant of current consumption is permanent income 
C) The primary determinant of permanent income is current consumption 
D) Consumers are more likely to save if they are uncertain about the future

Question 9

If $100 today is worth $150 to you in the future, then you exhibit

Accepted Answer

A) A positive time preference 
B) A negative time preference 
C) A neutral time preference 
D) A negative marginal rate of substitution 
A) A positive time preference 
B) A negative time preference 
C) A neutral time preference 
D) A negative marginal rate of substitution

Question 10

If the marginal rate of substitution between future and current consumption is less than one, then this consumer exhibits

Accepted Answer

A) A positive time preference 
B) A negative time preference 
C) A neutral time preference 
D) An increasing preference 
A) A positive time preference 
B) A negative time preference 
C) A neutral time preference 
D) An increasing preference

Question 11

According to the Life-cycle hypothesis if a person received a payment roughly equals to her current income her consumption would:

Accepted Answer

A) roughly double. 
B) increase, but not by as much as the increase in income 
C) increase by more than the increase in income 
D) would not increase at all. 
A) roughly double. 
B) increase, but not by as much as the increase in income 
C) increase by more than the increase in income 
D) would not increase at all.

Question 12

If the government wanted to curb consumption of alcohol by taxing alcohol without hurting consumer's welfare it would

Accepted Answer

A) Raise the tax on alcohol until demand for alcohol became elastic 
B) Need to know the substitution effect but not the income effect of a tax hike 
C) Need to know the income effect but not the substitution effect of a tax hike 
D) Tax until the income effect of the price increase, which would be refunded, is exactly equal to the revenue gained from the tax 
A) Raise the tax on alcohol until demand for alcohol became elastic 
B) Need to know the substitution effect but not the income effect of a tax hike 
C) Need to know the income effect but not the substitution effect of a tax hike 
D) Tax until the income effect of the price increase, which would be refunded, is exactly equal to the revenue gained from the tax

Question 13

When a product depicted on the horizontal axis of a typical indifference curve model of behavior is taxed

Accepted Answer

A) The budget line becomes steeper 
B) The budget line becomes flatter 
C) The indifference curve of the consumer shifts right 
D) All the indifference curves of the consumer become steeper 
A) The budget line becomes steeper 
B) The budget line becomes flatter 
C) The indifference curve of the consumer shifts right 
D) All the indifference curves of the consumer become steeper

Question 14

If markets for addictive drugs have a more elastic demand curve than is often thought, and if addicts tend to be unstable people with low incomes, we might speculate that the most likely reason for the surprising elasticity estimates is that

Accepted Answer

A) The substitution effect is smaller than expected because addicts aren't as addicted as we 
B) thought 
C) The income effect has a more constraining effect than we had anticipated 
D) Addictive drugs are inferior goods 
E) The income and substitution effects work in opposite directions 
A) The substitution effect is smaller than expected because addicts aren't as addicted as we 
B) thought 
C) The income effect has a more constraining effect than we had anticipated 
D) Addictive drugs are inferior goods 
E) The income and substitution effects work in opposite directions

Question 15

Suppose a bank will pay you a 10% interest rate on your deposits for 1 period.In this case 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

Question 16

Show, using a similar sketch graph, why another consumer chooses the merchandise rather than the cash grant.

Accepted Answer

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

Question 17

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

Accepted Answer

A) increase the level of spending on education 
B) decrease the level of spending on education 
C) leave the level of spending on education the same 
D) force some people to leave the public school system 
A) increase the level of spending on education 
B) decrease the level of spending on education 
C) leave the level of spending on education the same 
D) force some people to leave the public school system

Question 18

One thousand dollars given to you a year from now is worth __________ to you today if the relevant discount rate is 10%.

Accepted Answer

A) $1000 
B) $1100 
C) $909 
D) $900 
A) $1000 
B) $1100 
C) $909 
D) $900

Question 19

Suppose an individual demand curve is given by P = 100 - 5Q, where P is the price of cigarettes ($/pack) and Q is the quantity she consumes (packs/week).Assuming her income per week is $1,000 and the current price of cigarettes is $5 per pack, by how much will her consumer surplus decline if the price of cigarettes increased to $10/pack?

Accepted Answer

A) $92.5 
B) $810 
C) $950 
D) $25 
A) $92.5 
B) $810 
C) $950 
D) $25

Question 20

In general, despite some examples to the contrary, people

Accepted Answer

A) Have a positive time preference 
B) Have a negative time preference 
C) Value the present and the future about the same 
D) Have a negative time preference for food and basic necessities and a positive time preference for services and luxuries 
A) Have a positive time preference 
B) Have a negative time preference 
C) Value the present and the future about the same 
D) Have a negative time preference for food and basic necessities and a positive time preference for services and luxuries

The local golf course has upgraded seven of its 18 holes and raised its rates from 20 to 24 dollars.It would be correct to say that

If you had a windfall of $5,000 in the present time period and you save some of it, your saving behavior would likely be due to the fact that

What will happen in the market to bring about equilibrium?

What is the maximum amount you could consume in the future?

Colin's demand for golf at his local club each season is P = 50 - 2Q.If the golf course charges $26 dollars per round of golf, how much could it charge Colin in a membership fee before he would not play there?

If you buy food which then is put on special at half price just after you paid,

Differences in time preferences depend on

The Permanent Income and Life-Cycle Hypotheses imply that

If $100 today is worth $150 to you in the future, then you exhibit

If the marginal rate of substitution between future and current consumption is less than one, then this consumer exhibits

According to the Life-cycle hypothesis if a person received a payment roughly equals to her current income her consumption would:

If the government wanted to curb consumption of alcohol by taxing alcohol without hurting consumer's welfare it would

When a product depicted on the horizontal axis of a typical indifference curve model of behavior is taxed

If markets for addictive drugs have a more elastic demand curve than is often thought, and if addicts tend to be unstable people with low incomes, we might speculate that the most likely reason for the surprising elasticity estimates is that

Suppose a bank will pay you a 10% interest rate on your deposits for 1 period.In this case you must sacrifice $10 of current consumption to finance

Show, using a similar sketch graph, why another consumer chooses the merchandise rather than the cash grant.

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

One thousand dollars given to you a year from now is worth __________ to you today if the relevant discount rate is 10%.

In general, despite some examples to the contrary, people

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

The local golf course has upgraded seven of its 18 holes and raised its rates from 20 to 24 dollars.It would be correct to say that

If you had a windfall of $5,000 in the present time period and you save some of it, your saving behavior would likely be due to the fact that

What will happen in the market to bring about equilibrium?

What is the maximum amount you could consume in the future?

Colin's demand for golf at his local club each season is P = 50 - 2Q.If the golf course charges $26 dollars per round of golf, how much could it charge Colin in a membership fee before he would not play there?

If you buy food which then is put on special at half price just after you paid,

Differences in time preferences depend on

The Permanent Income and Life-Cycle Hypotheses imply that

If $100 today is worth $150 to you in the future, then you exhibit

If the marginal rate of substitution between future and current consumption is less than one, then this consumer exhibits

According to the Life-cycle hypothesis if a person received a payment roughly equals to her current income her consumption would:

If the government wanted to curb consumption of alcohol by taxing alcohol without hurting consumer's welfare it would

When a product depicted on the horizontal axis of a typical indifference curve model of behavior is taxed

If markets for addictive drugs have a more elastic demand curve than is often thought, and if addicts tend to be unstable people with low incomes, we might speculate that the most likely reason for the surprising elasticity estimates is that

Suppose a bank will pay you a 10% interest rate on your deposits for 1 period.In this case you must sacrifice $10 of current consumption to finance

Show, using a similar sketch graph, why another consumer chooses the merchandise rather than the cash grant.

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

One thousand dollars given to you a year from now is worth __________ to you today if the relevant discount rate is 10%.

In general, despite some examples to the contrary, people

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