Question 1

The possible goods and services a consumer can afford to consume represents the:

Accepted Answer

A)  consumer behavior. 
B)  consumer preferences. 
C)  consumer status. 
D)  consumer opportunities. 
A)  consumer behavior. 
B)  consumer preferences. 
C)  consumer status. 
D)  consumer opportunities.

Question 2

If a worker receives a fixed payment of $100 plus $10 for every hour she works,what is the maximum total earnings the worker can receive if she is restricted to a maximum of 12 hours of work per day?

Accepted Answer

A)  $220 
B)  $120 
C)  $340 
D)  $125 
A)  $220 
B)  $120 
C)  $340 
D)  $125

Question 3

If you wish to open a store and you do not like risk,it would be wise to sell:

Accepted Answer

A)  only normal goods. 
B)  a mix of normal and inferior goods. 
C)  all inferior goods. 
D)  None of the preceding statements is correct. 
A)  only normal goods. 
B)  a mix of normal and inferior goods. 
C)  all inferior goods. 
D)  None of the preceding statements is correct.

Question 4

Suppose a worker is offered a wage of $8 per hour,plus a fixed payment of $100 per day,and he can use 24 hours per day.What is the equation for the worker's opportunity set? (E is total earnings and L is leisure.)

Accepted Answer

A)  E = 100 − 8L 
B)  E = 192 − 8L 
C)  E = 292 − 8L 
D)  None of the preceding statements is correct. 
A)  E = 100 − 8L 
B)  E = 192 − 8L 
C)  E = 292 − 8L 
D)  None of the preceding statements is correct.

Question 5

If a firm offers to pay a worker $10 for each hour of leisure the worker gives up,the $10 implies the:

Accepted Answer

A)  marginal rate of substitution between leisure and income. 
B)  market rate of substitution between leisure and income. 
C)  market rate of transformation between leisure and income. 
D)  marginal rate of transformation between leisure and income. 
A)  marginal rate of substitution between leisure and income. 
B)  market rate of substitution between leisure and income. 
C)  market rate of transformation between leisure and income. 
D)  marginal rate of transformation between leisure and income.

Question 6

The slope of the budget line represents:

Accepted Answer

A)  the marginal rate of substitution. 
B)  the market rate of substitution. 
C)  the budget rate of substitution. 
D)  the opportunity rate of substitution. 
A)  the marginal rate of substitution. 
B)  the market rate of substitution. 
C)  the budget rate of substitution. 
D)  the opportunity rate of substitution.

Question 7

Individuals who purchase services and goods for the purpose of consumption are:

Accepted Answer

A)  consumers. 
B)  managers. 
C)  workers. 
D)  agents. 
A)  consumers. 
B)  managers. 
C)  workers. 
D)  agents.

Question 8

A decrease in the price of good Y will have what effect on the budget line on a normal X-Y graph?

Accepted Answer

A)  Increase the vertical intercept 
B)  Decrease the horizontal intercept 
C)  Parallel outward shift of the line 
D)  Parallel inward shift of the line 
A)  Increase the vertical intercept 
B)  Decrease the horizontal intercept 
C)  Parallel outward shift of the line 
D)  Parallel inward shift of the line

Question 9

The marginal rate of substitution (MRS)determines the rate at which a consumer is willing to substitute between two goods in order to achieve:

Accepted Answer

A)  a higher level of satisfaction. 
B)  a lower level of satisfaction. 
C)  the same level of satisfaction. 
D)  None of the preceding statements is correct. 
A)  a higher level of satisfaction. 
B)  a lower level of satisfaction. 
C)  the same level of satisfaction. 
D)  None of the preceding statements is correct.

Question 10

Suppose an individual's marginal rate of substitution is three slices of pizza for one beer at the present bundle of beer and pizza she is consuming.If the price of beer is $1.00 and the price of a slice of pizza is $1.50,is the consumer maximizing her welfare?
 If not,how should she change her consumption?

Accepted Answer

Since the ratio of beer prices

Question 11

If bundles A,B,and C lie on the same indifference curve,then:

Accepted Answer

A) A ≻ B ≻ C. 
B) B ≻ C ≻ A. 
C) A ∽ B ≻ C. 
D) A ∽ B ∽ C. 
A) A ≻ B ≻ C. 
B) B ≻ C ≻ A. 
C) A ∽ B ≻ C. 
D) A ∽ B ∽ C.

Question 12

The substitution effect isolates the change in the consumption of a good caused by:

Accepted Answer

A)  the lower "real" income. 
B)  the change in consumer preferences. 
C)  the change in the market rate of substitution. 
D)  None of the preceding statements is correct. 
A)  the lower "real" income. 
B)  the change in consumer preferences. 
C)  the change in the market rate of substitution. 
D)  None of the preceding statements is correct.

Question 13

What is/are the important things that must be developed when characterizing consumer behavior?

Accepted Answer

A)  Individual goals of the firm 
B)  Consumer opportunities 
C)  Individual goals of the firm and consumer opportunities 
D)  Consumer preferences and consumer opportunities 
A)  Individual goals of the firm 
B)  Consumer opportunities 
C)  Individual goals of the firm and consumer opportunities 
D)  Consumer preferences and consumer opportunities

Question 14

Suppose a worker is offered a wage of $8 per hour,plus a fixed payment of $100 per day,and he can use 24 hours per day.What is the market rate of substitution between leisure and income?

Accepted Answer

A)  $5 
B)  $8 
C)  $10 
D)  None of the preceding statements is correct. 
A)  $5 
B)  $8 
C)  $10 
D)  None of the preceding statements is correct.

Question 15

The maximum quantity of good Y that is affordable is:

Accepted Answer

A)  M/PX. 
B)  M/X. 
C)  M/PY. 
D)  M/Y. 
A)  M/PX. 
B)  M/X. 
C)  M/PY. 
D)  M/Y.

Question 16

If the slope of the budget line is steeper than the slope of the indifference curve,and X is on the horizontal axis:

Accepted Answer

A)  the consumer is willing to give up more of good X to get an additional unit of good Y than is necessary under the current market prices. 
B)  MRS > PX /PY. 
C)  MRS = −PX /PY. 
D)  the consumer is willing to give up more of good Y to get an additional unit of good X than is necessary under the current market prices. 
A)  the consumer is willing to give up more of good X to get an additional unit of good Y than is necessary under the current market prices. 
B)  MRS > PX /PY. 
C)  MRS = −PX /PY. 
D)  the consumer is willing to give up more of good Y to get an additional unit of good X than is necessary under the current market prices.

Question 17

Suppose that consumers' preferences are well behaved in that properties 4-1 to 4-4 are satisfied.Furthermore,assume that X is a normal good,Y is an inferior good,and the price of good X increases.Then the substitution effect will lead consumers to consume:

Accepted Answer

A)  more of good X and more of good Y. 
B)  less of good X and more of good Y. 
C)  less of good X and less of good Y. 
D)  more of good X and less of good Y. 
A)  more of good X and more of good Y. 
B)  less of good X and more of good Y. 
C)  less of good X and less of good Y. 
D)  more of good X and less of good Y.

Question 18

Joe consumes 10 units of food and 12 units of clothing.Since food is an inferior good,a gift to Joe of a $12 gift certificate at a clothing store will:

Accepted Answer

A)  induce Joe to eat more than 10 units of food. 
B)  definitely make Joe better off than a gift of $12 in cash. 
C)  definitely make Joe worse off than a gift of $12 in cash. 
D)  None of the preceding statements is correct. 
A)  induce Joe to eat more than 10 units of food. 
B)  definitely make Joe better off than a gift of $12 in cash. 
C)  definitely make Joe worse off than a gift of $12 in cash. 
D)  None of the preceding statements is correct.

Question 19

Sam Voter prefers Jack to Rob,Rob to Mark,and Jack to Mark.Sam's preferences:

Accepted Answer

A)  are not consistent with our assumptions about consumer behavior. 
B)  indicate that he is a liberal. 
C)  are not complete. 
D)  are transitive. 
A)  are not consistent with our assumptions about consumer behavior. 
B)  indicate that he is a liberal. 
C)  are not complete. 
D)  are transitive.

Question 20

If sugar and Nutrasweet are substitutes,then we can be certain that a decrease in the price of sugar will lead to an increase in the consumption of:

Accepted Answer

A)  Nutrasweet only. 
B)  sugar only. 
C)  sugar and Nutrasweet. 
D)  None of the preceding statements is correct. 
A)  Nutrasweet only. 
B)  sugar only. 
C)  sugar and Nutrasweet. 
D)  None of the preceding statements is correct.

The possible goods and services a consumer can afford to consume represents the:

If a worker receives a fixed payment of $100 plus $10 for every hour she works,what is the maximum total earnings the worker can receive if she is restricted to a maximum of 12 hours of work per day?

If you wish to open a store and you do not like risk,it would be wise to sell:

Suppose a worker is offered a wage of $8 per hour,plus a fixed payment of $100 per day,and he can use 24 hours per day.What is the equation for the worker's opportunity set? (E is total earnings and L is leisure.)

If a firm offers to pay a worker $10 for each hour of leisure the worker gives up,the $10 implies the:

The slope of the budget line represents:

Individuals who purchase services and goods for the purpose of consumption are:

A decrease in the price of good Y will have what effect on the budget line on a normal X-Y graph?

The marginal rate of substitution (MRS)determines the rate at which a consumer is willing to substitute between two goods in order to achieve:

If bundles A,B,and C lie on the same indifference curve,then:

The substitution effect isolates the change in the consumption of a good caused by:

What is/are the important things that must be developed when characterizing consumer behavior?

Suppose a worker is offered a wage of $8 per hour,plus a fixed payment of $100 per day,and he can use 24 hours per day.What is the market rate of substitution between leisure and income?

The maximum quantity of good Y that is affordable is:

If the slope of the budget line is steeper than the slope of the indifference curve,and X is on the horizontal axis:

Suppose that consumers' preferences are well behaved in that properties 4-1 to 4-4 are satisfied.Furthermore,assume that X is a normal good,Y is an inferior good,and the price of good X increases.Then the substitution effect will lead consumers to consume:

Joe consumes 10 units of food and 12 units of clothing.Since food is an inferior good,a gift to Joe of a $12 gift certificate at a clothing store will:

Sam Voter prefers Jack to Rob,Rob to Mark,and Jack to Mark.Sam's preferences:

If sugar and Nutrasweet are substitutes,then we can be certain that a decrease in the price of sugar will lead to an increase in the consumption of:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Exam 4: The Theory of Individual Behavior

The possible goods and services a consumer can afford to consume represents the:

If a worker receives a fixed payment of $100 plus $10 for every hour she works,what is the maximum total earnings the worker can receive if she is restricted to a maximum of 12 hours of work per day?

If you wish to open a store and you do not like risk,it would be wise to sell:

Suppose a worker is offered a wage of $8 per hour,plus a fixed payment of $100 per day,and he can use 24 hours per day.What is the equation for the worker's opportunity set? (E is total earnings and L is leisure.)

If a firm offers to pay a worker $10 for each hour of leisure the worker gives up,the $10 implies the:

The slope of the budget line represents:

Individuals who purchase services and goods for the purpose of consumption are:

A decrease in the price of good Y will have what effect on the budget line on a normal X-Y graph?

The marginal rate of substitution (MRS)determines the rate at which a consumer is willing to substitute between two goods in order to achieve:

If bundles A,B,and C lie on the same indifference curve,then:

The substitution effect isolates the change in the consumption of a good caused by:

What is/are the important things that must be developed when characterizing consumer behavior?

Suppose a worker is offered a wage of $8 per hour,plus a fixed payment of $100 per day,and he can use 24 hours per day.What is the market rate of substitution between leisure and income?

The maximum quantity of good Y that is affordable is:

If the slope of the budget line is steeper than the slope of the indifference curve,and X is on the horizontal axis:

Suppose that consumers' preferences are well behaved in that properties 4-1 to 4-4 are satisfied.Furthermore,assume that X is a normal good,Y is an inferior good,and the price of good X increases.Then the substitution effect will lead consumers to consume:

Joe consumes 10 units of food and 12 units of clothing.Since food is an inferior good,a gift to Joe of a $12 gift certificate at a clothing store will:

Sam Voter prefers Jack to Rob,Rob to Mark,and Jack to Mark.Sam's preferences:

If sugar and Nutrasweet are substitutes,then we can be certain that a decrease in the price of sugar will lead to an increase in the consumption of:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters