Question 1

An increase in an individual's income without changing relative prices will

Accepted Answer

A) rotate the budget constraint about the X-axis. 
B) shift the indifference curves outward. 
C) shift the budget constraint outward in a parallel way. 
D) rotate the budget constraint about the Y axis. 
A) rotate the budget constraint about the X-axis. 
B) shift the indifference curves outward. 
C) shift the budget constraint outward in a parallel way. 
D) rotate the budget constraint about the Y axis. C

Question 2

If a person's indifference curves can be represented as a straight line,the person views the goods as

Accepted Answer

A) perfect substitutes 
B) perfect complements 
C) complements (but not perfect) 
D) substitutes (but not perfect) 
A) perfect substitutes 
B) perfect complements 
C) complements (but not perfect) 
D) substitutes (but not perfect) A

Question 3

As an individual moves northwest along an indifference curve substituting more and more Y for X,his or her MRS of X for Y

Accepted Answer

A) increases. 
B) decreases. 
C) stays the same. 
D) changes in a way that cannot be determined. 
A) increases. 
B) decreases. 
C) stays the same. 
D) changes in a way that cannot be determined. A

Question 4

The X-intercept of the budget constraint represents

Accepted Answer

A) how much of good Y can be purchased if no good X is purchased and all income is spent. 
B) how much of good X can be purchased if no good Y is purchased and all income is spent. 
C) total income divided by the price of X. 
D) b and c. 
A) how much of good Y can be purchased if no good X is purchased and all income is spent. 
B) how much of good X can be purchased if no good Y is purchased and all income is spent. 
C) total income divided by the price of X. 
D) b and c.

Question 5

Suppose a little girl likes peanut butter and jelly sandwiches with exactly 2T of jelly and 1T of peanut butter.Suppose further that her mom agrees to make sandwiches to those exact specifications and the price of peanut butter is $.25/T and the price of jelly is $.10/T.If she has $1.80 to spend on peanut butter and jelly ingredients (ignore the bread)in a week,how many sandwiches will she make?

Accepted Answer

A) 1 
B) 2 
C) 4 
D) 8 
A) 1 
B) 2 
C) 4 
D) 8

Question 6

The point of tangency between a consumer's budget constraint and his or her indifference curve represents

Accepted Answer

A) complete satisfaction for the consumer. 
B) the equivalence of prices the consumer pays. 
C) constrained utility maximization for the consumer. 
D) the least he or she can spend. 
A) complete satisfaction for the consumer. 
B) the equivalence of prices the consumer pays. 
C) constrained utility maximization for the consumer. 
D) the least he or she can spend.

Question 7

Suppose a cup of coffee at the campus coffee shop is $2.50 and a cup of hot tea is $1.25.Suppose a student's beverage budget is $20 per week.Suppose the student simply prefers more caffeine to less and that the tea sold has the same amount of caffeine as the coffee.The student will buy

Accepted Answer

A) all tea. 
B) all coffee. 
C) a mix of coffee and tea. 
D) quantities that cannot be determined from the information given here. 
A) all tea. 
B) all coffee. 
C) a mix of coffee and tea. 
D) quantities that cannot be determined from the information given here.

Question 8

Indifference curves

Accepted Answer

A) are nonintersecting. 
B) are contour lines of a utility function. 
C) are negatively sloped. 
D) All of the above. 
A) are nonintersecting. 
B) are contour lines of a utility function. 
C) are negatively sloped. 
D) All of the above.

Question 9

The slope of the budget constraint line is

Accepted Answer

A)  the ratio of the prices $\left( P _ { X } / P _ { Y } \right)$ 
B) the negative of the ratio of the prices $\left( P _ { X } / P _ { Y } \right)$ 
C) the ratio of income divided by price of Y $\left( I / P _ { Y } \right)$ 
D) none of the above. 
A)  the ratio of the prices $\left( P _ { X } / P _ { Y } \right)$ 
B) the negative of the ratio of the prices $\left( P _ { X } / P _ { Y } \right)$ 
C) the ratio of income divided by price of Y $\left( I / P _ { Y } \right)$ 
D) none of the above.

Question 10

If an individual's indifference curve map does not obey the assumption of a diminishing MRS,then

Accepted Answer

A) the individual will not maximize utility. 
B) the individual will buy none of good X. 
C) tangencies of indifference curves to the budget constraint may not be points of utility maximization. 
D) the budget constraint cannot be tangent to an appropriate indifference curve. 
A) the individual will not maximize utility. 
B) the individual will buy none of good X. 
C) tangencies of indifference curves to the budget constraint may not be points of utility maximization. 
D) the budget constraint cannot be tangent to an appropriate indifference curve.

Question 11

If an individual has a constant MRS of shoes for sneakers of 3/4 (that is,he or she is always willing to give up 3 pairs of sneakers to get 4 pairs of shoes)then,if sneakers and shoes are equally costly,he or she will

Accepted Answer

A) buy only sneakers. 
B) buy only shoes. 
C) spend his or her income equally on sneakers and shoes. 
D) wear sneakers only 3/4 of the time. 
A) buy only sneakers. 
B) buy only shoes. 
C) spend his or her income equally on sneakers and shoes. 
D) wear sneakers only 3/4 of the time.

Question 12

Suppose a cup of coffee at the campus coffee shop is $2.50 and a cup of hot tea is $1.25 and that a student's beverage budget is $20 per week.What is the market tradeoff between coffee and tea?

Accepted Answer

A) 1 coffee to 1 tea 
B) 2 coffee to 1 tea 
C) 1 coffee to 2 tea 
D) 2 coffee to 2 tea 
A) 1 coffee to 1 tea 
B) 2 coffee to 1 tea 
C) 1 coffee to 2 tea 
D) 2 coffee to 2 tea

Question 13

Suppose a cup of coffee at the campus coffee shop is $2.50 and a cup of hot tea is $1.25 and that a student's beverage budget is $20 per week.What is the algebraic expression of the budget?

Accepted Answer

A)  $20 = 2.5 C + 1.25 T$ 
B)  $20 = 2.5 C$ 
C)  $20 = = 1.5 T$ 
D)  $20 = 1.25 C + 2.5 C$ 
A)  $20 = 2.5 C + 1.25 T$ 
B)  $20 = 2.5 C$ 
C)  $20 = = 1.5 T$ 
D)  $20 = 1.25 C + 2.5 C$

Question 14

Suppose a person has $20 and likes both rap music (R) and country music (C) with a set of preferences so that $\mathrm { U } = \mathrm { C } ^ { 1 / 2 } \mathrm { R } ^ { 1 / 2 }$. Suppose that the iTunes price of a rap music song is  $P _ { R } = 2$ and the price of a country music song is $P _ { C } = 1$. What is the lowest level of $\text { utility that }$  is unaffordable?

Accepted Answer

A) 6 
B) 7 
C)  $\sqrt { 50 }$ 
D) 8 
A) 6 
B) 7 
C)  $\sqrt { 50 }$ 
D) 8

Question 15

If the price of X falls,the budget constraint

Accepted Answer

A) shifts outward in a parallel fashion. 
B) shifts inward in a parallel fashion. 
C) rotates outward about the X-intercept. 
D) rotates outward about the Y-intercept. 
A) shifts outward in a parallel fashion. 
B) shifts inward in a parallel fashion. 
C) rotates outward about the X-intercept. 
D) rotates outward about the Y-intercept.

Question 16

Suppose an individual's MRS (of steak for beer)is 2:1.That is,at the current consumption choices he or she is willing to give up 2 beers to get an extra steak.Suppose also that the price of a steak is $1 and a beer is 25¢.Then in order to increase utility the individual should

Accepted Answer

A) buy more steak and less beer. 
B) buy more beer and less steak. 
C) continue with current consumption plans. 
D) Not enough information to answer the question. 
A) buy more steak and less beer. 
B) buy more beer and less steak. 
C) continue with current consumption plans. 
D) Not enough information to answer the question.

Question 17

Suppose that at current consumption levels an individual's marginal utility of consuming an extra hot dog is 10 whereas the marginal utility of consuming an extra soft drink is 2.Then the MRS (of soft drinks for hot dogs)-that is,the number of hot dogs the individual is willing to give up to get one more soft drink is

Accepted Answer

A) 5 
B) 2 
C) 1/2 
D) 1/5 
A) 5 
B) 2 
C) 1/2 
D) 1/5

Question 18

Suppose a person likes both rap music (R)and country music (C)with a set of preferences so that $\mathrm { U } = \mathrm { C } ^ { 1 / 2 } \mathrm { R } ^ { 1 / 2 }$ .Which point (C,R)makes this person the happiest?

Accepted Answer

A) 4,16 
B) 25,1 
C) 9,9 
D) 16,4 
A) 4,16 
B) 25,1 
C) 9,9 
D) 16,4

Question 19

If bundle A lies on an indifference curve and bundle B lies to the right of the curve,the individual

Accepted Answer

A) prefers bundle A to bundle B. 
B) prefers bundle B to bundle A. 
C) enjoys bundle A and B equally. 
D) must receive more of both-with bundle B. 
A) prefers bundle A to bundle B. 
B) prefers bundle B to bundle A. 
C) enjoys bundle A and B equally. 
D) must receive more of both-with bundle B.

Question 20

Suppose a person has $20 and likes both rap music (R)and country music (C)with a set of preferences so that $\mathrm { U } = \mathrm { C } ^ { 1 / 2 } \mathrm { R } ^ { 1 / 2 }$ .Suppose that the iTunes price of a rap music song is and the price of a country music song is $P _ { R } = 2$ .Which level of utility is $P _ { C } = 1$ affordable?

Accepted Answer

A)  $\sqrt { 50 }$ 
B) 9 
C) 16 
D) 25 
A)  $\sqrt { 50 }$ 
B) 9 
C) 16 
D) 25

An increase in an individual's income without changing relative prices will

If a person's indifference curves can be represented as a straight line,the person views the goods as

As an individual moves northwest along an indifference curve substituting more and more Y for X,his or her MRS of X for Y

The X-intercept of the budget constraint represents

The point of tangency between a consumer's budget constraint and his or her indifference curve represents

Suppose a cup of coffee at the campus coffee shop is $2.50 and a cup of hot tea is $1.25.Suppose a student's beverage budget is $20 per week.Suppose the student simply prefers more caffeine to less and that the tea sold has the same amount of caffeine as the coffee.The student will buy

Indifference curves

The slope of the budget constraint line is

If an individual's indifference curve map does not obey the assumption of a diminishing MRS,then

If an individual has a constant MRS of shoes for sneakers of 3/4 (that is,he or she is always willing to give up 3 pairs of sneakers to get 4 pairs of shoes)then,if sneakers and shoes are equally costly,he or she will

Suppose a cup of coffee at the campus coffee shop is $2.50 and a cup of hot tea is $1.25 and that a student's beverage budget is $20 per week.What is the market tradeoff between coffee and tea?

Suppose a cup of coffee at the campus coffee shop is $2.50 and a cup of hot tea is $1.25 and that a student's beverage budget is $20 per week.What is the algebraic expression of the budget?

If the price of X falls,the budget constraint

Suppose an individual's MRS (of steak for beer)is 2:1.That is,at the current consumption choices he or she is willing to give up 2 beers to get an extra steak.Suppose also that the price of a steak is $1 and a beer is 25¢.Then in order to increase utility the individual should

Suppose a person likes both rap music (R)and country music (C)with a set of preferences so that $\mathrm { U } = \mathrm { C } ^ { 1 / 2 } \mathrm { R } ^ { 1 / 2 }$ .Which point (C,R)makes this person the happiest?

If bundle A lies on an indifference curve and bundle B lies to the right of the curve,the individual

Economic Models

Demand Curves

Uncertainty

Game Theory

Production

Costs

Profit Maximization and Supply

Perfect Competition in a Single Market

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Pricing in Input Markets

Capital and Time

Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

Exam 2: Utility and Choice

An increase in an individual's income without changing relative prices will

If a person's indifference curves can be represented as a straight line,the person views the goods as

As an individual moves northwest along an indifference curve substituting more and more Y for X,his or her MRS of X for Y

The X-intercept of the budget constraint represents

The point of tangency between a consumer's budget constraint and his or her indifference curve represents

Suppose a cup of coffee at the campus coffee shop is $2.50 and a cup of hot tea is $1.25.Suppose a student's beverage budget is $20 per week.Suppose the student simply prefers more caffeine to less and that the tea sold has the same amount of caffeine as the coffee.The student will buy

Indifference curves

The slope of the budget constraint line is

If an individual's indifference curve map does not obey the assumption of a diminishing MRS,then

If an individual has a constant MRS of shoes for sneakers of 3/4 (that is,he or she is always willing to give up 3 pairs of sneakers to get 4 pairs of shoes)then,if sneakers and shoes are equally costly,he or she will

Suppose a cup of coffee at the campus coffee shop is $2.50 and a cup of hot tea is $1.25 and that a student's beverage budget is $20 per week.What is the market tradeoff between coffee and tea?

Suppose a cup of coffee at the campus coffee shop is $2.50 and a cup of hot tea is $1.25 and that a student's beverage budget is $20 per week.What is the algebraic expression of the budget?

If the price of X falls,the budget constraint

Suppose an individual's MRS (of steak for beer)is 2:1.That is,at the current consumption choices he or she is willing to give up 2 beers to get an extra steak.Suppose also that the price of a steak is $1 and a beer is 25¢.Then in order to increase utility the individual should

Suppose a person likes both rap music (R)and country music (C)with a set of preferences so that U=C1/2R1/2\mathrm { U } = \mathrm { C } ^ { 1 / 2 } \mathrm { R } ^ { 1 / 2 }U=C1/2R1/2 .Which point (C,R)makes this person the happiest?

If bundle A lies on an indifference curve and bundle B lies to the right of the curve,the individual

Economic Models

Demand Curves

Uncertainty

Game Theory

Production

Costs

Profit Maximization and Supply

Perfect Competition in a Single Market

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Pricing in Input Markets

Capital and Time

Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

Suppose a person likes both rap music (R)and country music (C)with a set of preferences so that $\mathrm { U } = \mathrm { C } ^ { 1 / 2 } \mathrm { R } ^ { 1 / 2 }$ .Which point (C,R)makes this person the happiest?