Question 1

Using a carefully-labeled diagram,explain an Engel curve for a good that is initially a normal good,but eventually becomes an inferior good.

Accepted Answer

An Engel curve shows the relationship be

Question 2

According to the No-Overlap Rule,

Accepted Answer

A)  The area above the indifference curve that runs through the consumer's best bundle does not overlap with the area below the budget line 
B)  The area above the indifference curve that runs through the consumer's best bundle does not overlap with the area above the budget line 
C)  The area above the indifference curve that runs through the consumer's best bundle should overlap with the area below the budget line 
D)  The area above the indifference curve that runs through any bundle other than the consumer's best bundle does not overlap with the area below the budget line 
A)  The area above the indifference curve that runs through the consumer's best bundle does not overlap with the area below the budget line 
B)  The area above the indifference curve that runs through the consumer's best bundle does not overlap with the area above the budget line 
C)  The area above the indifference curve that runs through the consumer's best bundle should overlap with the area below the budget line 
D)  The area above the indifference curve that runs through any bundle other than the consumer's best bundle does not overlap with the area below the budget line

Question 3

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 4

If the income-consumption path slopes down,then

Accepted Answer

A)  Both goods are inferior 
B)  Both goods are normal 
C)  One good is normal and the other good is inferior 
D)  We can't tell anything about whether the goods are normal or inferior 
A)  Both goods are inferior 
B)  Both goods are normal 
C)  One good is normal and the other good is inferior 
D)  We can't tell anything about whether the goods are normal or inferior

Question 5

-Refer to Figure 5.1.Which graph represents an increase in the consumer's income?

Accepted Answer

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

Question 6

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 7

Suppose that soup is measured on the horizontal axis and bread is measured on the vertical axis.At an interior solution

Accepted Answer

A)  MRSSB = PS/PB 
B)  MRSSB = - PS/PB 
C)  MRSSB = PB/PS 
D)  MRSSB = - PB/PS 
A)  MRSSB = PS/PB 
B)  MRSSB = - PS/PB 
C)  MRSSB = PB/PS 
D)  MRSSB = - PB/PS

Question 8

-When the price elasticity of demand is large in magnitude,a _____ increase in the price leads to a _____ reduction in the amount purchased and the demand curve is relatively ______.

Accepted Answer

A)  Slight; substantial; steep 
B)  Slight; slight; flat 
C)  Large; slight; steep 
D)  Slight; substantial; flat 
A)  Slight; substantial; steep 
B)  Slight; slight; flat 
C)  Large; slight; steep 
D)  Slight; substantial; flat

Question 9

Suppose a consumer buy books and DVDs.The price of a book is $10,the price of a DVD is $20 and the consumer's income is $400.If books are measured on the vertical axis and DVDs are measured on the horizontal axis,then the budget line intersects the vertical axis at

Accepted Answer

A)  40 
B)  20 
C)  10 
D)  400 
A)  40 
B)  20 
C)  10 
D)  400

Question 10

A utility function is a mathematical function that assigns values to consumption bundles to represent the

Accepted Answer

A)  Consumer's income 
B)  Consumer's preferences 
C)  Marginal rate of substitution 
D)  Prices of the goods in the consumption bundle 
A)  Consumer's income 
B)  Consumer's preferences 
C)  Marginal rate of substitution 
D)  Prices of the goods in the consumption bundle

Question 11

If an increase in the price of one good causes the demand curve for another good to shift to the left,then the two goods are

Accepted Answer

A)  Substitutes 
B)  Complements 
C)  Normal 
D)  Unrelated 
A)  Substitutes 
B)  Complements 
C)  Normal 
D)  Unrelated

Question 12

Which of the following conditions must hold if a consumer is maximizing their utility?

Accepted Answer

A)  MUX x PX = MUY x PY 
B)  MUX = MUY 
C)  MUX/PY = MUY/PX 
D)  MUX/PX = MUY/PY 
A)  MUX x PX = MUY x PY 
B)  MUX = MUY 
C)  MUX/PY = MUY/PX 
D)  MUX/PX = MUY/PY

Question 13

Terry buys 10 pounds of cheese and 12 boxes of crackers each month.A pound of cheese costs $5 and a box of crackers costs $3.If she is maximizing her utility,what is her monthly income?

Accepted Answer

A)  $86 
B)  $90 
C)  $80 
D)  There is not enough information to determine her monthly income 
A)  $86 
B)  $90 
C)  $80 
D)  There is not enough information to determine her monthly income

Question 14

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

Accepted Answer

A)  A price-consumption curve 
B)  The Engel curve 
C)  An income-consumption curve 
D)  A budget line 
A)  A price-consumption curve 
B)  The Engel curve 
C)  An income-consumption curve 
D)  A budget line

Question 15

-Refer to Figure 5.5.Which diagram shows the income-consumption curve resulting from a decrease in income?

Accepted Answer

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

Question 16

-Refer to Figure 5.2.If the government rations gas to 50 gallons,the consumer's budget line would be given by the line

Accepted Answer

A)  Abc 
B)  Abd 
C)  50bd 
D)  50bc 
A)  Abc 
B)  Abd 
C)  50bd 
D)  50bc

Question 17

-Refer to Table 5.1,which shows Madeline's preference ranking for various consumption bundles of bread and soup.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 18

Boundary solutions arise when

Accepted Answer

A)  A good provides a consumer with little value per dollar relative to other alternatives 
B)  A consumer has a very low level of income 
C)  Indifference curves are convex 
D)  Indifference curves exhibit increasing MRS 
A)  A good provides a consumer with little value per dollar relative to other alternatives 
B)  A consumer has a very low level of income 
C)  Indifference curves are convex 
D)  Indifference curves exhibit increasing MRS

Question 19

-When the price elasticity of demand is small in magnitude,a _____ increase in the price leads to a _____ reduction in the amount purchased and the demand curve is relatively ______.

Accepted Answer

A)  Slight; substantial; steep 
B)  Slight; slight; flat 
C)  Large; slight; steep 
D)  Slight; substantial; flat 
A)  Slight; substantial; steep 
B)  Slight; slight; flat 
C)  Large; slight; steep 
D)  Slight; substantial; flat

Question 20

Whenever a consumer purchases good X but not good Y,then

Accepted Answer

A)  MRSXY >= PX/PY at the chosen bundle 
B)  MRSXY X/PY at the chosen bundle 
C)  MRSXY = PX/PY at the chosen bundle 
D)  MRSXY = -PX/PY at the chosen bundle 
A)  MRSXY >= PX/PY at the chosen bundle 
B)  MRSXY X/PY at the chosen bundle 
C)  MRSXY = PX/PY at the chosen bundle 
D)  MRSXY = -PX/PY at the chosen bundle

Using a carefully-labeled diagram,explain an Engel curve for a good that is initially a normal good,but eventually becomes an inferior good.

According to the No-Overlap Rule,

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

If the income-consumption path slopes down,then

-Refer to Figure 5.1.Which graph represents an increase in the consumer's income?

Which of the following statements is true?

Suppose that soup is measured on the horizontal axis and bread is measured on the vertical axis.At an interior solution

-When the price elasticity of demand is large in magnitude,a ___ increase in the price leads to a _ reduction in the amount purchased and the demand curve is relatively ____.

Suppose a consumer buy books and DVDs.The price of a book is $10,the price of a DVD is $20 and the consumer's income is $400.If books are measured on the vertical axis and DVDs are measured on the horizontal axis,then the budget line intersects the vertical axis at

A utility function is a mathematical function that assigns values to consumption bundles to represent the

If an increase in the price of one good causes the demand curve for another good to shift to the left,then the two goods are

Which of the following conditions must hold if a consumer is maximizing their utility?

Terry buys 10 pounds of cheese and 12 boxes of crackers each month.A pound of cheese costs $5 and a box of crackers costs $3.If she is maximizing her utility,what is her monthly income?

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

-Refer to Figure 5.5.Which diagram shows the income-consumption curve resulting from a decrease in income?

-Refer to Figure 5.2.If the government rations gas to 50 gallons,the consumer's budget line would be given by the line

-Refer to Table 5.1,which shows Madeline's preference ranking for various consumption bundles of bread and soup.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?

Boundary solutions arise when

-When the price elasticity of demand is small in magnitude,a ___ increase in the price leads to a _ reduction in the amount purchased and the demand curve is relatively ____.

Whenever a consumer purchases good X but not good Y,then

Introduction

Supply and Demand3

Balancing Benefits and Costs

Principles and Preferences

Rom Demand to Welfare

Technology and Production

Cost

Rofit 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

Filters

Exam 5: Constraints, Choices, and Demand

Using a carefully-labeled diagram,explain an Engel curve for a good that is initially a normal good,but eventually becomes an inferior good.

According to the No-Overlap Rule,

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

If the income-consumption path slopes down,then

-Refer to Figure 5.1.Which graph represents an increase in the consumer's income?

Which of the following statements is true?

Suppose that soup is measured on the horizontal axis and bread is measured on the vertical axis.At an interior solution

-When the price elasticity of demand is large in magnitude,a _____ increase in the price leads to a _____ reduction in the amount purchased and the demand curve is relatively ______.

Suppose a consumer buy books and DVDs.The price of a book is $10,the price of a DVD is $20 and the consumer's income is $400.If books are measured on the vertical axis and DVDs are measured on the horizontal axis,then the budget line intersects the vertical axis at

A utility function is a mathematical function that assigns values to consumption bundles to represent the

If an increase in the price of one good causes the demand curve for another good to shift to the left,then the two goods are

Which of the following conditions must hold if a consumer is maximizing their utility?

Terry buys 10 pounds of cheese and 12 boxes of crackers each month.A pound of cheese costs $5 and a box of crackers costs $3.If she is maximizing her utility,what is her monthly income?

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

-Refer to Figure 5.5.Which diagram shows the income-consumption curve resulting from a decrease in income?

-Refer to Figure 5.2.If the government rations gas to 50 gallons,the consumer's budget line would be given by the line

-Refer to Table 5.1,which shows Madeline's preference ranking for various consumption bundles of bread and soup.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?

Boundary solutions arise when

-When the price elasticity of demand is small in magnitude,a _____ increase in the price leads to a _____ reduction in the amount purchased and the demand curve is relatively ______.

Whenever a consumer purchases good X but not good Y,then

Introduction

Supply and Demand3

Balancing Benefits and Costs

Principles and Preferences

Rom Demand to Welfare

Technology and Production

Cost

Rofit 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

Filters

-When the price elasticity of demand is large in magnitude,a ___ increase in the price leads to a _ reduction in the amount purchased and the demand curve is relatively ____.

-When the price elasticity of demand is small in magnitude,a ___ increase in the price leads to a _ reduction in the amount purchased and the demand curve is relatively ____.