Question 1

Alex's wage rate falls.Holding everything else constant,Alex's new time allocation budget line will:

Accepted Answer

A)  shift in toward the origin,parallel to the old one. 
B)  shift away from the origin,parallel to the old one. 
C)  rotate to the left on the x-axis. 
D)  rotate down on the y-axis. 
A)  shift in toward the origin,parallel to the old one. 
B)  shift away from the origin,parallel to the old one. 
C)  rotate to the left on the x-axis. 
D)  rotate down on the y-axis.

Question 2

Use the following to answer questions :
Figure: The Time Allocation Budget Line  
-During the holiday season,some people take a second job or work more hours.From this,we know that:

Accepted Answer

A)  the income effect becomes more powerful than the substitution effect during the holiday season. 
B)  the substitution effect becomes more powerful than the income effect during the holiday season. 
C)  the income and substitution effects cancel each other out during the holiday season. 
D)  people want to spend more time with their family during the holiday season. 
A)  the income effect becomes more powerful than the substitution effect during the holiday season. 
B)  the substitution effect becomes more powerful than the income effect during the holiday season. 
C)  the income and substitution effects cancel each other out during the holiday season. 
D)  people want to spend more time with their family during the holiday season.

Question 3

Miss Marple spends her entire leisure time gardening.She values the marginal utility of the last hour spent gardening at $17.She could earn $20 if she worked an additional hour.Assuming that Miss Marple wants to maximize her utility,which of the following is CORRECT?

Accepted Answer

A)  She should spend more time gardening and less time working to balance the stress of work with the relaxation provided by a hobby. 
B)  She should spend more time gardening and less time working,since leisure activities are usually characterized by increasing marginal utility. 
C)  She should reallocate her time away from gardening and toward more work. 
D)  This question cannot be answered without knowing how many hours she spends working and how many hours she spends gardening. 
A)  She should spend more time gardening and less time working to balance the stress of work with the relaxation provided by a hobby. 
B)  She should spend more time gardening and less time working,since leisure activities are usually characterized by increasing marginal utility. 
C)  She should reallocate her time away from gardening and toward more work. 
D)  This question cannot be answered without knowing how many hours she spends working and how many hours she spends gardening.

Question 4

Kaile earns $10 as a lab technician.She can work up to 60 hours per week but usually works 35 hours.She spends several hours every week reading in the park.She says that she likes this because it is free.Kaile is right: sitting in the park with a book is costless.

Accepted Answer

A) True 
 B)False

Question 5

Use the following to answer questions :
Figure: Davina's Labour Supply Choice  
-(Figure: Davina's Labour Supply Choice)The figure Davina's Labour Supply Choice shows Davina's time allocation budget line when her hourly wage is $10 or $15 and she has 80 hours to allocate between labour and leisure;it also shows two of her indifference curves for income and leisure.When Davina earns $15 per hour,she works _____ hours and enjoys _____ hours of leisure.

Accepted Answer

A)  20;60 
B)  30;50 
C)  40;40 
D)  50;30 
A)  20;60 
B)  30;50 
C)  40;40 
D)  50;30

Question 6

The time allocation budget line shows an individual's _____ and the income that allows consumption of marketed goods.

Accepted Answer

A)  preferences for leisure 
B)  trade-offs between the consumption of leisure 
C)  labour supply for the consumption of leisure 
D)  indifference between the consumption of leisure 
A)  preferences for leisure 
B)  trade-offs between the consumption of leisure 
C)  labour supply for the consumption of leisure 
D)  indifference between the consumption of leisure

Question 7

If an individual's wage rate decreases,the substitution effect will cause the individual to work fewer hours.

Accepted Answer

A) True 
 B)False

Question 8

Use the following to answer questions :
Figure: The Time Allocation Budget Line  
-If the labour supply curve bends backward,then the backward-bending portion reveals that _____ is a(n)_____ good and the _____ effect is greater than the _____ effect.

Accepted Answer

A)  labour;normal;income;substitution 
B)  labour;inferior;substitution;income 
C)  leisure;normal;income;substitution 
D)  leisure;inferior;substitution;income 
A)  labour;normal;income;substitution 
B)  labour;inferior;substitution;income 
C)  leisure;normal;income;substitution 
D)  leisure;inferior;substitution;income

Question 9

Use the following to answer questions :
Figure: Joanna's Time Allocation Budget Line  
-(Figure: Joanna's Time Allocation Budget Line)Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours.If Joanna's wage rate increases and she ends up working MORE hours:

Accepted Answer

A)  leisure became relatively more expensive. 
B)  leisure became relatively less expensive. 
C)  leisure did not change in price. 
D)  she does not know how to allocate her time effectively. 
A)  leisure became relatively more expensive. 
B)  leisure became relatively less expensive. 
C)  leisure did not change in price. 
D)  she does not know how to allocate her time effectively.

Question 10

Use the following to answer questions :
Figure: Davina's Labour Supply Choice  
-(Figure: Davina's Labour Supply Choice)The figure Davina's Labour Supply Choice shows Davina's time allocation budget line when her hourly wage is $10 or $15 and she has 80 hours to allocate between labour and leisure;it also shows two of her indifference curves for income and leisure.When Davina earns $10 per hour,she works _____ hours and enjoys _____ hours of leisure.

Accepted Answer

A)  20;60 
B)  30;50 
C)  40;40 
D)  50;30 
A)  20;60 
B)  30;50 
C)  40;40 
D)  50;30

Question 11

Use the following to answer questions :
Figure: Joanna's Time Allocation Budget Line  
-(Figure: Joanna's Time Allocation Budget Line)The figure Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours.What is Joanna's wage rate?

Accepted Answer

A)  $10.00 
B)  $12.50 
C)  $40.00 
D)  $15.00 
A)  $10.00 
B)  $12.50 
C)  $40.00 
D)  $15.00

Question 12

Use the following to answer questions :
Figure: The Time Allocation Budget Line  
-If an individual's labour supply curve is upward-sloping at low wage rates and downward-sloping at high wage rates,then at higher wage rates:

Accepted Answer

A)  there is no substitution effect as wages change. 
B)  there is no income effect as wages change. 
C)  the income effect dominates the substitution effect. 
D)  the substitution effect dominates the income effect. 
A)  there is no substitution effect as wages change. 
B)  there is no income effect as wages change. 
C)  the income effect dominates the substitution effect. 
D)  the substitution effect dominates the income effect.

Question 13

An increase in the wage rate will:

Accepted Answer

A)  normally generate a small income effect. 
B)  generate a significant decrease in after-tax income. 
C)  possibly lead people to choose more leisure rather than work more,since leisure is a normal good. 
D)  cause businesses to increase the number of employees to reduce costs. 
A)  normally generate a small income effect. 
B)  generate a significant decrease in after-tax income. 
C)  possibly lead people to choose more leisure rather than work more,since leisure is a normal good. 
D)  cause businesses to increase the number of employees to reduce costs.

Question 14

Use the following to answer questions :
Figure: Rita's Time Allocation Budget Line  
-(Figure: Rita's Time Allocation Budget Line)Look at the figure Rita's Time Allocation Budget Line.It is based on 80 hours available for labour and leisure.If her hourly wage doubles,the vertical intercept will be:

Accepted Answer

A)  $1 120. 
B)  $1 400. 
C)  $1 600. 
D)  $2 000. 
A)  $1 120. 
B)  $1 400. 
C)  $1 600. 
D)  $2 000.

Question 15

Use the following to answer questions :
Figure: Income and Leisure Opportunities  
-(Figure: Income and Leisure Opportunities)The figure Income and Leisure Opportunities refers to Keisha when she has 100 hours per week for working or leisure.There are two time allocation lines,one for a $10 hourly wage rate and the other for a $20 hourly wage rate.Keisha's optimal choice is point A when the wage is $10,and her optimal choice is point C when the wage is $20.As the amount she earns increases from $10 to $20 per hour,Keisha will work _____ hours because of the income effect.

Accepted Answer

A)  10 fewer 
B)  15 more 
C)  25 fewer 
D)  50 more 
A)  10 fewer 
B)  15 more 
C)  25 fewer 
D)  50 more

Question 16

Use the following to answer questions :
Figure: The Time Allocation Budget Line  
-(Figure: The Time Allocation Budget Line)Look at the figure The Time Allocation Budget Line.If the wage rate rises,then the time allocation budget line will rotate _____ along the _____ axis.

Accepted Answer

A)  left;leisure 
B)  up;income 
C)  right;leisure 
D)  down;income 
A)  left;leisure 
B)  up;income 
C)  right;leisure 
D)  down;income

Question 17

Kurt earns a wage of $100 per hour;Jim earns a wage of $10 per hour.To maximize utility,Kurt works 45 hours per week and Jim works 50 hours per week.The value of an additional hour of leisure is:

Accepted Answer

A)  higher for Jim than for Kurt. 
B)  higher for Kurt than for Jim. 
C)  less than $100 for Kurt. 
D)  greater than $10 for Jim. 
A)  higher for Jim than for Kurt. 
B)  higher for Kurt than for Jim. 
C)  less than $100 for Kurt. 
D)  greater than $10 for Jim.

Question 18

Use the following to answer questions :
Figure: Davina's Labour Supply Choice  
-(Figure: Davina's Labour Supply Choice)The figure Davina's Labour Supply Choice shows Davina's time allocation budget line when her hourly wage is $10 or $15 and she has 80 hours to allocate between labour and leisure;it also shows two of her indifference curves for income and leisure.Davina's labour supply curve is _____ as her hourly wage rises from $10 to $15.

Accepted Answer

A)  upward-sloping 
B)  downward-sloping 
C)  vertical 
D)  horizontal 
A)  upward-sloping 
B)  downward-sloping 
C)  vertical 
D)  horizontal

Question 19

Use the following to answer questions :
Figure: Joanna's Time Allocation Budget Line  
-(Figure: Joanna's Time Allocation Budget Line)The figure Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours.If Joanna's wage increases and as a result she consumes LESS leisure,her supply curve of labour is:

Accepted Answer

A)  horizontal. 
B)  upward-sloping. 
C)  downward-sloping. 
D)  vertical. 
A)  horizontal. 
B)  upward-sloping. 
C)  downward-sloping. 
D)  vertical.

Question 20

Use the following to answer questions :
Figure: Income and Leisure Opportunities  
-(Figure: Income and Leisure Opportunities)The figure Income and Leisure Opportunities refers to Keisha when she has 100 hours per week for working or leisure.There are two time allocation lines,one for a $10 hourly wage rate and the other for a $20 hourly wage rate.Keisha's optimal choice is point A when the wage is $10,and her optimal choice is point C when the wage is $20.As the amount she earns increases from $10 to $20 per hour,Keisha will work _____ hours because of the substitution effect.

Accepted Answer

A)  10 fewer 
B)  15 more 
C)  25 fewer 
D)  50 more 
A)  10 fewer 
B)  15 more 
C)  25 fewer 
D)  50 more

Alex's wage rate falls.Holding everything else constant,Alex's new time allocation budget line will:

Use the following to answer questions : Figure: The Time Allocation Budget Line -During the holiday season,some people take a second job or work more hours.From this,we know that:

Miss Marple spends her entire leisure time gardening.She values the marginal utility of the last hour spent gardening at $17.She could earn $20 if she worked an additional hour.Assuming that Miss Marple wants to maximize her utility,which of the following is CORRECT?

Kaile earns $10 as a lab technician.She can work up to 60 hours per week but usually works 35 hours.She spends several hours every week reading in the park.She says that she likes this because it is free.Kaile is right: sitting in the park with a book is costless.

The time allocation budget line shows an individual's _____ and the income that allows consumption of marketed goods.

If an individual's wage rate decreases,the substitution effect will cause the individual to work fewer hours.

Use the following to answer questions : Figure: The Time Allocation Budget Line -If the labour supply curve bends backward,then the backward-bending portion reveals that ___ is a(n)_ good and the _ effect is greater than the ___ effect.

Use the following to answer questions : Figure: Joanna's Time Allocation Budget Line -(Figure: Joanna's Time Allocation Budget Line)Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours.If Joanna's wage rate increases and she ends up working MORE hours:

Use the following to answer questions : Figure: Joanna's Time Allocation Budget Line -(Figure: Joanna's Time Allocation Budget Line)The figure Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours.What is Joanna's wage rate?

Use the following to answer questions : Figure: The Time Allocation Budget Line -If an individual's labour supply curve is upward-sloping at low wage rates and downward-sloping at high wage rates,then at higher wage rates:

An increase in the wage rate will:

Use the following to answer questions : Figure: Rita's Time Allocation Budget Line -(Figure: Rita's Time Allocation Budget Line)Look at the figure Rita's Time Allocation Budget Line.It is based on 80 hours available for labour and leisure.If her hourly wage doubles,the vertical intercept will be:

Use the following to answer questions : Figure: The Time Allocation Budget Line -(Figure: The Time Allocation Budget Line)Look at the figure The Time Allocation Budget Line.If the wage rate rises,then the time allocation budget line will rotate _ along the _ axis.

Kurt earns a wage of $100 per hour;Jim earns a wage of $10 per hour.To maximize utility,Kurt works 45 hours per week and Jim works 50 hours per week.The value of an additional hour of leisure is:

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Filters

Exam 23: Indifference Curve Analysis

Alex's wage rate falls.Holding everything else constant,Alex's new time allocation budget line will:

Use the following to answer questions : Figure: The Time Allocation Budget Line -During the holiday season,some people take a second job or work more hours.From this,we know that:

Miss Marple spends her entire leisure time gardening.She values the marginal utility of the last hour spent gardening at $17.She could earn $20 if she worked an additional hour.Assuming that Miss Marple wants to maximize her utility,which of the following is CORRECT?

Kaile earns $10 as a lab technician.She can work up to 60 hours per week but usually works 35 hours.She spends several hours every week reading in the park.She says that she likes this because it is free.Kaile is right: sitting in the park with a book is costless.

The time allocation budget line shows an individual's _____ and the income that allows consumption of marketed goods.

If an individual's wage rate decreases,the substitution effect will cause the individual to work fewer hours.

Use the following to answer questions : Figure: The Time Allocation Budget Line -If the labour supply curve bends backward,then the backward-bending portion reveals that _____ is a(n)_____ good and the _____ effect is greater than the _____ effect.

Use the following to answer questions : Figure: Joanna's Time Allocation Budget Line -(Figure: Joanna's Time Allocation Budget Line)Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours.If Joanna's wage rate increases and she ends up working MORE hours:

Use the following to answer questions : Figure: Joanna's Time Allocation Budget Line -(Figure: Joanna's Time Allocation Budget Line)The figure Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours.What is Joanna's wage rate?

Use the following to answer questions : Figure: The Time Allocation Budget Line -If an individual's labour supply curve is upward-sloping at low wage rates and downward-sloping at high wage rates,then at higher wage rates:

An increase in the wage rate will:

Use the following to answer questions : Figure: Rita's Time Allocation Budget Line -(Figure: Rita's Time Allocation Budget Line)Look at the figure Rita's Time Allocation Budget Line.It is based on 80 hours available for labour and leisure.If her hourly wage doubles,the vertical intercept will be:

Use the following to answer questions : Figure: The Time Allocation Budget Line -(Figure: The Time Allocation Budget Line)Look at the figure The Time Allocation Budget Line.If the wage rate rises,then the time allocation budget line will rotate _____ along the _____ axis.

Kurt earns a wage of $100 per hour;Jim earns a wage of $10 per hour.To maximize utility,Kurt works 45 hours per week and Jim works 50 hours per week.The value of an additional hour of leisure is:

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Filters

Use the following to answer questions : Figure: The Time Allocation Budget Line -If the labour supply curve bends backward,then the backward-bending portion reveals that ___ is a(n)_ good and the _ effect is greater than the ___ effect.

Use the following to answer questions : Figure: The Time Allocation Budget Line -(Figure: The Time Allocation Budget Line)Look at the figure The Time Allocation Budget Line.If the wage rate rises,then the time allocation budget line will rotate _ along the _ axis.