Question 1

Indifference curves

Accepted Answer

A) are straight lines. 
B) show the different combinations of goods and services that consumers prefer. 
C) must intersect. 
D) bow outward with respect to the origin. 
E) do not intersect. 
A) are straight lines. 
B) show the different combinations of goods and services that consumers prefer. 
C) must intersect. 
D) bow outward with respect to the origin. 
E) do not intersect.

Question 2

Along a given indifference curve,marginal utility is constant.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following will most likely happen when a person's income increases,other things being equal?

Accepted Answer

A) The budget line will shift outward. 
B) The indifference curves will shift downward. 
C) The indifference curves will shift outward. 
D) The budget line will become steeper. 
E) The budget line will become flatter. 
A) The budget line will shift outward. 
B) The indifference curves will shift downward. 
C) The indifference curves will shift outward. 
D) The budget line will become steeper. 
E) The budget line will become flatter.

Question 4

As an individual consumer's income increases,that consumer's

Accepted Answer

A) budget line shifts to the left. 
B) indifference curve shifts to the right. 
C) budget line shifts to the right. 
D) indifference curve shifts to the left. 
E) budget line remains unchanged. 
A) budget line shifts to the left. 
B) indifference curve shifts to the right. 
C) budget line shifts to the right. 
D) indifference curve shifts to the left. 
E) budget line remains unchanged.

Question 5

The budget line rotates when a consumer's budget increases.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 5A-3  
-Refer to Exhibit 5A-3.Calculate the maximum quantity of good Y and the maximum quantity of good X that the consumer can purchase if the price of good Y is $3 and the price of good X is $5.

Accepted Answer

51; 30.6
Consumer in

Question 7

As you move down an indifference curve,your

Accepted Answer

A) budget must decrease. 
B) budget must increase. 
C) total utility increases. 
D) total utility remains the same. 
E) total utility decreases. 
A) budget must decrease. 
B) budget must increase. 
C) total utility increases. 
D) total utility remains the same. 
E) total utility decreases.

Question 8

Exhibit 5A-2  
-Refer to Exhibit 5A-2.If the individual starts at point A and moves to point B as a result of an increase in the price of Y,then the income effect

Accepted Answer

A) decreases the consumption of both X and Y. 
B) has no effect on the consumption of either X or Y. 
C) increases the consumption of both X and Y. 
D) decreases the consumption of X but increases the consumption of Y. 
E) increases the consumption of X but decreases the consumption of Y. 
A) decreases the consumption of both X and Y. 
B) has no effect on the consumption of either X or Y. 
C) increases the consumption of both X and Y. 
D) decreases the consumption of X but increases the consumption of Y. 
E) increases the consumption of X but decreases the consumption of Y.

Question 9

A decrease in income shifts the budget line outward from the origin.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 5A-1  
-Refer to Exhibit 5A-1.Which of the following statements is false?

Accepted Answer

A) At point C,MUX/MUY > PX/PY. 
B) Curve I2 represents a greater level of utility than I1. 
C) If the individual started at point A and moved to point B,the most likely cause was a decrease in the price of X. 
D) In moving from point A to point B,the individual is moving down along his or her demand curve for good Y. 
E) At point B,MUX/PX = MUY/PY. 
A) At point C,MUX/MUY > PX/PY. 
B) Curve I2 represents a greater level of utility than I1. 
C) If the individual started at point A and moved to point B,the most likely cause was a decrease in the price of X. 
D) In moving from point A to point B,the individual is moving down along his or her demand curve for good Y. 
E) At point B,MUX/PX = MUY/PY.

Question 11

For every point along a demand curve,utility is being maximized.

Accepted Answer

A) True 
 B)False

Question 12

An indifference curve shows

Accepted Answer

A) various combinations of two goods that give the consumer the same amount of utility. 
B) the quantities of a good that give the consumer maximum utility when compared directly to price. 
C) the relationship between the price and quantity of a good that a consumer is able to purchase. 
D) the relationship between the quantity of a good and maximum utility. 
E) the relationship between total and marginal utility. 
A) various combinations of two goods that give the consumer the same amount of utility. 
B) the quantities of a good that give the consumer maximum utility when compared directly to price. 
C) the relationship between the price and quantity of a good that a consumer is able to purchase. 
D) the relationship between the quantity of a good and maximum utility. 
E) the relationship between total and marginal utility.

Question 13

The slope of a budget line for two goods,A and B,with A on the vertical axis and B on the horizontal axis,is equal to

Accepted Answer

A) -PA/PB. 
B) PB/PA. 
C) -PB/PA. 
D) -MUA/PB. 
E) PA/PB. 
A) -PA/PB. 
B) PB/PA. 
C) -PB/PA. 
D) -MUA/PB. 
E) PA/PB.

Question 14

Exhibit 5A-1  
-Refer to Exhibit 5A-1.If income for this individual is $120 and the individual is consuming at point B,the price of X is ____ and the price of Y is ____.

Accepted Answer

A) $2.40; $1.20 
B) $1.20; $2.00 
C) $2.40; $2.00 
D) $2.00; $2.40 
E) $1.20; $2.40 
A) $2.40; $1.20 
B) $1.20; $2.00 
C) $2.40; $2.00 
D) $2.00; $2.40 
E) $1.20; $2.40

Question 15

Exhibit 5A-2  
-Refer to Exhibit 5A-2.If the individual starts at point A and moves to point B as a result of an increase in the price of Y,then the amount of reduction in the consumption of Y is

Accepted Answer

A) 45 due to the substitution effect and 25 due to the income effect. 
B) 25 due to the substitution effect and 20 due to the income effect. 
C) 25 due to both the substitution effect and income effect. 
D) 20 due to the substitution effect and 25 due to the income effect. 
E) 25 due to the substitution effect and 45 due to the income effect. 
A) 45 due to the substitution effect and 25 due to the income effect. 
B) 25 due to the substitution effect and 20 due to the income effect. 
C) 25 due to both the substitution effect and income effect. 
D) 20 due to the substitution effect and 25 due to the income effect. 
E) 25 due to the substitution effect and 45 due to the income effect.

Question 16

Along an indifference curve,different combinations of a good represent the same cost to a consumer.

Accepted Answer

A) True 
 B)False

Question 17

At any point on an indifference curve for an individual consuming two goods,A and B,with A on the vertical axis and B on the horizontal axis,the slope is equal to

Accepted Answer

A) MUA/MUB. 
B) MUB/MUA. 
C) -MUA/MUB. 
D) -MUB/MUA. 
E) -PB/PA. 
A) MUA/MUB. 
B) MUB/MUA. 
C) -MUA/MUB. 
D) -MUB/MUA. 
E) -PB/PA.

Question 18

As a consumer's income rises,her indifference curves shift outward.

Accepted Answer

A) True 
 B)False

Question 19

Indifference curves never intersect.

Accepted Answer

A) True 
 B)False

Exam 32: Consumer Theory With Indifference Curves

Indifference curves

Along a given indifference curve,marginal utility is constant.

Which of the following will most likely happen when a person's income increases,other things being equal?

As an individual consumer's income increases,that consumer's

The budget line rotates when a consumer's budget increases.

Exhibit 5A-3 -Refer to Exhibit 5A-3.Calculate the maximum quantity of good Y and the maximum quantity of good X that the consumer can purchase if the price of good Y is $3 and the price of good X is $5.

As you move down an indifference curve,your

Exhibit 5A-2 -Refer to Exhibit 5A-2.If the individual starts at point A and moves to point B as a result of an increase in the price of Y,then the income effect

A decrease in income shifts the budget line outward from the origin.

Exhibit 5A-1 -Refer to Exhibit 5A-1.Which of the following statements is false?

For every point along a demand curve,utility is being maximized.

An indifference curve shows

The slope of a budget line for two goods,A and B,with A on the vertical axis and B on the horizontal axis,is equal to

Exhibit 5A-1 -Refer to Exhibit 5A-1.If income for this individual is $120 and the individual is consuming at point B,the price of X is ____ and the price of Y is ____.

Exhibit 5A-2 -Refer to Exhibit 5A-2.If the individual starts at point A and moves to point B as a result of an increase in the price of Y,then the amount of reduction in the consumption of Y is

Along an indifference curve,different combinations of a good represent the same cost to a consumer.

At any point on an indifference curve for an individual consuming two goods,A and B,with A on the vertical axis and B on the horizontal axis,the slope is equal to

As a consumer's income rises,her indifference curves shift outward.

Indifference curves never intersect.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors,price Ceilings,and Elasticity

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, transfers, and Income Distribution

Public Goods, externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth and Globalization

International Trade

International Finance

Reading,understanding,and Creating Graphs

Producer Theory With Isoquants

Present Discounted Value

The Miracle of Compound Growth

Deriving the Growth Accounting Formula

Deriving the Formula for the Keynesian Multiplier and the Forward-Looking Consumption Model

Filters

Exhibit 5A-1 -Refer to Exhibit 5A-1.If income for this individual is $120 and the individual is consuming at point B,the price of X is and the price of Y is .