Question 1

The rate at which a consumer is WILLING to substitute one good for another is measured by

Accepted Answer

A) the corner solution on the Y axis. 
B) the slope of the budget line. 
C) the consumer's real income. 
D) the slope of the tangent to the indifference curve. 
A) the corner solution on the Y axis. 
B) the slope of the budget line. 
C) the consumer's real income. 
D) the slope of the tangent to the indifference curve.

Question 2

According to the following graphs,what is   ?   The price of Y is $15 per unit.

Accepted Answer

A) 12 
B) 15 
C) 20 
D) 25 
E) none of the above 
A) 12 
B) 15 
C) 20 
D) 25 
E) none of the above

Question 3

-What is the equation for budget line LM,given the above graph?

Accepted Answer

A) Y = 10 + 1.5X 
B) Y = 10 -2/3)X 
C) Y = 1.5 + 1.5X 
D) Y = 1.5 - 10X 
E) Y = 0.667 + 1.5X 
A) Y = 10 + 1.5X 
B) Y = 10 -2/3)X 
C) Y = 1.5 + 1.5X 
D) Y = 1.5 - 10X 
E) Y = 0.667 + 1.5X

Question 4

An indifference curve is drawn on a graph with good X on the horizontal axis and good Y on the vertical axis.One point on the curve is X = 5,Y = 5.Which of the following points CANNOT also be on the curve?

Accepted Answer

A) X = 6,Y = 6 
B) X = 6,Y = 4 
C) X = 9,Y = 4 
D) X = 2,Y = 11 
A) X = 6,Y = 6 
B) X = 6,Y = 4 
C) X = 9,Y = 4 
D) X = 2,Y = 11

Question 5

The price of X is $20 and the price of Y is $40.  
-Based on the above graph,how many units of X will the consumer choose if point B is the utility-maximizing choice?

Accepted Answer

A) 28 
B) 30 
C) 32 
D) 60 
E) none of the above 
A) 28 
B) 30 
C) 32 
D) 60 
E) none of the above

Question 6

According to the following graph,at point A,   The price of Y is $50.

Accepted Answer

A) the consumer can exchange two units of X for one unit of Y and keep utility unchanged. 
B) the consumer can exchange two units of X for one unit of Y and keep income unchanged. 
C) the consumer receives twice as much marginal utility from X as from Y. 
D) both a and b 
E) all of the above 
A) the consumer can exchange two units of X for one unit of Y and keep utility unchanged. 
B) the consumer can exchange two units of X for one unit of Y and keep income unchanged. 
C) the consumer receives twice as much marginal utility from X as from Y. 
D) both a and b 
E) all of the above

Question 7

The ratio of the prices of two goods measures

Accepted Answer

A) the rate at which a consumer is willing to substitute one good for another in the market. 
B) the rate at which a consumer is able to substitute one good for another in the market. 
C) the marginal rate of substitution of X for Y. 
D) both a and c 
E) both b and c 
A) the rate at which a consumer is willing to substitute one good for another in the market. 
B) the rate at which a consumer is able to substitute one good for another in the market. 
C) the marginal rate of substitution of X for Y. 
D) both a and c 
E) both b and c

Question 8

A market demand curve

Accepted Answer

A) is the horizontal summation of the demand curves of all consumers in the market. 
B) is the sum of the prices consumers are willing to pay at each quantity. 
C) shows that consumers demand more at higher prices. 
D) both a and b 
E) all of the above 
A) is the horizontal summation of the demand curves of all consumers in the market. 
B) is the sum of the prices consumers are willing to pay at each quantity. 
C) shows that consumers demand more at higher prices. 
D) both a and b 
E) all of the above

Question 9

Assume that an individual consumes two goods,X and Y.The total utility assumed measurable)of each good is independent of the rate of consumption of other goods.The prices of X and Y are,respectively,$5 and $10.   Given the above,if the consumer buys the third unit of Y,

Accepted Answer

A) the marginal utility of the third unit is 950 units of satisfaction. 
B) the marginal utility per dollar spent on Y is 200. 
C) the marginal utility per dollar spent on Y is 20. 
D) both a and B 
A) the marginal utility of the third unit is 950 units of satisfaction. 
B) the marginal utility per dollar spent on Y is 200. 
C) the marginal utility per dollar spent on Y is 20. 
D) both a and B

Question 10

Refer to the following indifference map for a consumer who has an income of $48 to spend on goods X and Y and the market prices of X and Y are both $4:   After the price of good X increases to $12 while the price of good Y remains $4,how many units of good X would be purchased?

Accepted Answer

A) 0 
B) 2 
C) 4 
D) 8 
E) 12 
A) 0 
B) 2 
C) 4 
D) 8 
E) 12

Question 11

slope of an indifference curve

Accepted Answer

A) shows the change in utility from an additional unit of the good. 
B) shows the rate at which the consumer is able to substitute goods in the market. 
C) is equal to the price ratio at all points. 
D) is the rate at which the consumer is willing to exchange one good for another,utility held constant. 
E) all of the above 
A) shows the change in utility from an additional unit of the good. 
B) shows the rate at which the consumer is able to substitute goods in the market. 
C) is equal to the price ratio at all points. 
D) is the rate at which the consumer is willing to exchange one good for another,utility held constant. 
E) all of the above

Question 12

Alexandra consumes only caviar and champagne,but she does have a limited income of $400.Her current consumption choice is 5 ounces of caviar,at a price of $50 per ounce,and 6 bottles of champagne,at $25 each.The last ounce of caviar added 100 units to Alexandra's total utility,while the last bottle of champagne added 75 units.If Alexandra chooses 4 ounces of caviar and 8 bottles of champagne instead her total utility will:

Accepted Answer

A) increase by 150 units 
B) decrease by 150 units 
C) increase by 100 units 
D) decrease by 100 units 
E) increase by 50 units 
A) increase by 150 units 
B) decrease by 150 units 
C) increase by 100 units 
D) decrease by 100 units 
E) increase by 50 units

Question 13

Assume that an individual consumes two goods,X and Y.The total utility assumed measurable)of each good is independent of the rate of consumption of other goods.The prices of X and Y are,respectively,$5 and $10.   Given the above,if the consumer has $65 to spend on X and Y,the utility-maximizing bundle is

Accepted Answer

A) 3X and 5Y. 
B) 4X and 4Y. 
C) 5X and 2Y. 
D) 1X and 6Y. 
E) 2X and 7Y. 
A) 3X and 5Y. 
B) 4X and 4Y. 
C) 5X and 2Y. 
D) 1X and 6Y. 
E) 2X and 7Y.

Question 14

Suppose that 25 units of X and 16 units of Y give a consumer the same satisfaction as 15 units of X and 18 units of Y.Then

Accepted Answer

A) the consumer can exchange five units of X for one unit of Y and keep utility unchanged. 
B) the consumer can exchange one unit of X for 1/5 unit of Y and keep utility unchanged. 
C) the market rate of exchange of X for Y is 1/5. 
D) both a and b 
E) all of the above 
A) the consumer can exchange five units of X for one unit of Y and keep utility unchanged. 
B) the consumer can exchange one unit of X for 1/5 unit of Y and keep utility unchanged. 
C) the market rate of exchange of X for Y is 1/5. 
D) both a and b 
E) all of the above

Question 15

Refer to the following indifference map for a consumer who has an income of $48 to spend on goods X and Y and the market prices of X and Y are both $4:   Now suppose the price of good X increases to $12 while the price of good Y remains $4.Utility will be maximized on which indifference curve?

Accepted Answer

A) I 
B) II 
C) III 
D) On an indifference curve below I 
A) I 
B) II 
C) III 
D) On an indifference curve below I

Question 16

According to the following graphs,what does the curve in the lower graph show?   The price of Y is $15 per unit.

Accepted Answer

A) how a consumer's utility-maximizing choices of X and Y change when the budget constraint changes 
B) how a consumer's preferences change when income changes 
C) how a consumer's utility-maximizing choices of X changes when the price of X changes 
D) how a consumer's utility-maximizing choices of Y changes when the price of Y changes 
E) both c and d 
A) how a consumer's utility-maximizing choices of X and Y change when the budget constraint changes 
B) how a consumer's preferences change when income changes 
C) how a consumer's utility-maximizing choices of X changes when the price of X changes 
D) how a consumer's utility-maximizing choices of Y changes when the price of Y changes 
E) both c and d

Question 17

Lord Greystroke uses his limited income to purchase fruits and nuts; he is currently buying 10 pounds of fruits at a price of $2 per pound and 5 pounds of nuts at a price of $6 per pound.The last pound of fruits added 10 units to Lord Greystroke's total utility,while the last pound of nuts added 30 units.Lord Greystroke

Accepted Answer

A) is making the utility-maximizing choice. 
B) should buy more fruits and less nuts because the last pound of fruits cost less than the last pound of nuts. 
C) should buy more fruits and less nuts because the last dollar spent on fruits added more to total utility than the last dollar spent on nuts. 
D) should buy more nuts and less fruits because the last pound of nuts added more to total utility than the last pound of fruits. 
E) should buy more nuts and less fruits because the last dollar spent on nuts added more to total utility than the last dollar spent on fruits. 
A) is making the utility-maximizing choice. 
B) should buy more fruits and less nuts because the last pound of fruits cost less than the last pound of nuts. 
C) should buy more fruits and less nuts because the last dollar spent on fruits added more to total utility than the last dollar spent on nuts. 
D) should buy more nuts and less fruits because the last pound of nuts added more to total utility than the last pound of fruits. 
E) should buy more nuts and less fruits because the last dollar spent on nuts added more to total utility than the last dollar spent on fruits.

Question 18

If the marginal rate of substitution of X for Y is 2,the price of X is $3,and the price of Y is $1,a utility-maximizing consumer should

Accepted Answer

A) be indifferent between 1X and 2Y. 
B) prefer 3Y to 1X. 
C) choose less X and more Y. 
D) choose more X and less Y. 
A) be indifferent between 1X and 2Y. 
B) prefer 3Y to 1X. 
C) choose less X and more Y. 
D) choose more X and less Y.

Question 19

The price of X is $20 and the price of Y is $40.  
-Based on the above graph,at point B,

Accepted Answer

A) if the consumer obtains one more unit of Y,½ unit of X must be foregone in order to keep utility unchanged. 
B) if the consumer obtains one more unit of X,two units of Y must be foregone in order to keep utility unchanged. 
C) the marginal rate of substitution is ½. 
D) both a and c 
E) all of the above 
A) if the consumer obtains one more unit of Y,½ unit of X must be foregone in order to keep utility unchanged. 
B) if the consumer obtains one more unit of X,two units of Y must be foregone in order to keep utility unchanged. 
C) the marginal rate of substitution is ½. 
D) both a and c 
E) all of the above

Question 20

The price of X is $20 and the price of Y is $40.  
-According to the following graph,at point B,   The consumer's income is $1,200.

Accepted Answer

A) the rate at which the consumer is willing to substitute X for Y is greater than it is at point A. 
B) the consumer is willing to give up more Y in order to gain an extra unit of X than at point A. 
C) the consumer will receive more Y for each unit of X exchanged in the market than at point A. 
D) both a and b 
E) all of the above 
A) the rate at which the consumer is willing to substitute X for Y is greater than it is at point A. 
B) the consumer is willing to give up more Y in order to gain an extra unit of X than at point A. 
C) the consumer will receive more Y for each unit of X exchanged in the market than at point A. 
D) both a and b 
E) all of the above

The rate at which a consumer is WILLING to substitute one good for another is measured by

According to the following graphs,what is ? The price of Y is $15 per unit.

-What is the equation for budget line LM,given the above graph?

An indifference curve is drawn on a graph with good X on the horizontal axis and good Y on the vertical axis.One point on the curve is X = 5,Y = 5.Which of the following points CANNOT also be on the curve?

The price of X is $20 and the price of Y is $40. -Based on the above graph,how many units of X will the consumer choose if point B is the utility-maximizing choice?

According to the following graph,at point A, The price of Y is $50.

The ratio of the prices of two goods measures

A market demand curve

Assume that an individual consumes two goods,X and Y.The total utility assumed measurable)of each good is independent of the rate of consumption of other goods.The prices of X and Y are,respectively,$5 and $10. Given the above,if the consumer buys the third unit of Y,

Refer to the following indifference map for a consumer who has an income of $48 to spend on goods X and Y and the market prices of X and Y are both $4: After the price of good X increases to $12 while the price of good Y remains $4,how many units of good X would be purchased?

slope of an indifference curve

Suppose that 25 units of X and 16 units of Y give a consumer the same satisfaction as 15 units of X and 18 units of Y.Then

Refer to the following indifference map for a consumer who has an income of $48 to spend on goods X and Y and the market prices of X and Y are both $4: Now suppose the price of good X increases to $12 while the price of good Y remains $4.Utility will be maximized on which indifference curve?

According to the following graphs,what does the curve in the lower graph show? The price of Y is $15 per unit.

If the marginal rate of substitution of X for Y is 2,the price of X is $3,and the price of Y is $1,a utility-maximizing consumer should

The price of X is $20 and the price of Y is $40. -Based on the above graph,at point B,

The price of X is $20 and the price of Y is $40. -According to the following graph,at point B, The consumer's income is $1,200.

Managers, profits, and Markets

Demand, supply, and Market Equilibrium

Marginal Analysis for Optimal Decision Making

Basic Estimation Techniques

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters

Exam 5: Theory of Consumer Behavior

The rate at which a consumer is WILLING to substitute one good for another is measured by

According to the following graphs,what is ? The price of Y is $15 per unit.

-What is the equation for budget line LM,given the above graph?

An indifference curve is drawn on a graph with good X on the horizontal axis and good Y on the vertical axis.One point on the curve is X = 5,Y = 5.Which of the following points CANNOT also be on the curve?

The price of X is $20 and the price of Y is $40. -Based on the above graph,how many units of X will the consumer choose if point B is the utility-maximizing choice?

According to the following graph,at point A, The price of Y is $50.

The ratio of the prices of two goods measures

A market demand curve

Assume that an individual consumes two goods,X and Y.The total utility assumed measurable)of each good is independent of the rate of consumption of other goods.The prices of X and Y are,respectively,$5 and $10. Given the above,if the consumer buys the third unit of Y,

Refer to the following indifference map for a consumer who has an income of $48 to spend on goods X and Y and the market prices of X and Y are both $4: After the price of good X increases to $12 while the price of good Y remains $4,how many units of good X would be purchased?

slope of an indifference curve

Suppose that 25 units of X and 16 units of Y give a consumer the same satisfaction as 15 units of X and 18 units of Y.Then

Refer to the following indifference map for a consumer who has an income of $48 to spend on goods X and Y and the market prices of X and Y are both $4: Now suppose the price of good X increases to $12 while the price of good Y remains $4.Utility will be maximized on which indifference curve?

According to the following graphs,what does the curve in the lower graph show? The price of Y is $15 per unit.

If the marginal rate of substitution of X for Y is 2,the price of X is $3,and the price of Y is $1,a utility-maximizing consumer should

The price of X is $20 and the price of Y is $40. -Based on the above graph,at point B,

The price of X is $20 and the price of Y is $40. -According to the following graph,at point B, The consumer's income is $1,200.

Managers, profits, and Markets

Demand, supply, and Market Equilibrium

Marginal Analysis for Optimal Decision Making

Basic Estimation Techniques

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters