Deck 9: Possibilities, Preferences, and Choices

Question 1

David has an income of $60 to buy movie tickets and bus tickets.The price of a movie ticket is $12 and the price of a bus ticket is $4.What is the relative price of a bus ticket in terms of movie tickets?

A)2 movie tickets
B)15 movie tickets
C)$3
D)1/3 movie ticket
E)$6

Answer 1

D

Question 2

If income increases, the budget line

A)becomes steeper.
B)becomes flatter.
C)shifts leftward and parallel to the original budget line.
D)shifts rightward and parallel to the original budget line.
E)shifts parallels either leftward or rightward depending on whether the goods measured on the axes are normal or inferior.

Answer 2

D

Question 3

The magnitude of the slope of the budget line is the

A)relative price of the good measured on the vertical axis.
B)relative price of the good measured on the horizontal axis.
C)absolute price of the good measured on the horizontal axis.
D)real price of the good measured on the vertical axis.
E)price of the good measured on the vertical axis.

Answer 3

B

Question 4

Sarah has an income of $100.She purchases 5 pizzas at $10 each and 10 subs at $5 each.Then the government taxes subs, and the price rises to $10 each.Simultaneously, the government gives Sarah a grant of $50 in income to make up for this change.As a result, Sarah's budget line

A)becomes steeper.
B)becomes flatter.
C)shifts leftward and parallel to the original budget line.
D)shifts rightward and parallel to the original budget line.
E)swivels around the original consumption choice.

Question 5

Let Y = $100, QX = quantity of good X, and QW = quantity of good W, PX = $4 and PW = $5.The budget equation is

A)100 = 4QX + 5QW.
B)100 = QX + (4/5)QW.
C)QX = 100 + (4/5)QW.
D)QX = QW + (4/5)Y.
E)QW = QX + (4/5)Y.

Question 6

If the price of the good measured on the vertical axis increases, the budget line

A)becomes steeper.
B)becomes flatter.
C)shifts leftward and parallel to the original budget line.
D)shifts rightward and parallel to the original budget line.
E)shifts leftward and becomes steeper.

Question 7

If the price of the good measured on the horizontal axis increases, the budget line

A)becomes steeper.
B)shifts leftward and becomes steeper.
C)shifts leftward and parallel to the original budget line.
D)shifts rightward and parallel to the original budget line.
E)becomes flatter.

Question 8

Use the figure below to answer the following questions.

Figure 9.1.1
Shelly's budget line is shown in Figure 9.1.1.Which points are affordable given her income and current prices?

A)A only
B)B only
C)C only
D)D only
E)A, C, and D

Question 9

The price of a cup of coffee is $2.00.The price of a cup of tea is $1.20.The relative price of a cup of tea with respect to a cup of coffee is

A)0.6 cups of coffee.
B)1.67 cups of coffee.
C)1.0 cup of coffee.
D)1.25 cups of coffee.
E)0.75 cups of coffee.

Question 10

Marie-Louise has an income of $10 to buy peanuts and popcorn.The price of a bag of peanuts is $1 and the price of a bag of popcorn is $2.What is Marie-Louise's real income in terms of popcorn?

A)1/2 bag of popcorn
B)1 bag of popcorn
C)2 bags of popcorn
D)5 bags of popcorn
E)10 bags of popcorn

Question 11

When speaking of the price of the good measured on the horizontal axis relative to the price of the good measured on the vertical axis, which statement is true?

A)The steeper the slope of the budget line, the more expensive the good measured on the horizontal axis.
B)The steeper the slope of the budget line, the less expensive the good measured on the horizontal axis.
C)The steeper the slope of the budget line, the more expensive the good measured on the vertical axis.
D)The slope of the budget line is independent of relative prices.
E)The flatter the slope of the budget line, the more expensive the good measured on the horizontal axis.

Question 12

The price of one good divided by the price of another good is

A)an absolute price.
B)a relative price.
C)a marginal price.
D)a demand price.
E)a money price.

Question 13

Use the figure below to answer the following questions.

Figure 9.1.1
Shelly's budget line is shown in Figure 9.1.1 Which point is unaffordable given her income and current prices?

A)A and B
B)B only
C)C only
D)C and D only
E)All points are unattainable.

Question 14

The budget line depends on

A)income only.
B)prices only.
C)income and prices.
D)preferences only.
E)preferences and prices.

Question 15

Guy has an income (Y)of $50 with which he can purchase DVDs (D)at $10 each and haircuts (H)at $20 each.Which one of the following represents Guy's budget line?

A)Y = 10QD - 20QH
B)50 = QD + QH
C)Y = 50 + QD + QH
D)20Y = QD + 10QH
E)50 = 10QD + 20QH

Question 16

If income decreases, the budget line

A)becomes steeper.
B)becomes flatter.
C)shifts leftward and parallel to the original budget line.
D)shifts rightward and parallel to the original budget line.
E)shifts parallel either leftward or rightward depending on whether the goods measured on the axes are normal or inferior.

Question 17

Real income in terms of a good is defined as

A)income divided by the quantity consumed of a good.
B)the income of a producer of that good.
C)the price of one good divided by the price of another good.
D)dollar income.
E)income divided by the price of a good.

Question 18

Martha consumes cake and muffins.Suppose Martha's income doubles and the prices of cake and muffins also double.Martha's budget line

A)shifts leftward but the slope does not change.
B)remains unchanged.
C)shifts rightward but the slope does not change.
D)shifts rightward and becomes steeper.
E)shifts rightward and becomes flatter.

Question 19

David has an income of $60 to buy movie tickets and bus tickets.The price of a movie ticket is $12 and the price of a bus ticket is $4.What is David's real income?

A)$30
B)5 movie tickets or 15 bus tickets
C)15 movie tickets or 5 bus tickets
D)$38
E)$32

Question 20

Suppose all prices double and income also doubles.Which statement is true?

A)The budget line does not change.
B)The slope of the budget line increases.
C)The slope of the budget line decreases.
D)The budget line shifts rightward.
E)The budget line shifts leftward.

Question 21

A change in the price of the good measured on the vertical axis changes ________ of the budget line.

A)the slope and y-intercept
B)the slope and x-intercept
C)the x- and y-intercepts but not the slope
D)only the slope
E)only the y-intercept

Question 22

Zarina can afford to buy 3 tomatoes and no toothbrushes, or 2 toothbrushes and no tomatoes.The relative price of a toothbrush is

A)2/3 of a tomato.
B)3/2 tomatoes.
C)6 tomatoes.
D)1/6 of a tomato.
E)impossible to calculate without additional information.

Question 23

Use the figure below to answer the following questions.

Figure 9.1.2
Refer to Figure 9.1.2.Which budget line has the lowest relative price for carrots?

A)AD
B)BD
C)CD
D)The relative price is equal for all three budget lines.
E)Cannot be determined without studying the indifference curves.

Question 24

Larry consumes only beer (B)and chips (C).The magnitude of the slope of his budget line (with beer measured on the vertical axis)is

A)PC/Y.
B)PC × PB.
C)Y/PC.
D)Y/PB.
E)PC/PB.

Question 25

Use the figure below to answer the following questions.

Figure 9.1.2
Refer to Figure 9.1.2.Which budget line has the lowest relative price for compact discs?

A)DA
B)DB
C)DC
D)The relative price is equal for all three budget lines.
E)Cannot be determined without studying the indifference curves.

Question 26

The initial budget equation for pop (p)and movies (m)is Qp = 20 - 4Qm, and the price of a pop is $5.If the price of a pop falls to $4, what is the new budget equation?

A)Qp = 25 - 2Qm
B)Qp = 25 - 4Qm
C)Qp = 25 - 5Qm
D)Qp = 20 - 5Qm
E)none of the above

Question 27

Larry consumes only beer (B)and chips (C).His real income in terms of chips is

A)PC/Y.
B)PC × PB.
C)Y/PC.
D)Y/PB.
E)PC/PB.

Question 28

Use the figure below to answer the following questions.

Figure 9.1.2
Refer to Figure 9.1.2.Which budget line shows the greatest real income in terms of compact discs?

A)AD
B)BD
C)CD
D)Real income is equal for all three budget lines.
E)Cannot be determined without studying the indifference curves.

Question 29

Sara's income is $12 a week.The price of popcorn is $3 a bag, and the price of a smoothie is $3.The opportunity cost of a smoothie is

A)$3.
B)4 bags of popcorn.
C)1.00 smoothie.
D)1.0 bag of popcorn.
E)$1.

Question 30

A change in income changes ________ of the budget line.

A)the slope and y-intercept
B)the slope and x-intercept
C)the x- and y-intercepts but not the slope
D)only the slope
E)only the y-intercept

Question 31

Junkfood Jill spends all of her income on jellybeans and Jolt cola.Suppose that Jill's income is $30, the price of a bag of jellybeans is $6, and the price of a bottle of Jolt cola is $2.Which of the following combinations of jellybeans and Jolt cola lies inside Jill's budget line?

A)2 bags of jellybeans and 8 bottles of Jolt
B)5 bags of jellybeans and 0 bottles of Jolt
C)4 bags of jellybeans and 4 bottles of Jolt
D)3 bags of jellybeans and 6 bottles of Jolt
E)5 bags of jellybeans and 15 bottles of Jolt

Question 32

Goods that can be bought in any quantity desired are called

A)divisible goods.
B)invisible goods.
C)inferior goods.
D)services.
E)normal goods.

Question 33

Larry consumes only beer (B)and chips (C).His real income in terms of beer is

A)PC/Y.
B)PC × PB.
C)Y/PC.
D)Y/PB.
E)PC/PB.

Question 34

Use the figure below to answer the following questions.

Figure 9.1.2
Refer to Figure 9.1.2.Which budget line shows the greatest real income in terms of carrots?

A)AD
B)BD
C)CD
D)Real income is equal for all three budget lines.
E)Cannot be determined without studying the indifference curves.

Question 35

A change in the price of the good measured on the horizontal axis changes ________ of the budget line.

A)the slope and y-intercept
B)the slope and x-intercept
C)the x- and y-intercepts but not the slope
D)only the slope
E)only the y-intercept

Question 36

Larry consumes only beer (B)and chips (C).If beer is measured on the vertical axis, the relative price of chips in terms of beer is all of the following except

A)PC/PB.
B)the magnitude of the slope of the budget line.
C)equal to the opportunity cost of 1 bag of chips.
D)the real income in terms of beer.
E)the inverse of the relative price of beer in terms of chips.

Question 37

Which of the following is not relevant when calculating the budget line?

A)the price of good X
B)income
C)the price of good Y
D)preferences
E)the relative price of good X in terms of good Y

Question 38

Bill consumes apples and bananas.Apples are measured on the vertical axis and bananas are measured on the horizontal axis.Bill's income doubles, the price of apples doubles, and the price of bananas triples.Bill's budget line

A)remains unchanged.
B)shifts rightward and the slope does not change.
C)shifts rightward and becomes steeper.
D)shifts rightward and becomes flatter.
E)becomes steeper.

Question 39

Which one of the following statements about the budget line is false? The budget line

A)separates affordable consumption points from unaffordable consumption points.
B)is based on fixed prices.
C)is based on fixed income.
D)is based on fixed quantities.
E)constrains consumer choices.

Question 40

Larry consumes only beer (B)and chips (C).The equation of his budget line (with beer measured on the vertical axis)is

A)QB = Y/PB - (PC/PB)QC.
B)QB = Y - (PC/PB)QC.
C)QB = Y/PC - (PB/PC)QC.
D)QB = Y/PB - (PC/PB)QB.
E)QC = Y/PC - (PB/PC)QB.

Question 41

A constant marginal rate of substitution between two goods implies

A)the goods are perfect complements.
B)the goods are imperfect substitutes.
C)the goods are both inferior.
D)one good is normal and one good is inferior.
E)the goods are perfect substitutes.

Question 42

What is a distinguishing characteristic of goods that are perfect complements?

A)straight-line indifference curves
B)upward-sloping demand curves
C)L-shaped indifference curves
D)upward-sloping indifference curves
E)curved indifference curves, bowed away from the origin

Question 43

A consumer considers Coke and Pepsi to be perfect substitutes for each other.What would the consumer's indifference curves for these two goods look like?

A)L-shaped
B)horizontal along the entire length
C)vertical along the entire length
D)upward sloping
E)downward sloping with a constant slope

Question 44

Use the figure below to answer the following questions.

Figure 9.2.1
Which of the graphs in Figure 9.2.1 shows perfect substitutes?

A)(a)
B)(b)
C)(c)
D)(d)
E)(c)and (d)

Question 45

Moving down along a given budget line, real income

A)decreases but prices remain constant.
B)and prices are constant.
C)decreases and prices decrease.
D)increases but prices remain constant.
E)remains constant but prices decrease.

Question 46

Which one of the following statements is false?

A)If the indifference curve is steep, the marginal rate of substitution is high.
B)A low marginal rate of substitution implies a flat indifference curve.
C)A flat indifference curve implies a consumer must receive a large amount of good X to compensate for a small decrease in good Y.
D)A high marginal rate of substitution implies a consumer must receive a large amount of good X to compensate for a small decrease in good Y.
E)A high marginal rate of substitution implies a consumer must receive a small amount of good X to compensate for a large decrease in good Y.

Question 47

Use the figure below to answer the following questions.

Figure 9.2.1
Which of the graphs in Figure 9.2.1 shows perfect complements?

A)(a)
B)(b)
C)(c)
D)(d)
E)(c)and (d)

Question 48

Use the figure below to answer the following question.

Figure 9.2.2
Figure 9.2.2 shows three indifference curves for Brenda.Which one of the following is not true?

A)Brenda would be equally happy consuming at either point B or point C.
B)Brenda prefers consuming at point B to consuming at point A.
C)Brenda prefers consuming at point D to consuming at either point B or point C.
D)The marginal rate of substitution is higher at point C than at point B.
E)Brenda prefers consuming at point D to consuming at point A.

Question 49

Which one of the following statements is false?

A)Indifference curves are negatively sloped.
B)A preference map consists of a series of indifference curves.
C)Indifference curves are bowed out from the origin.
D)The marginal rate of substitution is the magnitude of the slope of an indifference curve.
E)The marginal rate of substitution increases as a consumer moves up along an indifference curve for ordinary goods.

Question 50

An indifference curve is

A)the boundary between what can be produced and what cannot be produced.
B)the boundary between what a consumer can afford and what he cannot afford.
C)a curve that shows combinations of goods among which a consumer is indifferent.
D)the boundary between normal goods and inferior goods.
E)a line with a positive slope.

Question 51

A rise in the price of gasoline, everything else remaining the same, ________ the relative price of a restaurant meal and ________ real income in terms of restaurant meals.

A)increases; does not change
B)does not change; decreases
C)decreases; does not change
D)does not change; increases
E)decreases; decreases

Question 52

A preference map is

A)a series of points that represent levels of equal satisfaction.
B)a series of demand curves.
C)a series of supply curves.
D)a map that shows contour lines.
E)a series of indifference curves.

Question 53

The number of pizza slices is plotted on the horizontal axis and number of hot dogs is plotted on the vertical axis.If the price of a hot dog rises, the

A)x-intercept and the slope of the budget line increase.
B)y-intercept and the slope of the budget line increase.
C)x-intercept and the slope of the budget line decrease.
D)y-intercept decreases and the slope of the budget line does not change.
E)y-intercept and the slope of the budget line decrease.

Question 54

Sam buys gasoline and coffee each week.To draw his budget line for gasoline and coffee, Sam needs to know

A)how much income he has to spend on gasoline and coffee, the price of a litre of gasoline, and the price of a cup of coffee.
B)only the price of a litre of gasoline and the price of a cup of coffee.
C)only how much coffee he wants to drink and how much gasoline he needs.
D)only how much income he has to spend on coffee and gasoline.
E)what he needs more-gasoline or coffee.

Question 55

The marginal rate of substitution

A)is the amount of good Y substituted for good X as a consumer moves along his budget line.
B)is the rate at which a person gives up the good measured on the y-axis to get an additional unit of the good measured on the x-axis while remaining on the same indifference curve.
C)increases as a consumer consumes more of the good measured on the x-axis.
D)is greater than the magnitude of the slope of the budget line.
E)is equal to the slope of the budget line.

Question 56

Which one of the following statements is true about the indifference curves for two goods that are perfect substitutes?

A)The indifference curves are negatively-sloped straight lines.
B)The indifference curves are L-shaped.
C)The marginal rate of substitution is zero.
D)The indifference curves are positively-sloped straight lines.
E)The marginal rate of substitution is infinity.

Question 57

The magnitude of the slope of an indifference curve is

A)the marginal rate of substitution.
B)the marginal rate of transformation.
C)the marginal propensity to consume.
D)the marginal propensity to substitute.
E)the relative price of good Y.

Question 58

Good X is measured on the horizontal axis and good Y is measured on the vertical axis.The marginal rate of substitution is

A)the relative price of good X in terms of good Y.
B)the relative price of good Y in terms of good X.
C)the rate at which a consumer will give up good Y to obtain an additional unit of good X while remaining indifferent.
D)the rate at which a consumer will give up good X to obtain an additional unit of good Y while remaining indifferent.
E)equal to the magnitude of the slope of the budget line.

Question 59

A consumer always has a cup of coffee with a tablespoon of sugar.What would the consumer's indifference curves for these two goods look like?

A)upward sloping
B)horizontal along the entire length
C)downward sloping with a constant slope
D)vertical along the entire length
E)L-shaped

Question 60

Tonya, who is wealth, and Jerome, who is not, both buy orange juice and croissants for lunch at the student cafeteria.Their budget lines are drawn with orange juice on the vertical axis and croissants on the horizontal axis.Choose the correct statement.

A)Both of these budget lines have the same y-axis intercepts.
B)Both of these budget lines have the same x-axis intercepts.
C)Both of these budget lines have the same slopes.
D)Both of these budget lines have the same y-axis intercepts and x-axis intercepts.
E)These budget lines have different slopes, different x-axis intercepts, and different y-axis intercepts.

Question 61

Which one of the following statements is true about the indifference curves for two goods that are close but not perfect substitutes?

A)The indifference curves are negatively-sloped straight lines.
B)The indifference curves are L-shaped.
C)The marginal rate of substitution is constant.
D)The marginal rate of substitution decreases as more of the good measured on the x-axis and less of the good measured on the y-axis are consumed.
E)The marginal rate of substitution is negative.

Question 62

Which of the following results in a rightward shift of your indifference curves for gasoline and movie rentals?

A)an increase in the price of a litre of gasoline with no change in the price of a movie rental
B)an increase in the price of a movie rental with no change in the price of a litre of gasoline
C)an increase in income if gasoline and movie rentals are normal goods
D)a decrease in the price of a litre of gasoline or a decrease in the price of a movie rental
E)none of the above

Question 63

Use the figure below to answer the following question.

Figure 9.2.4
Refer to Figure 9.2.4.Rashid buys only books and albums.The figure shows his preferences.Rashid's indifference curves ________ display diminishing marginal rate of substitution because ________.

A)do; Rashid is indifferent between consuming 6 albums and 2 books and consuming 2 albums and 3 books
B)do not; the magnitude of the slope of both indifference curves decreases as Rashid consumes more albums and fewer books
C)do not; Rashid is indifferent between consuming 6 albums and 2 books and consuming 2 albums and 3 books
D)do; the magnitude of the slope of both indifference curves decreases as Rashid consumes more albums and fewer books
E)do; the price of an album decreases as Rashid increases the quantity he buys

Question 64

The shape of a person's indifference curves between two goods depends on

A)the prices of the two goods.
B)the person's income.
C)the degree of substitutability between the two goods.
D)the level of satisfaction for the person.
E)the person's income and the prices of the two goods.

Question 65

Jay has an income of $10 to buy peanuts and popcorn.The price of peanuts is $1 a bag and the price of popcorn is $2 a bag.He chooses to consume 5 bags of peanuts and 2 bags of popcorn.What can we say about this consumption choice?

A)It is not the best affordable choice. He should consume more peanuts, more popcorn, or more of both.
B)It is the best affordable choice, and his marginal rate of substitution equals the slope of the budget line.
C)The consumption choice is on the budget line.
D)The consumption choice is outside the budget line.
E)both B and C

Question 66

At the best affordable point, what is the relationship between the indifference curve and the budget line?

A)The budget line and the indifference curve are identical.
B)The slope of the indifference curve exceeds the slope of the budget line.
C)The slope of the budget line exceeds the slope of the indifference curve.
D)The slope of the indifference curve equals the slope of the budget line.
E)The slope of the indifference curve is one-half the slope of the budget line.

Question 67

As a consumer moves rightward along an indifference curve,

A)the relative price of the good measured on the x-axis falls.
B)the relative price of the good measured on the y-axis falls.
C)the income required to buy the combinations of the goods increases.
D)the consumer remains indifferent among the different combinations of goods.
E)the consumer prefers the combinations of goods that are farther rightward along the indifference curve.

Question 68

When the iPhone5 was introduced, the demand for iPhone5 protective cases increased.This information tells us that the iPhone5 and iPhone5 protective cases are

A)substitutes and their indifference curves are close to straight lines.
B)substitutes and their indifference curves are close to L-shaped.
C)complements and their indifference curves are close to L-shaped.
D)complements and their indifference curves have a constant marginal rate of substitution.
E)substitutes and their indifference curves have a constant marginal rate of substitution.

Question 69

Use the figure below to answer the following question.

Figure 9.2.5
Refer to Figure 9.2.5.The graphs show indifference curves for various goods.Graph ________ best describes the pair of goods baseballs and baseball bats.Graph ________ best describes the pair of goods desktop computers and laptop computers.

A)2; 3
B)2; 1
C)1; 1
D)1; 3
E)3; 2

Question 70

Leah consumes at a point on her budget line where her marginal rate of substitution is less than the magnitude of the slope of her budget line.As Leah moves along her budget line toward her best affordable point, she will move

A)down and left.
B)down and right.
C)up and left.
D)up and right.
E)straight up.

Question 71

An indifference curve slopes downward because

A)it shows that people are only happy when they increase consumption of all goods.
B)it shows that when a person gives up some of good X they must increase their consumption of good Y to remain indifferent.
C)it shows that when a person gives up some of good X they can afford to increase their consumption of good Y.
D)it is a demand curve without prices.
E)the quantity demanded increases as the price falls.

Question 72

Leah consumes at a point on her budget line where her marginal rate of substitution is less than the magnitude of the slope of her budget line.As Leah moves towards her best affordable point, she will move to

A)a lower budget line.
B)a higher budget line.
C)a lower indifference curve.
D)a higher indifference curve.
E)a tangent point on the same indifference curve.

Question 73

Use the information below to answer the following questions.
Fact 9.2.1 You May Be Paid More (or Less)Than You Think
It's so hard to put a price on happiness, isn't it? But if you've ever had to choose between a jobs you like and a better-paying one that you like less, you probably wished some economist would tell you how much job satisfaction is worth. Trust in management is by far the biggest component to consider. Say you get a new boss and your trust in management goes up a bit (say, up 1 point on a 10-point scale). That's like getting a 36 percent pay raise. In other words, that increased level of trust will boost your level of overall satisfaction in life by about the same amount as a 36 percent raise would.
Source: CNN, March 29, 2006
Refer to Fact 9.2.1.What is the marginal rate of substitution?

A)3.6
B)1
C)36
D)10
E)10 + 36

Question 74

If two goods are perfect substitutes, then their

A)indifference curves are positively-sloped straight lines.
B)indifference curves are negatively-sloped straight lines.
C)indifference curves are L-shaped.
D)marginal rate of substitution is zero.
E)marginal rate of substitution is infinity.

Question 75

Which of the following statements is false?

A)A consumer possesses a preference map.
B)An indifference curve is a line that shows combinations of goods among which a consumer is indifferent.
C)A consumer has only one indifference curve.
D)The marginal rate of substitution is the rate at which a consumer will give up good y to get an additional unit of good x and remain on the same indifference curve.
E)If the indifference curve is steep, the marginal rate of substitution is high.

Question 76

Use the figure below to answer the following questions.

Figure 9.2.3
Refer to Figure 9.2.3.When Rashid chooses the consumption point of 2 books and 6 albums, his marginal rate of substitution is

A)1/3 books per album.
B)0.5 books per album.
C)3 books per album.
D)1 book per album.
E)2 books per album.

Question 77

A consumer's best affordable point occurs

A)inside the budget line.
B)outside the budget line.
C)on the budget line.
D)at a point that cannot be determined.
E)at a corner on the budget line, with only one good consumed.

Question 78

If two consumption points are on different indifference curves, then one point is

A)a substitute for the other.
B)preferred to the other.
C)a complement of the other.
D)a normal good and the other point is an inferior good.
E)more expensive than the other.

Question 79

Use the information below to answer the following questions.
Fact 9.2.1 You May Be Paid More (or Less)Than You Think
It's so hard to put a price on happiness, isn't it? But if you've ever had to choose between a jobs you like and a better-paying one that you like less, you probably wished some economist would tell you how much job satisfaction is worth. Trust in management is by far the biggest component to consider. Say you get a new boss and your trust in management goes up a bit (say, up 1 point on a 10-point scale). That's like getting a 36 percent pay raise. In other words, that increased level of trust will boost your level of overall satisfaction in life by about the same amount as a 36 percent raise would.
Source: CNN, March 29, 2006
Refer to Fact 9.2.1.The news clip implies that the marginal rate of substitution is ________, which is likely ________ implication.

A)constant; a correct
B)constant; an incorrect
C)decreasing; an incorrect
D)decreasing; a correct
E)incorrect; an incorrect

Question 80

Use the figure below to answer the following questions.

Figure 9.2.3
Refer to Figure 9.2.3.Rashid buys only books and albums.The figure shows his preferences.When Rashid chooses the consumption point of 3 books and 2 albums, his marginal rate of substitution is

A)1 book per album.
B)zero.
C)3/2 books per album.
D)2/3 books per album.
E)0.5 books per album.