Question 1

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy)intercept of Ann's budget line is 12, and the vertical (video game)intercept of Ann's budget line is 24.Which of the following best describes what would happen to the budget line if Ann's income increased?

Accepted Answer

A) It would shift rightward to a parallel position. 
B) It would shift rightward to a nonparallel position. 
C) It would shift leftward to a parallel position. 
D) It would shift leftward to a nonparallel position. 
E) Nothing.

Question 2

The marginal rate of substitution indicates

Accepted Answer

A) how much of one good a consumer is willing to give up to get one more unit of another good while remaining equally satisfied 
B) how much of a good a consumer can receive for $1 while remaining equally satisfied 
C) the tendency of a consumer to substitute lower-priced goods for a good whose price has increased 
D) the limits of utility analysis 
E) the basis of consumer surplus

Question 3

A family on a trip budgets $200 for restaurant meals and fast food.If the price of a fast-food meal for the whole family is $20, what is the vertical intercept of the budget line when fast food is measured on the horizontal axis?

Accepted Answer

A) 10 
B) 20 
C) 200 
D) 400 
E) it is impossible to tell from the information given

Question 4

All combinations of goods along the same indifference curve represent the same level of utility.

Accepted Answer

A) True 
 B)False

Question 5

The slope of the budget line is measured in units of income.

Accepted Answer

A) True 
 B)False

Question 6

What would happen if the price of novels increased and novels are measured on the horizontal axis of a budget line diagram?

Accepted Answer

A) The budget line would shift to the right. 
B) The budget line would rotate outward along the horizontal axis. 
C) The budget line would rotate inward along the horizontal axis. 
D) The budget line would rotate outward along the vertical axis. 
E) The budget line would rotate inward along the vertical axis.

Question 7

What would happen to the budget line if the price of compact disks decreased and compact disks are measured on the vertical axis?

Accepted Answer

A) The budget line would shift to the left. 
B) The budget line would rotate outward along the horizontal axis. 
C) The budget line would rotate inward along the horizontal axis. 
D) The budget line would rotate outward along the vertical axis. 
E) The budget line would rotate inward along the vertical axis.

Question 8

Exhibit 6-24  Which of the combinations of Good A and Good B in Exhibit 6-24 would an individual prefer?

Accepted Answer

A) point a 
B) point b 
C) point d 
D) point e 
E) point f

Question 9

Chris budgets $30 this week for spending on his two favorite things, pizza and movies.The price of a movie is $5.Moreover, he could buy 3 pizzas if he doesn't go to the movies.If pizza is on the horizontal axis, what is the slope of the budget line?

Accepted Answer

A) 2 
B) -1/2 
C) -1/3 
D) 1/3 
E) -2

Question 10

Exhibit 6-28  The rotation of the budget line in Exhibit 6-28 from AC to AB represents a(n)

Accepted Answer

A) increase in the price of clams 
B) increase in the price of mussels 
C) decrease in the price of clams 
D) decrease in the price of mussels 
E) increase in the amount the consumer can spend

Question 11

All combinations of goods along the same budget line represent the same level of utility.

Accepted Answer

A) True 
 B)False

Question 12

A line that shows the combinations of two goods that can be purchased with a given income is called a(n)

Accepted Answer

A) indifference curve 
B) budget line 
C) demand curve 
D) supply curve 
E) price floor

Question 13

A family on a trip budgets $800 for restaurant meals and fast food.If the price of a fast-food meal for the whole family is $20, how many meals can the family buy if they don't eat at restaurants?

Accepted Answer

A) 8 
B) 15 
C) 20 
D) 40 
E) 160

Question 14

An indifference curve shows

Accepted Answer

A) combinations of goods that provide the same utility 
B) combinations of goods that can be purchased with the same budget 
C) combinations of goods that yield the same level of profit 
D) the relationship between price and utility 
E) the relationship between utility and profits

Question 15

An increase in income is represented by a shift of the budget line outward to a parallel position.

Accepted Answer

A) True 
 B)False

Question 16

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy)intercept of Ann's budget line is 12, and the vertical (video game)intercept of Ann's budget line is 24.The slope of the budget line is

Accepted Answer

A) -50 
B) -25 
C) -1/2 
D) -2 
E) -$120

Question 17

Exhibit 6-24  Which point on curve I1 in Exhibit 6-24 yields the most utility?

Accepted Answer

A) point a 
B) point b 
C) point e 
D) point f 
E) All points on curve I1 yield the same utility.

Question 18

Exhibit 6-23  In Exhibit 6-23, the marginal rate of substitution of food for clothing between points a and b equals

Accepted Answer

A) 1/3 
B) 6/5 
C) 3 
D) 6 
E) 100

Question 19

Exhibit 6-28  The rotation of the budget line in Exhibit 6-28 from AB to AC represents

Accepted Answer

A) an increase in the price of clams 
B) an increase in the price of mussels 
C) a decrease in the price of clams 
D) a decrease in the price of mussels 
E) an increase in the amount the consumer can spend

Question 20

Exhibit 6-29  Which graph in Exhibit 6-29 shows an increase in the price of food?

Accepted Answer

A) Graph a 
B) Graph b 
C) Graph c 
D) Graph d 
E) Graph e

Exam 6: Appendix--Indifference Curves and Utility Maximization

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24.Which of the following best describes what would happen to the budget line if Ann's income increased?

The marginal rate of substitution indicates

A family on a trip budgets $200 for restaurant meals and fast food.If the price of a fast-food meal for the whole family is $20, what is the vertical intercept of the budget line when fast food is measured on the horizontal axis?

All combinations of goods along the same indifference curve represent the same level of utility.

The slope of the budget line is measured in units of income.

What would happen if the price of novels increased and novels are measured on the horizontal axis of a budget line diagram?

What would happen to the budget line if the price of compact disks decreased and compact disks are measured on the vertical axis?

Exhibit 6-24 Which of the combinations of Good A and Good B in Exhibit 6-24 would an individual prefer?

Chris budgets $30 this week for spending on his two favorite things, pizza and movies.The price of a movie is $5.Moreover, he could buy 3 pizzas if he doesn't go to the movies.If pizza is on the horizontal axis, what is the slope of the budget line?

Exhibit 6-28 The rotation of the budget line in Exhibit 6-28 from AC to AB represents a(n)

All combinations of goods along the same budget line represent the same level of utility.

A line that shows the combinations of two goods that can be purchased with a given income is called a(n)

A family on a trip budgets $800 for restaurant meals and fast food.If the price of a fast-food meal for the whole family is $20, how many meals can the family buy if they don't eat at restaurants?

An indifference curve shows

An increase in income is represented by a shift of the budget line outward to a parallel position.

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24.The slope of the budget line is

Exhibit 6-24 Which point on curve I₁ in Exhibit 6-24 yields the most utility?

Exhibit 6-23 In Exhibit 6-23, the marginal rate of substitution of food for clothing between points a and b equals

Exhibit 6-28 The rotation of the budget line in Exhibit 6-28 from AB to AC represents

Exhibit 6-29 Which graph in Exhibit 6-29 shows an increase in the price of food?