Question 1

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:  In order to maximize utility subject to her budget constraint,this consumer should buy how many units of good X?

Accepted Answer

A) 0 
B) 4 
C) 6 
D) 8 
E) 12

Question 2

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $14.When the price of X increases from point M to point N along the demand curve,it is clear that good X ___________ (is,is not)a Giffen good because _______________.

Accepted Answer

A) is; the total effect of the price increase is negative. 
B) is; the income effect reinforces the substitution effect. 
C) is; the income effect is larger than the substitution effect. 
D) is not; the substitution effect reinforces the income effect. 
E) is not; good X is an inferior good.

Question 3

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

Question 4

According to the following figure,at point A,

Accepted Answer

A) the marginal rate of substitution of X for Y is greater than it is at point B. 
B) the ratio of the price of X to the price of Y is greater than it is at point B. 
C) the consumer's utility is less than it is at point B. 
D) both a and c 
E) all of the above

Question 5

typical indifference curve

Accepted Answer

A) shows all combinations of goods that give a consumer the same level of utility. 
B) shows that as a consumer has more of a good,he is less willing to exchange it for one unit of another good. 
C) shifts out if income increases. 
D) both a and b 
E) all of the above

Question 6

The consumer faces a budget constraint because the market price of X is $3,the market price of Y is $3,and the consumer's budget is $90.How many units of X and Y would be purchased?

Accepted Answer

A) 0 units of X,0 units of Y. 
B) 10 units of X,20 units of Y. 
C) 20 units of X,20 units of Y. 
D) 30 units of X,30 units of Y.

Question 7

-According to the above figure,if the price of X is $5,what combination of X and Y will a utility-maximizing consumer choose?

Accepted Answer

A) 80X,20Y 
B) 120X,620Y 
C) 120X,250Y 
D) 200X,620Y 
E) none of the above

Question 8

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

Question 9

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

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

Question 11

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $4.50.At point B on indifference curve I,the MRS is _____ and _____ units of good X are purchased.

Accepted Answer

A) 3/10; 5 
B) 3/10; 6 
C) 3/10; 8 
D) 10/3; 5 
E) 10/3; 6

Question 12

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

Question 13

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $14.At point r on indifference curve I,the MRS is _____ and _____ units of good X are purchased.

Accepted Answer

A) 2; 40 
B) 2; 45 
C) 4; 40 
D) 4; 45 
E) 5; 45

Question 14

utility function

Accepted Answer

A) shows the relation between prices and a consumer's utility. 
B) shows the relation between income and a consumer's utility. 
C) shows the relation between the amount of goods consumed and a consumer's utility. 
D) all of the above 
E) none of the above

Question 15

Market demand

Accepted Answer

A) is the horizontal summation of the individual demand curves. 
B) slopes downward. 
C) shows how market purchases vary with price. 
D) both a and b 
E) all of the above

Question 16

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $4.50.At point R on the demand curve for X,the price of X is $____.

Accepted Answer

A) $8 
B) $10 
C) $12.50 
D) $14 
E) $15

Question 17

The following figure shows a portion of a consumer's indifference map and budget lines.The price of good Y is $17 and the consumer's income is $7,650.Let the consumer begin in utility-maximizing equilibrium at point A on indifference curve II.Next the price of good X changes so that the consumer moves to a new utility-maximizing equilibrium at point B on indifference curve I.The income effect of the change in the price of X is

Accepted Answer

A) 50 
B) 100 
C) 150 
D) -100 
E) -150

Question 18

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $4.50.What is the consumer's income?

Accepted Answer

A) $250 
B) $280 
C) $320 
D) $360 
E) $400

Question 19

Mary prefers bananas to plums and plums to peaches,but is indifferent between bananas and oranges,she

Accepted Answer

A) prefers oranges to peaches. 
B) prefers plums to oranges. 
C) is indifferent between oranges and plums. 
D) is indifferent between oranges and peaches.

Question 20

The following figure shows a portion of a consumer's indifference map and budget lines.The price of good Y is $7 and the consumer's income is $700.Let the consumer begin in utility-maximizing equilibrium at point A on indifference curve I.Next the price of good X changes so that the consumer moves to a new utility-maximizing equilibrium at point B on indifference curve II.Good X is a(an)___________ good and thus cannot be a _________ good.

Accepted Answer

A) normal; Giffen 
B) inferior; Giffen 
C) substitute; Giffen 
D) Giffen; normal 
E) Giffen; substitute

Exam 5: Theory of Consumer Behavior

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: In order to maximize utility subject to her budget constraint,this consumer should buy how many units of good X?

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 figure,at point A,

typical indifference curve

The consumer faces a budget constraint because the market price of X is $3,the market price of Y is $3,and the consumer's budget is $90.How many units of X and Y would be purchased?

-According to the above figure,if the price of X is $5,what combination of X and Y will a utility-maximizing consumer choose?

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?

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: 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?

The figure below shows a consumer maximizing utility at two different prices (the left panel) and the consumer's demand for good X at the same two prices of good X (the right panel) .The price of good Y is $4.50.At point B on indifference curve I,the MRS is _ and _ units of good X are purchased.

The ratio of the prices of two goods measures

The figure below shows a consumer maximizing utility at two different prices (the left panel) and the consumer's demand for good X at the same two prices of good X (the right panel) .The price of good Y is $14.At point r on indifference curve I,the MRS is _ and _ units of good X are purchased.

utility function

Market demand

The figure below shows a consumer maximizing utility at two different prices (the left panel) and the consumer's demand for good X at the same two prices of good X (the right panel) .The price of good Y is $4.50.At point R on the demand curve for X,the price of X is $____.

The figure below shows a consumer maximizing utility at two different prices (the left panel) and the consumer's demand for good X at the same two prices of good X (the right panel) .The price of good Y is $4.50.What is the consumer's income?

Mary prefers bananas to plums and plums to peaches,but is indifferent between bananas and oranges,she