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Managerial Economics and Business Strategy Study Set 2
Exam 4: The Theory of Individual Behavior
Path 4
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Question 101
Multiple Choice
The maximum quantity of good X that is affordable is:
Question 102
Multiple Choice
A cash gift causes the budget line to:
Question 103
Multiple Choice
What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and P
x
= $10, P
y
= $20, X = 0, and M = 400?
Question 104
Multiple Choice
Suppose the following Lagrangian is formed to maximize a consumer's utility subject to her budget constraint:
The first-order conditions for this problem imply:
Question 105
Multiple Choice
If the price of a good falls, then the equilibrium consumption of that good:
Question 106
Multiple Choice
Consider a two-good world, with commodities X and Y. If Y is an inferior good, then an increase in consumer income CANNOT:
Question 107
Multiple Choice
Given that income is $750 and P
X
= $32 and P
Y
= $8, what is the market rate of substitution between goods X and Y?
Question 108
Multiple Choice
Normally, owners of firms should try to induce their managers to care:
Question 109
Multiple Choice
Suppose a worker is offered a wage of $8 per hour, plus a fixed payment of $100 per day, and he can use 24 hours per day. What is the market rate of substitution between leisure and income?
Question 110
Multiple Choice
If the price of good X increases, what will happen to the budget line?
Question 111
Multiple Choice
If the price of good X decreases, what will happen to the budget line?
Question 112
Multiple Choice
Suppose that three consumers are in the market for good X. Consumer 1's (inverse) demand is P
X
= 40 - 5Q
X
; Consumer 2's (inverse) demand is P
X
= 10 - Q
X
; and Consumer 3's (inverse) demand is P
X
= 30 - 2Q
X
. When P
X
= $5, the market will demand:
Question 113
Essay
Clothing stores frequently run "sales" where they discount clothing prices by as much as 25 percent. What impact, if any, would you expect these "sales" to have on a store that specializes in selling shoes produced by Rockport?