Question 1

Figure 21-4
In each case,the budget constraint moves from BC-1 to BC-2.    
-Refer to Figure 21-4.Which of the graphs in the figure could reflect an increase in income?

Accepted Answer

A)   graph a
B)   graph b
C)   graph d
D)   None of the above is correct.E) A) and D)
F) B) and C)

Question 2

Assume that a college student purchases only Ramen noodles and textbooks.If Ramen noodles are an inferior good and textbooks are a normal good,then the substitution effect associated with a decrease in the price of Ramen noodles,by itself,will result in

Accepted Answer

A)   a decrease in the consumption of textbooks and a decrease in the consumption of Ramen noodles.
B)   a decrease in the consumption of textbooks and an increase in the consumption of Ramen noodles.
C)   an increase in the consumption of textbooks and an increase in the consumption of Ramen noodles.
D)   an increase in the consumption of textbooks and a decrease in the consumption of Ramen noodles.E) None of the above
F) B) and D)

Question 3

At a consumer's optimal choice,the consumer chooses the combination of goods that equates the marginal rate of substitution and the price ratio.

Accepted Answer

A) True 
 B)False

Question 4

Figure 21-14   
-Refer to Figure 21-14.Which of the graphs illustrates indifference curves for which the marginal rate of substitution is undefined?

Accepted Answer

A)   graph a
B)   graph b
C)   graph c
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 5

Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. 
-Refer to Figure 21-1.If Jack's income is $12.60,then the price of a pound of apples is

Accepted Answer

A)   $4.50.
B)   $3.85.
C)   $3.00.
D)   $2.80.E) A) and D)
F) B) and C)

Question 6

The theory of consumer choice illustrates the

Accepted Answer

A)   importance of property rights in creating efficient markets.
B)   ability of a single economic actor to have a substantial influence on market prices.
C)   the trade-offs that people face in their role as purchasers.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 7

If the price of bread is zero,the budget constraint between bread (on the vertical axis) and cheese (on the horizontal axis) would

Accepted Answer

A)   be vertical.
B)   coincide with the vertical axis.
C)   coincide with the horizontal axis.
D)   be horizontal.E) A) and D)
F) C) and D)

Question 8

Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. 
-Refer to Figure 21-1.Which of the following pairs of prices matches the appearance of the budget constraint?

Accepted Answer

A)   price of apples = $6/pound;price of pears = $4/pound
B)   price of apples = $4/pound;price of pears = $6/pound
C)   price of apples = $6/pound;price of pears = $5/pound
D)   price of apples = $5/pound;price of pears = $6/poundE) A) and B)
F) C) and D)

Question 9

Which of the following is not a property of a typical indifference curve?

Accepted Answer

A)   downward sloping
B)   bowed away from the origin
C)   does not intersect another indifference curve
D)   a higher one is preferred to a lower oneE) A) and D)
F) B) and C)

Question 10

When we derive the demand curve for a good,we should remember that the

Accepted Answer

A)   income effect must be greater than the substitution effect.
B)   substitution effect must be greater than the income effect.
C)   substitution effect must be in the same direction as the income effect.
D)   income effect and the substitution effect may work in the same or in opposite directions.E) A) and B)
F) C) and D)

Question 11

Higher indifference curves are preferred to lower ones as long as the

Accepted Answer

A)   marginal rate of substitution is diminishing.
B)   products in the bundle are "bads" and not "goods."
C)   products in the bundle are "goods" and not "bads."
D)   budget constraint does not shift.E) A) and D)
F) None of the above

Question 12

A good is an inferior good if the consumer buys less of it when

Accepted Answer

A)   his income rises.
B)   the price of the good rises.
C)   the price of a substitute good falls.
D)   his income falls.E) A) and B)
F) All of the above

Question 13

Consider the indifference curve map and budget constraint for two goods,beef and potatoes.Suppose the good measured on the horizontal axis,potatoes,is a Giffen good.Beef is measured on the vertical axis and is a normal good.When the price of potatoes increases,the substitution effect causes

Accepted Answer

A)   an increase in the consumption of potatoes,and the income effect causes a decrease in the consumption of potatoes.The substitution effect is less than the income effect.
B)   a decrease in the consumption of potatoes,and the income effect causes an increase in the consumption of potatoes.The substitution effect is greater than the income effect.
C)   an increase in the consumption of potatoes,and the income effect causes a decrease in the consumption of potatoes.The substitution effect is greater than the income effect.
D)   a decrease in the consumption of potatoes,and the income effect causes an increase in the consumption of potatoes.The substitution effect is less than the income effect.E) C) and D)
F) B) and D)

Question 14

A consumer's budget constraint is drawn with the quantity of pizza measured along the horizontal axis and the price of Pepsi measured along the vertical axis.If the market is offering the consumer the trade-off of 3 pints of Pepsi for 1 pizza,then what is the slope of the consumer's budget constraint?

Accepted Answer

A pizza costs three times as m...

Question 15

A consumer's optimal choice is affected by income,prices of goods,and preferences.

Accepted Answer

A) True 
 B)False

Question 16

Consider the indifference curve map for nickels and quarters.Assume nickels are on the vertical axis and quarters are on the horizontal axis.The indifference curves for nickels and quarters are

Accepted Answer

A)   straight lines with slope of -1/5
B)   straight lines with a slope of -1.
C)   straight lines with a slope of -5.
D)   L shaped.E) B) and D)
F) A) and B)

Question 17

When two goods are perfect complements,the indifference curves are right angles.

Accepted Answer

A) True 
 B)False

Question 18

At a consumer's optimal choice,the consumer chooses the combination of goods such that the ratio of the marginal utilities equals the ratio of the prices.

Accepted Answer

A) True 
 B)False

Question 19

The slope of the budget constraint is determined by the

Accepted Answer

A)   relative price of the goods measured on the axes.
B)   relative price of the goods measured on the axes and the consumer's income.
C)   endowment of productive resources.
D)   preferences of the consumer.E) A) and B)
F) All of the above

Question 20

Figure 21-11 
-Refer to Figure 21-11.What is the consumer's marginal rate of substitution?

Accepted Answer

A)   12
B)   4
C)   1
D)   We do not have enough information to answer the question because the MRS varies along the graph.E) B) and C)
F) All of the above

Exam 21: The Theory of Consumer Choice

If the price of bread is zero,the budget constraint between bread (on the vertical axis) and cheese (on the horizontal axis) would

Correct Answer
verified

Correct Answer
verified
A pizza costs three times as m...
View Answer

A consumer's optimal choice is affected by income,prices of goods,and preferences.

Correct Answer
verified

Figure 21-4 In each case,the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-4.Which of the graphs in the figure could reflect an increase in income?

Correct Answer
verified

Consider the indifference curve map for nickels and quarters.Assume nickels are on the vertical axis and quarters are on the horizontal axis.The indifference curves for nickels and quarters are

Correct Answer
verified

Consider the indifference curve map and budget constraint for two goods,beef and potatoes.Suppose the good measured on the horizontal axis,potatoes,is a Giffen good.Beef is measured on the vertical axis and is a normal good.When the price of potatoes increases,the substitution effect causes

Correct Answer
verified

The slope of the budget constraint is determined by the

Correct Answer
verified

Assume that a college student purchases only Ramen noodles and textbooks.If Ramen noodles are an inferior good and textbooks are a normal good,then the substitution effect associated with a decrease in the price of Ramen noodles,by itself,will result in

Correct Answer
verified

Higher indifference curves are preferred to lower ones as long as the

Correct Answer
verified

Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. -Refer to Figure 21-1.If Jack's income is $12.60,then the price of a pound of apples is

Correct Answer
verified

A good is an inferior good if the consumer buys less of it when

Correct Answer
verified

At a consumer's optimal choice,the consumer chooses the combination of goods such that the ratio of the marginal utilities equals the ratio of the prices.

Correct Answer
verified

When two goods are perfect complements,the indifference curves are right angles.

Correct Answer
verified

Figure 21-14 -Refer to Figure 21-14.Which of the graphs illustrates indifference curves for which the marginal rate of substitution is undefined?

Correct Answer
verified

Which of the following is not a property of a typical indifference curve?

Correct Answer
verified

Figure 21-11 -Refer to Figure 21-11.What is the consumer's marginal rate of substitution?

Correct Answer
verified

When we derive the demand curve for a good,we should remember that the

Correct Answer
verified

The theory of consumer choice illustrates the

Correct Answer
verified

Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. -Refer to Figure 21-1.Which of the following pairs of prices matches the appearance of the budget constraint?

Correct Answer
verified

At a consumer's optimal choice,the consumer chooses the combination of goods that equates the marginal rate of substitution and the price ratio.

Correct Answer
verified

Exam 21: The Theory of Consumer Choice

If the price of bread is zero,the budget constraint between bread (on the vertical axis) and cheese (on the horizontal axis) would

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA pizza costs three times as m...View AnswerShow Answer

A consumer's optimal choice is affected by income,prices of goods,and preferences.

Correct AnswerverifiedShow Answer

Figure 21-4 In each case,the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-4.Which of the graphs in the figure could reflect an increase in income?

Correct AnswerverifiedShow Answer

Consider the indifference curve map for nickels and quarters.Assume nickels are on the vertical axis and quarters are on the horizontal axis.The indifference curves for nickels and quarters are

Correct AnswerverifiedShow Answer

Consider the indifference curve map and budget constraint for two goods,beef and potatoes.Suppose the good measured on the horizontal axis,potatoes,is a Giffen good.Beef is measured on the vertical axis and is a normal good.When the price of potatoes increases,the substitution effect causes

Correct AnswerverifiedShow Answer

The slope of the budget constraint is determined by the

Correct AnswerverifiedShow Answer

Assume that a college student purchases only Ramen noodles and textbooks.If Ramen noodles are an inferior good and textbooks are a normal good,then the substitution effect associated with a decrease in the price of Ramen noodles,by itself,will result in

Correct AnswerverifiedShow Answer

Higher indifference curves are preferred to lower ones as long as the

Correct AnswerverifiedShow Answer

Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. -Refer to Figure 21-1.If Jack's income is $12.60,then the price of a pound of apples is

Correct AnswerverifiedShow Answer

A good is an inferior good if the consumer buys less of it when

Correct AnswerverifiedShow Answer

At a consumer's optimal choice,the consumer chooses the combination of goods such that the ratio of the marginal utilities equals the ratio of the prices.

Correct AnswerverifiedShow Answer

When two goods are perfect complements,the indifference curves are right angles.

Correct AnswerverifiedShow Answer

Figure 21-14 -Refer to Figure 21-14.Which of the graphs illustrates indifference curves for which the marginal rate of substitution is undefined?

Correct AnswerverifiedShow Answer

Which of the following is not a property of a typical indifference curve?

Correct AnswerverifiedShow Answer

Figure 21-11 -Refer to Figure 21-11.What is the consumer's marginal rate of substitution?

Correct AnswerverifiedShow Answer

When we derive the demand curve for a good,we should remember that the

Correct AnswerverifiedShow Answer

The theory of consumer choice illustrates the

Correct AnswerverifiedShow Answer

Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. -Refer to Figure 21-1.Which of the following pairs of prices matches the appearance of the budget constraint?

Correct AnswerverifiedShow Answer

At a consumer's optimal choice,the consumer chooses the combination of goods that equates the marginal rate of substitution and the price ratio.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
A pizza costs three times as m...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified