Question 1

Andi uses all of her income to purchase books and games. At any two points A and B on Andi's budget constraint,

Accepted Answer

A)   Andi is spending all of her income on books and games.
B)   Andi is spending one half of her income on books and the other half of her income on games.
C)   the price of books relative to the price of games is different.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 2

Figure 21-18  Py/Px. B)  MRSxy = Px/Py. C)  MRSxy  Px/Py." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 21-18. Bundle C represents a point where

Accepted Answer

A)   MRSxy > Py/Px.
B)   MRSxy = Px/Py.
C)   MRSxy 
D)   MRSxy > Px/Py.E) All of the above
F) None of the above

Question 3

The indifference curves for perfect substitutes are right angles.

Accepted Answer

A) True 
 B)False

Question 4

Economists have found evidence of a Giffen good when studying the consumption of rice in the Chinese province of Hunan.

Accepted Answer

A) True 
 B)False

Question 5

Figure 21-24
The figure shows three indifference curves and a budget constraint for a certain consumer named Steve. 
-Refer to Figure 21-24. 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) A) and C)

Question 6

If goods X and Y are both normal goods for Brenda, then an increase in Brenda's income will lead her to__________.

Accepted Answer

buy more o...

Question 7

Figure 21-8 
-Refer to Figure 21-8. If the price of good X is $3, and your budget constraint is BC, what is the price of good Y?

Accepted Answer

A)   $3.33
B)   $5
C)   $15
D)   $30E) B) and D)
F) All of the above

Question 8

Figure 21-31
The figure shows two indifference curves and two budget constraints for a consumer named Kevin. 
-Refer to Figure 21-31. If Kevin's income is $1,260, then what is the price of a sweater?

Accepted Answer

The price ...

Question 9

If we observe that a consumer's budget constraint has shifted outward, we can assume that the consumer will buy

Accepted Answer

A)   fewer normal goods and more inferior goods.
B)   more normal goods and fewer inferior goods.
C)   more normal goods and more inferior goods.
D)   fewer normal goods and fewer inferior goods.E) A) and D)
F) B) and C)

Question 10

A typical consumer consumes both coffee and donuts. After the consumer's income decreases, the consumer consumes more coffee but fewer donuts than before. For this consumer, coffee is a normal good, but donuts are an inferior good.

Accepted Answer

A) True 
 B)False

Question 11

Figure 21-31
The figure shows two indifference curves and two budget constraints for a consumer named Kevin. 
-Refer to Figure 21-31. If point A is Kevin's optimum, then at that optimum, what is his opportunity cost of a shirt in terms of sweaters?

Accepted Answer

Kevin's opportunity ...

Question 12

A family on a trip budgets $800 for meals and gasoline. If the price of a meal for the family is $50, how many meals can the family buy if they do not buy any gasoline?

Accepted Answer

A)   8
B)   16
C)   24
D)   32E) B) and C)
F) A) and D)

Question 13

A consumer chooses an optimal consumption point where the

Accepted Answer

A)   marginal rate of substitution equals the relative price ratio.
B)   slope of the indifference curve exceeds the slope of the budget constraint.
C)   ratios of all the marginal utilities are equal.
D)   All of the above are correct.E) None of the above
F) B) and D)

Question 14

What does the slope of a consumer's indifference curve represent?

Accepted Answer

The slope of a consumer's indi...

Question 15

If leisure were an inferior good, then labor supply curves

Accepted Answer

A)   would all be negatively sloped.
B)   would all be positively sloped.
C)   would all be vertical.
D)   could still be positively or negatively sloped.E) B) and D)
F) None of the above

Question 16

Samantha is maximizing total utility while consuming food and clothing. Her marginal utility from food is 50, and her marginal utility from clothing is 25. If clothing is priced at $10 per unit, the price of food per unit must be

Accepted Answer

A)   $2.
B)   $5.
C)   $2.50.
D)   $20.E) None of the above
F) A) and C)

Question 17

Billie spends all of her income on soccer balls and jeans, and the price of a pair of jeans is three times the price of soccer balls. In order to maximize total utility, Billie should

Accepted Answer

A)   buy three times as many soccer balls as pairs of jeans.
B)   buy three times as many pairs of jeans as soccer balls.
C)   buy both items until the marginal utility of soccer balls is three times the marginal utility of a pair of jeans.
D)   buy both items until the marginal utility of a pair of jeans is three times the marginal utility of soccer balls.E) B) and C)
F) A) and B)

Question 18

The slope of the budget constraint is all of the following except

Accepted Answer

A)   the relative price of two goods.
B)   the rate at which a consumer can afford to trade one good for another.
C)   the marginal rate of substitution.
D)   constant.E) B) and C)
F) C) and D)

Question 19

Assume that a college student spends her income on mac-n-cheese and CDs. The price of one box of mac-n- cheese is $1, and the price of one CD is $12. If she has $200 of income, she could choose to consume

Accepted Answer

A)   30 boxes of mac-n-cheese and 12 CDs.
B)   40 boxes of mac-n-cheese and 14 CDs.
C)   20 boxes of mac-n-cheese and 16 CDs.
D)   60 boxes of mac-n-cheese and 12 CDs.E) C) and D)
F) All of the above

Question 20

When considering her budget, the highest indifference curve that a consumer can reach is the

Accepted Answer

A)   one that is tangent to the budget constraint.
B)   indifference curve farthest from the origin
C)   indifference curve that intersects the budget constraint in at least two places.
D)   None of the above is correct.E) None of the above
F) All of the above

Exam 21: The Theory of Consumer Choice

What does the slope of a consumer's indifference curve represent?

Correct AnswerverifiedThe slope of a consumer's indi...View AnswerShow Answer

The indifference curves for perfect substitutes are right angles.

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Figure 21-8 -Refer to Figure 21-8. If the price of good X is $3, and your budget constraint is BC, what is the price of good Y?

Correct AnswerverifiedShow Answer

Billie spends all of her income on soccer balls and jeans, and the price of a pair of jeans is three times the price of soccer balls. In order to maximize total utility, Billie should

Correct AnswerverifiedShow Answer

Figure 21-31 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. -Refer to Figure 21-31. If Kevin's income is $1,260, then what is the price of a sweater?

Correct AnswerverifiedThe price ...View AnswerShow Answer

A family on a trip budgets $800 for meals and gasoline. If the price of a meal for the family is $50, how many meals can the family buy if they do not buy any gasoline?

Correct AnswerverifiedShow Answer

Assume that a college student spends her income on mac-n-cheese and CDs. The price of one box of mac-n- cheese is $1, and the price of one CD is $12. If she has $200 of income, she could choose to consume

Correct AnswerverifiedShow Answer

Economists have found evidence of a Giffen good when studying the consumption of rice in the Chinese province of Hunan.

Correct AnswerverifiedShow Answer

A typical consumer consumes both coffee and donuts. After the consumer's income decreases, the consumer consumes more coffee but fewer donuts than before. For this consumer, coffee is a normal good, but donuts are an inferior good.

Correct AnswerverifiedShow Answer

Figure 21-24 The figure shows three indifference curves and a budget constraint for a certain consumer named Steve. -Refer to Figure 21-24. Which of the following pairs of prices matches the appearance of the budget constraint?

Correct AnswerverifiedShow Answer

If we observe that a consumer's budget constraint has shifted outward, we can assume that the consumer will buy

Correct AnswerverifiedShow Answer

When considering her budget, the highest indifference curve that a consumer can reach is the

Correct AnswerverifiedShow Answer

A consumer chooses an optimal consumption point where the

Correct AnswerverifiedShow Answer

Figure 21-18 -Refer to Figure 21-18. Bundle C represents a point where

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If leisure were an inferior good, then labor supply curves

Correct AnswerverifiedShow Answer

The slope of the budget constraint is all of the following except

Correct AnswerverifiedShow Answer

If goods X and Y are both normal goods for Brenda, then an increase in Brenda's income will lead her to__________.

Correct Answerverifiedbuy more o...View AnswerShow Answer

Andi uses all of her income to purchase books and games. At any two points A and B on Andi's budget constraint,

Correct AnswerverifiedShow Answer

Samantha is maximizing total utility while consuming food and clothing. Her marginal utility from food is 50, and her marginal utility from clothing is 25. If clothing is priced at $10 per unit, the price of food per unit must be

Correct AnswerverifiedShow Answer

Figure 21-31 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. -Refer to Figure 21-31. If point A is Kevin's optimum, then at that optimum, what is his opportunity cost of a shirt in terms of sweaters?

Correct AnswerverifiedKevin's opportunity ...View AnswerShow Answer

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The price ...
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buy more o...
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Kevin's opportunity ...
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