Question 1

Figure 21-17 xy > Py/Px. B)  MRSxy = Px/Py. C)  MRSxy x/Py. D)  MRSxy > Px/Py." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 21-17.Bundle B represents a point where

Accepted Answer

A)   MRSxy > Py/Px.
B)   MRSxy = Px/Py.
C)   MRSxy x/Py.
D)   MRSxy > Px/Py.E) C) and D)
F) A) and B)

Question 2

As long as a consumer remains on the same indifference curve,

Accepted Answer

A)   she is indifferent to all points that lie on any other indifference curve.
B)   her preferences will not affect the marginal rate of substitution.
C)   she is unable to decide which bundle of goods to choose.
D)   she is indifferent among the points on that curve.E) None of the above
F) A) and C)

Question 3

Economic studies of lottery winners and people who have inherited large amounts of money show that

Accepted Answer

A)   the income effect of winning the lottery or inheriting large amounts of money likely outweighs the substitution effect for most people.
B)   the substitution effect of winning the lottery or inheriting large amounts of money likely outweighs the income effect for most people.
C)   most people view leisure as an inferior good.
D)   most people's labor supply is unaffected by changes in wealth.E) None of the above
F) B) and C)

Question 4

Figure 21-6 
-Refer to Figure 21-6.Suppose the price of popcorn is $2,the price of Mt.Dew is $4,the value of A is 30,and the value of B is 15.How much income does the consumer have?

Accepted Answer

A)   $120
B)   $80
C)   $60
D)   $30E) A) and C)
F) B) and C)

Question 5

Figure 21-5

-Refer to Figure 21-5.Assume that a consumer faces the budget constraint shown in graph (a) in January and the budget constraint shown in graph (b) in February.If the consumer's income has remained constant,what has happened to prices between January and February?

Accepted Answer

A)   The price of X has fallen,but there could not have been a change in the price of Y.
B)   The price of Y has fallen,but there could not have been a change in the price of X.
C)   The price of X has fallen,and the price of Y has risen.
D)   The price of Y has fallen,and the price of X has risen.E) All of the above
F) None of the above

Question 6

The substitution effect of a price change is the change in consumption that results from the movement to a new indifference curve.

Accepted Answer

A) True 
 B)False

Question 7

An inferior good is one in which

Accepted Answer

A)   the average consumer chooses not to consume.
B)   the good is not equally valued by all consumers.
C)   an increase in income increases consumption of the good.
D)   an increase in income decreases consumption of the good.E) B) and C)
F) A) and C)

Question 8

If goods A and B are perfect substitutes,then the marginal rate of substitution of good A for good B is constant.

Accepted Answer

A) True 
 B)False

Question 9

An indifference curve illustrates the

Accepted Answer

A)   prices facing a consumer as she chooses how much of good X and good Y to consume.
B)   income facing a consumer as she chooses how much of good X and good Y to consume.
C)   trade-offs facing a consumer as she chooses how much of good X and good Y to consume.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 10

Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. 
-Refer to Figure 21-1.About what percentage of his income is Jack spending on apples when he is at his optimum?

Accepted Answer

A)   33.3 percent
B)   38.2 percent
C)   44.4 percent
D)   56.7 percentE) A) and D)
F) All of the above

Question 11

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 income effect associated with an increase in the price of a textbook 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) A) and B)
F) None of the above

Question 12

Figure 21-10 
-Refer to Figure 21-10.Which of the following statements is correct?

Accepted Answer

A)   If a consumer moves from bundle C to bundle A,her loss of cake cannot be compensated for by an increase in donuts.
B)   Bundle E is preferred to all other points identified in the figure.
C)   Because more is preferred to less,bundle C may be preferred to bundle E in some circumstances for this consumer.
D)   Even though bundle E has more of both goods than bundle B,we could draw a different set of indifference curves in which bundle B is preferred to bundle E.E) All of the above
F) B) and D)

Question 13

Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. 
-Refer to Scenario 21-1.If Frank uses all of his income to buy hats during a certain month,then how many hats does he buy?

Accepted Answer

Frank buys...

Question 14

Which of the following is a property of typical indifference curves?

Accepted Answer

A)   Indifference curves usually intersect.
B)   Indifference curves have positive slopes.
C)   Indifference curves are downward sloping and always linear.
D)   Indifference curves are usually bowed in toward the origin.E) None of the above
F) B) and C)

Question 15

The rate at which a consumer is willing to trade off one good for another is called the __________.

Accepted Answer

marginal r...

Question 16

When Phil's income increases,he purchases fewer spaghetti dinners than he did before his income increased.For Phil,spaghetti dinners are a(n)

Accepted Answer

A)   normal good.
B)   inferior good.
C)   optimal good.
D)   luxury good.E) B) and D)
F) B) and C)

Question 17

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) None of the above
F) A) and C)

Question 18

Suppose the only two goods that Brett consumes are wine and cheese.When wine sells for $10 a bottle and cheese sell for $10 a pound,he buys 6 bottles of wine and 4 pounds of cheese - spending his entire income of $100.One day the price of wine falls to $5 a bottle,and the price of cheese increases to $20 a pound,while his income does not change.If you illustrate wine on the vertical axis and cheese on the horizontal axis,then

Accepted Answer

A)   the slope of Brett's budget has not changed.
B)   the slope of Brett's budget constraint is flatter at the new prices.
C)   the slope of Brett's budget constraint is steeper at the new prices.
D)   Brett's budget constraint has shifted in a parallel fashion to the budget constraint with the old prices.E) B) and C)
F) None of the above

Question 19

If an indifference curve is bowed out away from the origin,the marginal rate of substitution is

Accepted Answer

A)   not likely to reflect the relative value of goods.
B)   likely to be constant for all bundles along the indifference curve.
C)   likely to be identical to the price ratio for each bundle along the indifference curve.
D)   different for each bundle along the indifference curve.E) A) and B)
F) A) and C)

Question 20

The following diagram shows a budget constraint for a particular consumer.  If the price of X is $10,what is the price of Y?

Accepted Answer

A)   $15
B)   $25
C)   $35
D)   $70E) A) and B)
F) None of the above

Exam 21: The Theory of Consumer Choice

Economic studies of lottery winners and people who have inherited large amounts of money show that

Correct Answer
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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 Answer
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As long as a consumer remains on the same indifference curve,

Correct Answer
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The following diagram shows a budget constraint for a particular consumer. If the price of X is $10,what is the price of Y?

Correct Answer
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Figure 21-5 -Refer to Figure 21-5.Assume that a consumer faces the budget constraint shown in graph (a) in January and the budget constraint shown in graph (b) in February.If the consumer's income has remained constant,what has happened to prices between January and February?

Correct Answer
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If an indifference curve is bowed out away from the origin,the marginal rate of substitution is

Correct Answer
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Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. -Refer to Figure 21-1.About what percentage of his income is Jack spending on apples when he is at his optimum?

Correct Answer
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Which of the following is a property of typical indifference curves?

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When Phil's income increases,he purchases fewer spaghetti dinners than he did before his income increased.For Phil,spaghetti dinners are a(n)

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If goods A and B are perfect substitutes,then the marginal rate of substitution of good A for good B is constant.

Correct Answer
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Figure 21-10 -Refer to Figure 21-10.Which of the following statements is correct?

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Figure 21-17 -Refer to Figure 21-17.Bundle B represents a point where

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Figure 21-6 -Refer to Figure 21-6.Suppose the price of popcorn is $2,the price of Mt.Dew is $4,the value of A is 30,and the value of B is 15.How much income does the consumer have?

Correct Answer
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Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. -Refer to Scenario 21-1.If Frank uses all of his income to buy hats during a certain month,then how many hats does he buy?

Correct Answer
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Frank buys...
View Answer

The substitution effect of a price change is the change in consumption that results from the movement to a new indifference curve.

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 income effect associated with an increase in the price of a textbook will result in

Correct Answer
verified

The rate at which a consumer is willing to trade off one good for another is called the __________.

Correct Answer
verified
marginal r...
View Answer

An indifference curve illustrates the

Correct Answer
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An inferior good is one in which

Correct Answer
verified

Exam 21: The Theory of Consumer Choice

Economic studies of lottery winners and people who have inherited large amounts of money show that

Correct AnswerverifiedShow 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

As long as a consumer remains on the same indifference curve,

Correct AnswerverifiedShow Answer

The following diagram shows a budget constraint for a particular consumer. If the price of X is $10,what is the price of Y?

Correct AnswerverifiedShow Answer

Figure 21-5 -Refer to Figure 21-5.Assume that a consumer faces the budget constraint shown in graph (a) in January and the budget constraint shown in graph (b) in February.If the consumer's income has remained constant,what has happened to prices between January and February?

Correct AnswerverifiedShow Answer

If an indifference curve is bowed out away from the origin,the marginal rate of substitution is

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Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. -Refer to Figure 21-1.About what percentage of his income is Jack spending on apples when he is at his optimum?

Correct AnswerverifiedShow Answer

Which of the following is a property of typical indifference curves?

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When Phil's income increases,he purchases fewer spaghetti dinners than he did before his income increased.For Phil,spaghetti dinners are a(n)

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If goods A and B are perfect substitutes,then the marginal rate of substitution of good A for good B is constant.

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Figure 21-10 -Refer to Figure 21-10.Which of the following statements is correct?

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Figure 21-17 -Refer to Figure 21-17.Bundle B represents a point where

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Figure 21-6 -Refer to Figure 21-6.Suppose the price of popcorn is $2,the price of Mt.Dew is $4,the value of A is 30,and the value of B is 15.How much income does the consumer have?

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Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. -Refer to Scenario 21-1.If Frank uses all of his income to buy hats during a certain month,then how many hats does he buy?

Correct AnswerverifiedFrank buys...View AnswerShow Answer

The substitution effect of a price change is the change in consumption that results from the movement to a new indifference curve.

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 income effect associated with an increase in the price of a textbook will result in

Correct AnswerverifiedShow Answer

The rate at which a consumer is willing to trade off one good for another is called the __________.

Correct Answerverifiedmarginal r...View AnswerShow Answer

An indifference curve illustrates the

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An inferior good is one in which

Correct AnswerverifiedShow Answer

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Frank buys...
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marginal r...
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