Question 1

Assume Victoria's indifference curves are bowed outward but her indifference curves satisfy the other three properties of indifference curves. As Victoria moves from right to left along the horizontal axis, her marginal rate of substitution

Accepted Answer

A)  increases.
B)  decreases.
C)  remains constant.
D)  increases, then decreases.E) B) and D)
F) All of the above

Question 2

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 $2,520 and point B is his optimum, then what is the price of a shirt?

Accepted Answer

The price ...

Question 3

The labor supply curve may have a backward-bending portion if, at higher wages, the income effect is

Accepted Answer

A)  smaller than the substitution effect.
B)  larger than the substitution effect.
C)  negative.
D)  Any of the above could result in a backward-bending supply curve.E) C) and D)
F) A) and B)

Question 4

Figure 21-11 
-Refer to Figure 21-11. The graph illustrates

Accepted Answer

A)  a typical budget constraint.
B)  a typical indifference curve.
C)  an indifference curve where goods X and Y are perfect complements.
D)  an indifference curve where goods X and Y are perfect substitutes.E) B) and D)
F) None of the above

Question 5

All points on a demand curve are optimal consumption points.

Accepted Answer

A) True 
 B)False

Question 6

A consumer chooses an optimal consumption point where the

Accepted Answer

A)  marginal rate of substitution is maximized.
B)  slope of the indifference curve exceeds the slope of the budget constraint by the greatest amount.
C)  ratio of the marginal utilities equals the ratio of the prices.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 7

Figure 21-9 
-Refer to Figure 21-9. If the price of good X is $15, what is the price of good Y?

Accepted Answer

A)  $1,500
B)  $50
C)  $5
D)  $0.50E) B) and C)
F) A) and D)

Question 8

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

Accepted Answer

A)  gains 1.1 pounds of pears and becomes better off by moving from point A to point B.
B)  gains 1.1 pounds of pears and becomes better off by moving from point A to point C.
C)  gains 1.1 pounds of pears and becomes better off by moving from point B to point C.
D)  gives up 1.1 pounds of pears and becomes better off by moving from point C to point B.E) All of the above
F) A) and D)

Question 9

If the consumer's income and all prices simultaneously double, then the optimum consumption bundle will

Accepted Answer

A)  shift outward relative to the original optimum.
B)  move leftward along the original budget constraint.
C)  not change.
D)  shift inward relative to the original optimum.E) None of the above
F) B) and D)

Question 10

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) C) and D)
F) A) and B)

Question 11

A Giffen good is a good for which

Accepted Answer

A)  a decrease in the price decreases the quantity demanded.
B)  the income effect outweighs the substitution effect.
C)  an increase in the price decreases the quantity demanded.
D)  Both a)  and b)  are correct.E) A) and B)
F) A) and C)

Question 12

Each of the following are characteristics of a typical indifference curve map except

Accepted Answer

A)  moving northeast to a new indifference curve will increase utility.
B)  points on the same indifference curve yield equal utility.
C)  the axes represent levels of utility for each of the goods.
D)  indifference curves cannot cross.E) B) and D)
F) B) and C)

Question 13

Ryan experiences an increase in his wages. The hours of labor that he supplies to the market would increase if

Accepted Answer

A)  the income effect is larger than the substitution effect.
B)  the substitution effect is larger than the income effect.
C)  neither the income effect nor the substitution effect apply to Tom's labor-leisure tradeoff.
D)  Ryan views both labor and leisure as inferior goods.E) B) and C)
F) A) and D)

Question 14

Figure 21-11 
-Refer to Figure 21-11. What is the consumer's marginal rate of substitution as she moves from B to C?

Accepted Answer

A)  12
B)  6
C)  4
D)  1E) None of the above
F) All of the above

Question 15

Abby, Bobbi, and Deborah each buy ice cream and paperback novels to enjoy on hot summer days. Ice cream costs $5 per gallon, and paperback novels cost $8 each. Abby has a budget of $80, Bobbi has a budget of $60, and Deborah has a budget of $40 to spend on ice cream and paperback novels. Who can afford to purchase 4 gallons of ice cream and 5 paperback novels?

Accepted Answer

A)  Abby, Bobbi, and Deborah
B)  Abby only
C)  Abby and Bobbi, but not Deborah
D)  None of the women can afford to purchase 4 gallons of ice cream and 5 paperback novels.E) A) and B)
F) All of the above

Question 16

For Molly, the substitution effect of a wage increase is stronger than the income effect. In response to a wage increase, will Sally work more hours or will she work fewer hours?

Accepted Answer

In response to a wag...

Question 17

Suppose a consumer knows that at her current bundle, MUx/Px > MUy/Py. Is this individual choosing a bundle that maximizes utility? ​

Accepted Answer

A)  ​Yes, because this individual values good X more than good Y.
B)  ​Yes, because this individual values good Y more than good X.
C)  ​No. This individual should shift consumption from good X to good Y.
D)  ​No. This individual should shift consumption from good Y to good X.E) B) and D)
F) B) and C)

Question 18

Figure 21-32 The figure shows three indifference curves and a budget constraint for a consumer named Hannah. When young, Hannah works and earns income. When old, she is retired and earns no income. 
-Refer to Figure 21-32. How much income does Hannah earn when she is young?

Accepted Answer

Hannah ear...

Question 19

When two goods are perfect complements, the indifference curve is

Accepted Answer

A)  a horizontal straight line.
B)  bowed outward.
C)  a downward-sloping straight line.
D)  a right angle.E) A) and C)
F) None of the above

Question 20

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

Accepted Answer

A)  MRSxy > Py/Px.
B)  MRSxy = Px/Py.
C)  MRSxy x/Py.
D)  MRSxy y/Px.E) A) and D)
F) All of the above

Exam 21: The Theory of Consumer Choice

All points on a demand curve are optimal consumption points.

Correct Answer
verified

The labor supply curve may have a backward-bending portion if, at higher wages, the income effect is

Correct Answer
verified

A consumer chooses an optimal consumption point where the

Correct Answer
verified

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

Correct Answer
verified

Figure 21-9 -Refer to Figure 21-9. If the price of good X is $15, what is the price of good Y?

Correct Answer
verified

When two goods are perfect complements, the indifference curve is

Correct Answer
verified

Assume Victoria's indifference curves are bowed outward but her indifference curves satisfy the other three properties of indifference curves. As Victoria moves from right to left along the horizontal axis, her marginal rate of substitution

Correct Answer
verified

If the consumer's income and all prices simultaneously double, then the optimum consumption bundle will

Correct Answer
verified

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 $2,520 and point B is his optimum, then what is the price of a shirt?

Correct Answer
verified
The price ...
View Answer

Ryan experiences an increase in his wages. The hours of labor that he supplies to the market would increase if

Correct Answer
verified

Figure 21-11 -Refer to Figure 21-11. The graph illustrates

Correct Answer
verified

A Giffen good is a good for which

Correct Answer
verified

Correct Answer
verified

Suppose a consumer knows that at her current bundle, MUx/Px > MUy/Py. Is this individual choosing a bundle that maximizes utility?

Correct Answer
verified

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 Answer
verified

Each of the following are characteristics of a typical indifference curve map except

Correct Answer
verified

Figure 21-11 -Refer to Figure 21-11. What is the consumer's marginal rate of substitution as she moves from B to C?

Correct Answer
verified

Figure 21-32 The figure shows three indifference curves and a budget constraint for a consumer named Hannah. When young, Hannah works and earns income. When old, she is retired and earns no income. -Refer to Figure 21-32. How much income does Hannah earn when she is young?

Correct Answer
verified
Hannah ear...
View Answer

For Molly, the substitution effect of a wage increase is stronger than the income effect. In response to a wage increase, will Sally work more hours or will she work fewer hours?

Correct Answer
verified
In response to a wag...
View 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. Steve

Correct Answer
verified

Exam 21: The Theory of Consumer Choice

All points on a demand curve are optimal consumption points.

Correct AnswerverifiedShow Answer

The labor supply curve may have a backward-bending portion if, at higher wages, the income effect is

Correct AnswerverifiedShow Answer

A consumer chooses an optimal consumption point where the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 21-9 -Refer to Figure 21-9. If the price of good X is $15, what is the price of good Y?

Correct AnswerverifiedShow Answer

When two goods are perfect complements, the indifference curve is

Correct AnswerverifiedShow Answer

Assume Victoria's indifference curves are bowed outward but her indifference curves satisfy the other three properties of indifference curves. As Victoria moves from right to left along the horizontal axis, her marginal rate of substitution

Correct AnswerverifiedShow Answer

If the consumer's income and all prices simultaneously double, then the optimum consumption bundle will

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 $2,520 and point B is his optimum, then what is the price of a shirt?

Correct AnswerverifiedThe price ...View AnswerShow Answer

Ryan experiences an increase in his wages. The hours of labor that he supplies to the market would increase if

Correct AnswerverifiedShow Answer

Figure 21-11 -Refer to Figure 21-11. The graph illustrates

Correct AnswerverifiedShow Answer

A Giffen good is a good for which

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose a consumer knows that at her current bundle, MUx/Px > MUy/Py. Is this individual choosing a bundle that maximizes utility? ​

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

Each of the following are characteristics of a typical indifference curve map except

Correct AnswerverifiedShow Answer

Figure 21-11 -Refer to Figure 21-11. What is the consumer's marginal rate of substitution as she moves from B to C?

Correct AnswerverifiedShow Answer

Figure 21-32 The figure shows three indifference curves and a budget constraint for a consumer named Hannah. When young, Hannah works and earns income. When old, she is retired and earns no income. -Refer to Figure 21-32. How much income does Hannah earn when she is young?

Correct AnswerverifiedHannah ear...View AnswerShow Answer

For Molly, the substitution effect of a wage increase is stronger than the income effect. In response to a wage increase, will Sally work more hours or will she work fewer hours?

Correct AnswerverifiedIn response to a wag...View AnswerShow 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. Steve

Correct AnswerverifiedShow 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
The price ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Suppose a consumer knows that at her current bundle, MUx/Px > MUy/Py. Is this individual choosing a bundle that maximizes utility?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Hannah ear...
View Answer

Correct Answer
verified
In response to a wag...
View Answer

Correct Answer
verified