Question 1

Diana and Sarah each like jewelry and music by the Rolling Stones.If we were to graph an indifference curve with jewelry on the horizontal axis and cds by the Rolling Stones on the vertical axis,then

Accepted Answer

A)   Diana and Sarah would have identical indifference curves.
B)   Diana's indifference curve would be higher than Sarah's indifference curve.
C)   Sarah's indifference curve would be higher than Diana's indifference curve.
D)   Because we do not know the intensity of each woman's preferences,we do not have enough information to compare their indifference curves.E) B) and C)
F) All of the above

Question 2

A typical indifference curve is upward sloping.

Accepted Answer

A) True 
 B)False

Question 3

Assume that consumption when young and consumption when old are both normal goods.The income effect of an increase in the interest rate will result in

Accepted Answer

A)   an increase in saving when young.
B)   an increase in saving when old.
C)   a decrease in saving when young.
D)   a decrease in saving when old.E) A) and D)
F) B) and D)

Question 4

Mark spends his weekly income on gin and cocktail olives.The price of gin has risen from $7 to $9 per bottle,the price of cocktail olives has fallen from $6 to $5 per jar,and Mark's income has stayed fixed at $46 per week.If you measure gin on the vertical axis and cocktail olives on the horizontal axis,then the budget constraint

Accepted Answer

A)   is steeper after the price changes.
B)   is flatter after the price changes.
C)   is the same after the price changes.
D)   shifts in a parallel fashion to the old budget constraint after the price changes.E) B) and D)
F) B) and C)

Question 5

Refer to Scenario 21-1.If the price of beer doubles to $2,then the

Accepted Answer

A)   budget constraint intersects the vertical axis at 25 beers.
B)   slope of the budget constraint rises to -2.
C)   slope of the budget constraint falls to -4.
D)   budget constraint shifts inward in a parallel fashion.E) A) and B)
F) A) and C)

Question 6

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

Accepted Answer

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

Question 7

Economists represent a consumer's preferences using

Accepted Answer

A)   demand curves.
B)   budget constraints.
C)   indifference curves.
D)   supply curves.E) B) and C)
F) A) and D)

Question 8

Assume that a consumer faces the following budget constraints.  
a.Assuming that income is the same on both occasions,describe the difference in relative prices between Panel A and Panel B.
b.If income in Panel B is $126,what is the price of good X?
c.If income in Panel A is $84,what is the price of good Y?
d.Assuming that the price of good X is the same on both occasions,describe the difference in income and price of good Y between Panel A and Panel B.

Accepted Answer

a.The price of good Y is relatively high...

Question 9

Figure 21-5
X/PY) ? A)  1/4 B)  1/3 C)  3 D)  4" class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 21-5.In graph (a) ,what is the price of good X relative to good Y (i.e. ,PX/PY) ?

Accepted Answer

A)   1/4
B)   1/3
C)   3
D)   4E) All of the above
F) B) and C)

Question 10

Assume that a consumer's indifference curve is bowed inward and satisfies the other three properties of indifference curves.As the consumer moves from left to right along the horizontal axis,the consumer's marginal rate of substitution

Accepted Answer

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

Question 11

Figure 21-12 
-Refer to Figure 21-12.Which of the following statements is not correct?

Accepted Answer

A)   The consumer prefers bundle Y to bundle Z.
B)   The consumer is indifference between bundle W and bundle X.
C)   The consumer is indifference between bundle X and bundle V.
D)   The consumer prefers bundle X to bundle Z.E) A) and B)
F) B) and C)

Question 12

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

Accepted Answer

In response to a wag...

Question 13

The following diagram shows one indifference curve representing the preferences for goods X and Y for one consumer.  What is the marginal rate of substitution between points A and B?

Accepted Answer

A)   1/2
B)   4/3
C)   2
D)   3E) None of the above
F) All of the above

Question 14

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 buys 3 shirts during a certain month,then how many hats does he buy during that month?

Accepted Answer

Frank buys...

Question 15

Suppose a consumer spends her income on two goods: iTunes music downloads and books.The consumer has $100 to allocate to these two goods,the price of a downloaded song is $1,and the price of a book is $20.What is the maximum number of books the consumer can purchase?

Accepted Answer

A)   100
B)   20
C)   10
D)   5E) All of the above
F) B) and C)

Question 16

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 17

Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. 
-Refer to Scenario 21-1.What is the slope of Frank's budget constraint if it is drawn with the quantity of shirts on the horizontal axis and the quantity of hats on the vertical axis?

Accepted Answer

The slope of the bud...

Question 18

Figure 21-7 
-Refer to Figure 21-7.Suppose a consumer has $200 in income,the price of a book is $5,and the price of a DVD is $10.What is the value of B?

Accepted Answer

A)   40
B)   20
C)   10
D)   2E) A) and C)
F) All of the above

Question 19

A Giffen good is a good for which an increase in the price

Accepted Answer

A)   decreases the quantity supplied.
B)   increases the quantity supplied.
C)   decreases the quantity demanded.
D)   increases the quantity demanded.E) B) and D)
F) None of the above

Question 20

Suppose a consumer spends his income on CDs and DVDs.If his income decreases,the budget constraint for CDs and DVDs will

Accepted Answer

A)   shift outward,parallel to the original budget constraint.
B)   shift inward,parallel to the original budget constraint.
C)   rotate outward along the CD axis because he can afford more CDs.
D)   rotate outward along the DVD axis because he can afford more DVDs.E) A) and B)
F) A) and C)

Exam 21: The Theory of Consumer Choice

Correct Answer
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a.The price of good Y is relatively high...
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A Giffen good is a good for which an increase in the price

Correct Answer
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Correct Answer
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Economists represent a consumer's preferences using

Correct Answer
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Figure 21-12 -Refer to Figure 21-12.Which of the following statements is not correct?

Correct Answer
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The following diagram shows one indifference curve representing the preferences for goods X and Y for one consumer. What is the marginal rate of substitution between points A and B?

Correct Answer
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Diana and Sarah each like jewelry and music by the Rolling Stones.If we were to graph an indifference curve with jewelry on the horizontal axis and cds by the Rolling Stones on the vertical axis,then

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.What is the slope of Frank's budget constraint if it is drawn with the quantity of shirts on the horizontal axis and the quantity of hats on the vertical axis?

Correct Answer
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The slope of the bud...
View Answer

Suppose a consumer spends his income on CDs and DVDs.If his income decreases,the budget constraint for CDs and DVDs will

Correct Answer
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Assume that a consumer's indifference curve is bowed inward and satisfies the other three properties of indifference curves.As the consumer moves from left to right along the horizontal axis,the consumer's marginal rate of substitution

Correct Answer
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Figure 21-7 -Refer to Figure 21-7.Suppose a consumer has $200 in income,the price of a book is $5,and the price of a DVD is $10.What is the value of B?

Correct Answer
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For Brent,the income effect of a wage increase is stronger than the substitution effect.In response to a wage increase,will Brent work more hours or will he work fewer hours?

Correct Answer
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In response to a wag...
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Figure 21-5 -Refer to Figure 21-5.In graph (a) ,what is the price of good X relative to good Y (i.e. ,P_X/P_Y) ?

Correct Answer
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A typical indifference curve is upward sloping.

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

Correct Answer
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Suppose a consumer spends her income on two goods: iTunes music downloads and books.The consumer has $100 to allocate to these two goods,the price of a downloaded song is $1,and the price of a book is $20.What is the maximum number of books the consumer can purchase?

Correct Answer
verified

Refer to Scenario 21-1.If the price of beer doubles to $2,then the

Correct Answer
verified

Assume that consumption when young and consumption when old are both normal goods.The income effect of an increase in the interest rate will result in

Correct Answer
verified

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 buys 3 shirts during a certain month,then how many hats does he buy during that month?

Correct Answer
verified
Frank buys...
View Answer

A consumer chooses an optimal consumption point where the

Correct Answer
verified

Exam 21: The Theory of Consumer Choice

Correct Answerverifieda.The price of good Y is relatively high...View AnswerShow Answer

A Giffen good is a good for which an increase in the price

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economists represent a consumer's preferences using

Correct AnswerverifiedShow Answer

Figure 21-12 -Refer to Figure 21-12.Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

The following diagram shows one indifference curve representing the preferences for goods X and Y for one consumer. What is the marginal rate of substitution between points A and B?

Correct AnswerverifiedShow Answer

Diana and Sarah each like jewelry and music by the Rolling Stones.If we were to graph an indifference curve with jewelry on the horizontal axis and cds by the Rolling Stones on the vertical axis,then

Correct AnswerverifiedShow Answer

Figure 21-1.The figure shows three indifference curves and a budget constraint for a certain consumer named Jack. -Refer to Scenario 21-1.What is the slope of Frank's budget constraint if it is drawn with the quantity of shirts on the horizontal axis and the quantity of hats on the vertical axis?

Correct AnswerverifiedThe slope of the bud...View AnswerShow Answer

Suppose a consumer spends his income on CDs and DVDs.If his income decreases,the budget constraint for CDs and DVDs will

Correct AnswerverifiedShow Answer

Assume that a consumer's indifference curve is bowed inward and satisfies the other three properties of indifference curves.As the consumer moves from left to right along the horizontal axis,the consumer's marginal rate of substitution

Correct AnswerverifiedShow Answer

Figure 21-7 -Refer to Figure 21-7.Suppose a consumer has $200 in income,the price of a book is $5,and the price of a DVD is $10.What is the value of B?

Correct AnswerverifiedShow Answer

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

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

Figure 21-5 -Refer to Figure 21-5.In graph (a) ,what is the price of good X relative to good Y (i.e. ,PX/PY) ?

Correct AnswerverifiedShow Answer

A typical indifference curve is upward sloping.

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 constant?

Correct AnswerverifiedShow Answer

Suppose a consumer spends her income on two goods: iTunes music downloads and books.The consumer has $100 to allocate to these two goods,the price of a downloaded song is $1,and the price of a book is $20.What is the maximum number of books the consumer can purchase?

Correct AnswerverifiedShow Answer

Refer to Scenario 21-1.If the price of beer doubles to $2,then the

Correct AnswerverifiedShow Answer

Assume that consumption when young and consumption when old are both normal goods.The income effect of an increase in the interest rate will result in

Correct AnswerverifiedShow Answer

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 buys 3 shirts during a certain month,then how many hats does he buy during that month?

Correct AnswerverifiedFrank buys...View AnswerShow Answer

A consumer chooses an optimal consumption point where the

Correct AnswerverifiedShow Answer

Correct Answer
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a.The price of good Y is relatively high...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The slope of the bud...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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In response to a wag...
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Figure 21-5 -Refer to Figure 21-5.In graph (a) ,what is the price of good X relative to good Y (i.e. ,P_X/P_Y) ?

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Frank buys...
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Correct Answer
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