Question 1

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

Question 2

A typical indifference curve is upward sloping.

Accepted Answer

A) True 
 B)False

Question 3

When two goods are perfect substitutes, 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) C) and D)
F) B) and D)

Question 4

Figure 21-3
In each case, the budget constraint moves from BC-1 to BC-2.    
-Refer to Figure 21-3. Which of the graphs in the figure reflects a decrease in the price of good Y only?

Accepted Answer

A)  graph a
B)  graph b
C)  graph c
D)  graph dE) None of the above
F) A) and B)

Question 5

If a consumer experiences a decrease in income, the new budget constraint will have the same slope as the old budget constraint.

Accepted Answer

A) True 
 B)False

Question 6

What is significant about a point on a graph at which an indifference curve is tangent to a budget constraint?

Accepted Answer

A point of tangency between an...

Question 7

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

Question 8

The indifference curves for nickels and dimes are straight lines.

Accepted Answer

A) True 
 B)False

Question 9

Figure 21-3
In each case, the budget constraint moves from BC-1 to BC-2.    
-Refer to Figure 21-3. Which of the graphs in the figure reflects a decrease in the price of good X only?

Accepted Answer

A)  graph a
B)  graph b
C)  graph c
D)  graph dE) A) and B)
F) A) and C)

Question 10

The following diagram shows a budget constraint for a particular consumer.  If the price of X is $12, then what is the price of Y?

Accepted Answer

A)  $9
B)  $16
C)  $24
D)  $30E) A) and C)
F) All of the above

Question 11

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 A?

Accepted Answer

A)  40
B)  20
C)  10
D)  2E) None of the above
F) A) and B)

Question 12

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

Accepted Answer

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

Question 13

The marginal rate of substitution is the slope of the budget constraint.

Accepted Answer

A) True 
 B)False

Question 14

When economists describe preferences, they often use the concept of

Accepted Answer

A)  markets.
B)  income.
C)  utility.
D)  prices.E) B) and D)
F) None of the above

Question 15

A consumer

Accepted Answer

A)  is equally satisfied with any indifference curve.
B)  prefers indifference curves with positive slopes.
C)  prefers higher indifference curves to lower indifference curves.
D)  prefers indifference curves that are straight lines to indifference curves that are right angles.E) None of the above
F) A) and B)

Question 16

Giffen goods violate the law of demand.

Accepted Answer

A) True 
 B)False

Question 17

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 B is Kevin's optimum, then at that optimum, what is his opportunity cost of a sweater in terms of shirts?

Accepted Answer

Kevin's opportunity ...

Question 18

Figure 21-31 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. 
-Refer to Figure 21-31. Suppose point A was Kevin's optimum last week, and point B is his optimum this week. What happened between last week and this week?

Accepted Answer

The price ...

Question 19

If Priscilla regards cheese and crackers as perfect complements, then

Accepted Answer

A)  her indifference curves slope upward.
B)  her indifference curves are straight lines.
C)  Priscilla prefers lower indifference curves to higher ones.
D)  for Priscilla a bundle of 5 crackers and 5 ounces of cheese is just as good as a bundle of 5 crackers and 8 ounces of cheese.E) B) and C)
F) A) and C)

Question 20

Jake experiences an increase in his wages. The hours of labor that he supplies to the market would decrease 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 Harry's labor-leisure tradeoff.
D)  Jake views both labor and leisure as inferior goods.E) B) and D)
F) C) and D)

Exam 21: The Theory of Consumer Choice

When two goods are perfect substitutes, the indifference curve is

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

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The marginal rate of substitution is the slope of the budget constraint.

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Figure 21-31 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. -Refer to Figure 21-31. Suppose point A was Kevin's optimum last week, and point B is his optimum this week. What happened between last week and this week?

Correct AnswerverifiedThe price ...View AnswerShow Answer

When economists describe preferences, they often use the concept of

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

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A consumer

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The following diagram shows a budget constraint for a particular consumer. If the price of X is $12, then what is the price of Y?

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If a consumer experiences a decrease in income, the new budget constraint will have the same slope as the old budget constraint.

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

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Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure reflects a decrease in the price of good Y only?

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If Priscilla regards cheese and crackers as perfect complements, then

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The indifference curves for nickels and dimes are straight lines.

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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 B is Kevin's optimum, then at that optimum, what is his opportunity cost of a sweater in terms of shirts?

Correct AnswerverifiedKevin's opportunity ...View AnswerShow Answer

What is significant about a point on a graph at which an indifference curve is tangent to a budget constraint?

Correct AnswerverifiedA point of tangency between an...View AnswerShow 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 A?

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

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Giffen goods violate the law of demand.

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Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure reflects a decrease in the price of good X only?

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A typical indifference curve is upward sloping.

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The price ...
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Kevin's opportunity ...
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A point of tangency between an...
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Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a) , what is the price of good X relative to the price of good Y (i.e., P_X/P_Y) ?

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