Question 1

Two economists found empirical evidence that when the price of rice decreased in the Hunan province of China,local residents consumed less rice than before the price decrease.The study provides a real-world example of a(n)

Accepted Answer

A)   normal good.
B)   inferior good that is not a Giffen good.
C)   Giffen good.
D)   luxury good.E) A) and C)
F) None of the above

Question 2

Figure 21-19
The following graph illustrates a representative consumer's preferences for marshmallows and chocolate chip cookies:
 
-Refer to Figure 21-19.Assume that the consumer has an income of $100 and currently optimizes at bundle A.When the price of marshmallows decreases to $5,which bundle will the optimizing consumer choose?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) None of the above
F) A) and B)

Question 3

Suppose at the consumer's current consumption bundle the marginal rate of substitution of cheese for wine is 1/2 bottle of wine per pound of cheese.The price of one pound of cheese is $6,and the price of a bottle of wine is $10.The consumer should increase his consumption of

Accepted Answer

A)   cheese, decrease his consumption of wine, and move to a lower indifference curve.
B)   cheese, decrease his consumption of wine, and move to a higher indifference curve.
C)   wine, decrease consumption of cheese, and move to a higher indifference curve.
D)   cheese, decrease consumption of wine, and remain on the same indifference curve.E) C) and D)
F) A) and D)

Question 4

When the price of an inferior good decreases,

Accepted Answer

A)   both the income and substitution effects encourage the consumer to purchase more of the good.
B)   both the income and substitution effects encourage the consumer to purchase less of the good.
C)   the income effect encourages the consumer to purchase more of the good, and the substitution effect encourages the consumer to purchase less of the good.
D)   the income effect encourages the consumer to purchase less of the good, and the substitution effect encourages the consumer to purchase more of the good.E) A) and C)
F) A) and B)

Question 5

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

Question 6

Graphically demonstrate the conditions associated with a consumer optimum.Carefully label all curves and axes.

Accepted Answer

The answer of Graphically demonstrate the conditions associated with a...

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

Question 8

The marginal rate of substitution is

Accepted Answer

A)   the slope of a budget constraint.
B)   always constant.
C)   the slope of an indifference curve.
D)   the point at which the budget constraint and the indifference curve are tangent.E) A) and D)
F) B) and D)

Question 9

Draw indifference curves that reflect the following preferences.
a.pencils with white erasers and pencils with pink erasers
b.left shoes and right shoes
c.potatoes and rice
d.income and polluted water

Accepted Answer

The answer of Draw indifference curves that reflect the following...

Question 10

A typical indifference curve is upward sloping.

Accepted Answer

A) True 
 B)False

Question 11

Bundle L contains 10 units of good X and 20 units of good Y.Bundle M contains 8 units of good X and 21 units of good Y.The consumer is indifferent between bundle L and bundle M.Assume that the consumer's preferences satisfy the four properties of indifference curves.Which of the following correctly expresses the marginal rate of substitution of good X for good Y between these two points?

Accepted Answer

A)   The consumer will give up 1 unit of good X to gain 2 units of good Y.
B)   The consumer will give up 2 units of good X to gain 1 unit of good Y.
C)   The price of good X is twice as large as the price of good Y.
D)   The price of good X is half as large as the price of good Y.E) A) and D)
F) A) and C)

Question 12

Figure 21-5

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

Accepted Answer

A)   1/3
B)   1
C)   3
D)   10E) A) and B)
F) None of the above

Question 13

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.The bundle of wine and cheese that he purchased at the old prices now costs

Accepted Answer

A)   the same amount at the new prices.
B)   less than Brett's income at the new prices.
C)   more than Brett's income at the new prices.
D)   We do not have enough information to answer the question.E) A) and D)
F) None of the above

Question 14

Figure 21-13
 
-Refer to Figure 21-13.As the consumer moves from A to B to C,the marginal rate of substitution

Accepted Answer

A)   increases.
B)   decreases.
C)   remains constant.
D)   first increases, then decreases.E) None of the above
F) All of the above

Question 15

Economists represent a consumer's preferences using

Accepted Answer

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

Question 16

The substitution effect from an increase in wages is evident in a

Accepted Answer

A)   decrease in labor demand.
B)   desire to consume less leisure.
C)   desire to consume more leisure.
D)   backward-bending labor supply curve.E) B) and D)
F) B) and C)

Question 17

When the price of a good increases,all else equal,the higher price

Accepted Answer

A)   reduces the consumer's set of buying opportunities.
B)   leads to a parallel shift of the budget constraint.
C)   will necessarily lead to an increase in the consumption of goods whose price did not change.
D)   generally discourages the consumption of inferior goods.E) B) and D)
F) A) and B)

Question 18

If the interest rate rises,an individual could choose to

Accepted Answer

A)   increase consumption when young.
B)   increase consumption when old.
C)   decrease consumption when young.
D)   Any of the above could be correct.E) None of the above
F) A) and D)

Question 19

The indifference curves for perfect substitutes are right angles.

Accepted Answer

A) True 
 B)False

Question 20

If the relative price of a concert ticket is three times the price of a meal at a good restaurant,then the opportunity cost of a concert ticket can be measured by the

Accepted Answer

A)   slope of the budget constraint.
B)   slope of an indifference curve.
C)   marginal rate of substitution.
D)   income effect.E) B) and D)
F) A) and D)

Exam 21: The Theory of Consumer Choice.

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 Answer
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Correct Answer
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Figure 21-5 -Refer to Figure 21-5.In graph (b) ,what is the price of good X relative to good Y (i.e.,Pₓ/Pᵧ) ?

Correct Answer
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If the interest rate rises,an individual could choose to

Correct Answer
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Economists represent a consumer's preferences using

Correct Answer
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When the price of an inferior good decreases,

Correct Answer
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Suppose at the consumer's current consumption bundle the marginal rate of substitution of cheese for wine is 1/2 bottle of wine per pound of cheese.The price of one pound of cheese is $6,and the price of a bottle of wine is $10.The consumer should increase his consumption of

Correct Answer
verified

Two economists found empirical evidence that when the price of rice decreased in the Hunan province of China,local residents consumed less rice than before the price decrease.The study provides a real-world example of a(n)

Correct Answer
verified

Correct Answer
verified

Correct Answer
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The marginal rate of substitution is

Correct Answer
verified

When the price of a good increases,all else equal,the higher price

Correct Answer
verified

Draw indifference curves that reflect the following preferences. a.pencils with white erasers and pencils with pink erasers b.left shoes and right shoes c.potatoes and rice d.income and polluted water

Correct Answer
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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)

Correct Answer
verified

The substitution effect from an increase in wages is evident in a

Correct Answer
verified

A typical indifference curve is upward sloping.

Correct Answer
verified

Graphically demonstrate the conditions associated with a consumer optimum.Carefully label all curves and axes.

Correct Answer
verified

If the relative price of a concert ticket is three times the price of a meal at a good restaurant,then the opportunity cost of a concert ticket can be measured by the

Correct Answer
verified

The indifference curves for perfect substitutes are right angles.

Correct Answer
verified

Figure 21-13 -Refer to Figure 21-13.As the consumer moves from A to B to C,the marginal rate of substitution

Correct Answer
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Exam 21: The Theory of Consumer Choice.

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the interest rate rises,an individual could choose to

Correct AnswerverifiedShow Answer

Economists represent a consumer's preferences using

Correct AnswerverifiedShow Answer

When the price of an inferior good decreases,

Correct AnswerverifiedShow Answer

Suppose at the consumer's current consumption bundle the marginal rate of substitution of cheese for wine is 1/2 bottle of wine per pound of cheese.The price of one pound of cheese is $6,and the price of a bottle of wine is $10.The consumer should increase his consumption of

Correct AnswerverifiedShow Answer

Two economists found empirical evidence that when the price of rice decreased in the Hunan province of China,local residents consumed less rice than before the price decrease.The study provides a real-world example of a(n)

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The marginal rate of substitution is

Correct AnswerverifiedShow Answer

When the price of a good increases,all else equal,the higher price

Correct AnswerverifiedShow Answer

Draw indifference curves that reflect the following preferences. a.pencils with white erasers and pencils with pink erasers b.left shoes and right shoes c.potatoes and rice d.income and polluted water

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The substitution effect from an increase in wages is evident in a

Correct AnswerverifiedShow Answer

A typical indifference curve is upward sloping.

Correct AnswerverifiedShow Answer

Graphically demonstrate the conditions associated with a consumer optimum.Carefully label all curves and axes.

Correct AnswerverifiedShow Answer

If the relative price of a concert ticket is three times the price of a meal at a good restaurant,then the opportunity cost of a concert ticket can be measured by the

Correct AnswerverifiedShow Answer

The indifference curves for perfect substitutes are right angles.

Correct AnswerverifiedShow Answer

Figure 21-13 -Refer to Figure 21-13.As the consumer moves from A to B to C,the marginal rate of substitution

Correct AnswerverifiedShow Answer

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