Question 1

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

Question 2

Figure 21-5
(a) 
(b)   
-Refer to Figure 21-5. In graph (b) , if income is equal to $420, then the price of good Y is

Accepted Answer

A)  $1.
B)  $3.
C)  $10.
D)  $30.E) A) and D)
F) None of the above

Question 3

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 A is Kevin's optimum, then at that optimum, what is his opportunity cost of a shirt in terms of sweaters?

Accepted Answer

Kevin's opportunity ...

Question 4

The following diagram shows a budget constraint for a particular consumer.  If the price of X is $5, what is the consumer's income?

Accepted Answer

A)  $10
B)  $30
C)  $150
D)  $300E) None of the above
F) A) and D)

Question 5

The slope of the budget constraint is all of the following except

Accepted Answer

A)  the relative price of two goods.
B)  the rate at which a consumer can afford to trade one good for another.
C)  the marginal rate of substitution.
D)  constant.E) B) and C)
F) C) and D)

Question 6

A consumer who doesn't spend all of her income

Accepted Answer

A)  would be at a point outside of her budget constraint.
B)  would be at a point inside her budget constraint.
C)  must not be consuming positive quantities of all goods.
D)  must be consuming at a point where her budget constraint touches one of the axes.E) B) and C)
F) None of the above

Question 7

A worker with a backward-bending labor supply curve responds to an increase in wages by working more hours.

Accepted Answer

A) True 
 B)False

Question 8

Figure 21-2 The downward-sloping line on the figure represents a consumer's budget
constraint. 
-Refer to Figure 21-2. A consumer who chooses to spend all of her income could be at which point(s)  on the figure?

Accepted Answer

A)  V only
B)  Z only
C)  V, W, X, or Y only
D)  W, X, or Y onlyE) A) and D)
F) A) and C)

Question 9

List and briefly explain each of the four properties of indifference curves.

Accepted Answer

1: Higher indifference curves are prefer...

Question 10

Good X is an inferior good but not a Giffen good. When the price of X increases, the consumer will consume

Accepted Answer

A)  more X.
B)  the same amount of X.
C)  less X.
D)  more or less X depending on the size of the income effect relative to the size of the substitution effect.E) B) and D)
F) A) and C)

Question 11

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 12

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) A) and D)

Question 13

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 substitution effect associated with a decrease in the price of a textbook, by itself, 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) A) and C)

Question 14

An increase in a consumer's income

Accepted Answer

A)  increases the slope of the consumer's budget constraint.
B)  has no effect on the slope of the consumer's budget constraint.
C)  decreases the slope of the consumer's budget constraint.
D)  has no effect on the consumer's budget constraint.E) A) and D)
F) None of the above

Question 15

Figure 21-12 
-Refer to Figure 21-12. The marginal rate of substitution between bundles V and Z is

Accepted Answer

A)  greater than the marginal rate of substitution between bundles Z and T.
B)  less than the marginal rate of substitution between bundles Z and T.
C)  equal to the marginal rate of substitution between bundles Z and T.
D)  We are unable to compare the marginal rates of substitution.E) A) and C)
F) A) and D)

Question 16

If Rita's labor-supply curve is downward-sloping, then for Rita​

Accepted Answer

A)  ​an increase in the wage creates an income effect that is greater than the substitution effect.
B)  ​an increase in the wage creates a substitution effect that is greater than the income effect.
C)  ​leisure and consumption are perfect substitutes.
D)  ​leisure and consumption are perfect complements.E) A) and B)
F) B) and D)

Question 17

The indifference curves for nickels and dimes are straight lines.

Accepted Answer

A) True 
 B)False

Question 18

Figure 21-8 
-Refer to Figure 21-8. You have $36 to spend on good X and good Y. If good X costs $6 and good Y costs $12, your budget constraint is

Accepted Answer

A)  AB.
B)  BC.
C)  CD.
D)  DE.E) B) and D)
F) A) and D)

Question 19

Consider two goods: peanuts and crackers. The slope of the consumer's budget constraint is measured by the

Accepted Answer

A)  consumer's income divided by the price of crackers.
B)  relative price of peanuts and crackers.
C)  consumer's marginal rate of substitution.
D)  number of peanuts purchased divided by the number of crackers purchased.E) A) and C)
F) B) and C)

Question 20

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

Exam 21: The Theory of Consumer Choice

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (b) , if income is equal to $420, then the price of good Y is

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The slope of the budget constraint is all of the following except

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

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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 A is Kevin's optimum, then at that optimum, what is his opportunity cost of a shirt in terms of sweaters?

Correct AnswerverifiedKevin's opportunity ...View AnswerShow 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 substitution effect associated with a decrease in the price of a textbook, by itself, will result in

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Figure 21-12 -Refer to Figure 21-12. The marginal rate of substitution between bundles V and Z is

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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

Consider two goods: peanuts and crackers. The slope of the consumer's budget constraint is measured by the

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Figure 21-2 The downward-sloping line on the figure represents a consumer's budget constraint. -Refer to Figure 21-2. A consumer who chooses to spend all of her income could be at which point(s) on the figure?

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An increase in a consumer's income

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The indifference curves for nickels and dimes are straight lines.

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

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Good X is an inferior good but not a Giffen good. When the price of X increases, the consumer will consume

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

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A consumer who doesn't spend all of her income

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A worker with a backward-bending labor supply curve responds to an increase in wages by working more hours.

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If Rita's labor-supply curve is downward-sloping, then for Rita​

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The following diagram shows a budget constraint for a particular consumer. If the price of X is $5, what is the consumer's income?

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Figure 21-8 -Refer to Figure 21-8. You have $36 to spend on good X and good Y. If good X costs $6 and good Y costs $12, your budget constraint is

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List and briefly explain each of the four properties of indifference curves.

Correct Answerverified1: Higher indifference curves are prefer...View AnswerShow Answer

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Kevin's opportunity ...
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In response to a wag...
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If Rita's labor-supply curve is downward-sloping, then for Rita

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1: Higher indifference curves are prefer...
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