Question 1

A consumer's preferences provide a

Accepted Answer

A)  ranking of the set of bundles that happen to fall on indifference curves.
B)  relative ranking of bundles that provide more of all goods.
C)  framework for evaluating market equilibriums.
D)  complete ranking of all possible consumption bundles.E) C) and D)
F) A) and D)

Question 2

A consumer has preferences over two goods: books and movies.Two bundles,which lie on the same indifference curve for this consumer,are shown in the table below. 
Which of the following bundles could not lie on the same indifference curve with A and B and satisfy the four properties of indifference curves?

Accepted Answer

A)  One movie and five books
B)  Three movies and three books
C)  Five movies and one book
D)  One movie and seven booksE) A) and B)
F) A) and D)

Question 3

Figure 21-2
 
-Refer to Figure 21-2.Which of the graphs in the figure could reflect a decrease in the prices of both goods?

Accepted Answer

A)  graph (a) 
B)  graph (b) 
C)  graph (c) 
D)  graph (d) E) None of the above
F) A) and B)

Question 4

Figure 21-9
 
-Refer to Figure 21-9.Assume that the consumer depicted in the figure has an income of $40.Which of the following price-quantity combinations would be on her demand curve for marshmallows if the price of chocolate chips is $4?

Accepted Answer

A)  $2.00, 3
B)  $2.00, 9
C)  $4.00, 3
D)  $4.00, 9E) C) and D)
F) All of the above

Question 5

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 6

Which of the following is a property of indifference curves?

Accepted Answer

A)  Indifference curves cross to explain higher preferences.
B)  Indifference curves have positive slopes.
C)  Indifference curves are downward sloping and always linear.
D)  Indifference curves are bowed in toward the origin.E) A) and B)
F) A) and C)

Question 7

Figure 21-3
 
-Refer to Figure 21-3.In graph (a) ,if income is equal to $120,the price of good y is

Accepted Answer

A)  $1
B)  $2
C)  $3
D)  $4E) All of the above
F) C) and D)

Question 8

When economists describe preferences,they often use the concept of

Accepted Answer

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

Question 9

Figure 21-9
 
-Refer to Figure 21-9.Assume that the consumer depicted in the figure has an income of $40.If the price of chocolate chips is $4.00 and the price of marshmallows is $4.00,the optimizing consumer would choose to purchase

Accepted Answer

A)  9 marshmallows and 6 chocolate chips.
B)  10 marshmallows and 10 chocolate chips.
C)  5 marshmallows and 5 chocolate chips.
D)  3 marshmallows and 9 chocolate chips.E) None of the above
F) C) and D)

Question 10

An increase in income will cause a shift in the budget constraint

Accepted Answer

A)  outward.
B)  towards the good most consumed.
C)  towards the good least consumed.
D)  inward.E) A) and C)
F) B) and C)

Question 11

One of the primary research results in tax policy analysis over the last 20 years is that

Accepted Answer

A)  an increase in interest rates will increase saving.
B)  an increase in interest rates will decrease saving.
C)  lowering taxes on interest income will increase saving.
D)  None of the above.E) A) and C)
F) C) and D)

Question 12

A decrease in a consumer's income

Accepted Answer

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

Question 13

The slope at any point on an indifference curve equals the absolute price at which one consumer is willing to substitute one good for the other.

Accepted Answer

A) True 
 B)False

Question 14

The theory of consumer choice provides the foundation for understanding

Accepted Answer

A)  the structure of a firm.
B)  the profitability of a firm.
C)  a firm's product demand.
D)  a firm's product supply.E) C) and D)
F) A) and B)

Question 15

Figure 21-5
 
-Refer to Figure 21-5.Which of the graphs shown may represent indifference curves?

Accepted Answer

A)  graph (a) 
B)  graph (b) 
C)  graph (c) 
D)  All of the above are correct.E) None of the above
F) A) and C)

Question 16

The following diagram shows two budget lines: A and B. 
Which of the following could explain the change in the budget line from A to B?

Accepted Answer

A)  A decrease in income and a decrease in the price of x.
B)  A decrease in income and an increase in the price of x.
C)  An increase in income and a decrease in the price of x.
D)  An increase in income and an increase in the price of x.E) B) and C)
F) B) and D)

Question 17

Indifference curves that cross would suggest that

Accepted Answer

A)  the consumer does not prefer more to less.
B)  the consumer is likely to prefer a redistribution of income from rich to poor.
C)  different individuals have different preferences for the same goods.
D)  the marginal rate of substitution is the same for both indifference curves.E) A) and C)
F) B) and C)

Question 18

Figure 21-1
 
-Refer to Figure 21-1.All of the points identified in the figure represent possible consumption options with the exception of

Accepted Answer

A)  A
B)  E
C)  A and E
D)  None.All points are possible consumption options.E) A) and D)
F) A) and C)

Question 19

A rise in the interest rate will generally result in people consuming more when they are old.

Accepted Answer

A) True 
 B)False

Question 20

Figure 21-8
 
-Refer to Figure 21-8.The shift from point B to point C in the figure is due to the

Accepted Answer

A)  substitution effect of an increase in the price of potato chips.
B)  income effect of an increase in the price of potato chips.
C)  substitution effect of a decrease in the price of potato chips.
D)  income effect of a decrease in the price of potato chips.E) A) and C)
F) A) and B)

Exam 21: The Theory of Consumer Choice

A consumer's preferences provide a

Correct Answer
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Figure 21-5 -Refer to Figure 21-5.Which of the graphs shown may represent indifference curves?

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Figure 21-9 -Refer to Figure 21-9.Assume that the consumer depicted in the figure has an income of $40.If the price of chocolate chips is $4.00 and the price of marshmallows is $4.00,the optimizing consumer would choose to purchase

Correct Answer
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Figure 21-1 -Refer to Figure 21-1.All of the points identified in the figure represent possible consumption options with the exception of

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The following diagram shows two budget lines: A and B. Which of the following could explain the change in the budget line from A to B?

Correct Answer
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When economists describe preferences,they often use the concept of

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Figure 21-3 -Refer to Figure 21-3.In graph (a) ,if income is equal to $120,the price of good y is

Correct Answer
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An increase in income will cause a shift in the budget constraint

Correct Answer
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Figure 21-2 -Refer to Figure 21-2.Which of the graphs in the figure could reflect a decrease in the prices of both goods?

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Figure 21-9 -Refer to Figure 21-9.Assume that the consumer depicted in the figure has an income of $40.Which of the following price-quantity combinations would be on her demand curve for marshmallows if the price of chocolate chips is $4?

Correct Answer
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A rise in the interest rate will generally result in people consuming more when they are old.

Correct Answer
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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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One of the primary research results in tax policy analysis over the last 20 years is that

Correct Answer
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Figure 21-8 -Refer to Figure 21-8.The shift from point B to point C in the figure is due to the

Correct Answer
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A decrease in a consumer's income

Correct Answer
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Indifference curves that cross would suggest that

Correct Answer
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Which of the following is a property of indifference curves?

Correct Answer
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The theory of consumer choice provides the foundation for understanding

Correct Answer
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The slope at any point on an indifference curve equals the absolute price at which one consumer is willing to substitute one good for the other.

Correct Answer
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Exam 21: The Theory of Consumer Choice

A consumer's preferences provide a

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Figure 21-5 -Refer to Figure 21-5.Which of the graphs shown may represent indifference curves?

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Figure 21-9 -Refer to Figure 21-9.Assume that the consumer depicted in the figure has an income of $40.If the price of chocolate chips is $4.00 and the price of marshmallows is $4.00,the optimizing consumer would choose to purchase

Correct AnswerverifiedShow Answer

Figure 21-1 -Refer to Figure 21-1.All of the points identified in the figure represent possible consumption options with the exception of

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The following diagram shows two budget lines: A and B. Which of the following could explain the change in the budget line from A to B?

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When economists describe preferences,they often use the concept of

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Figure 21-3 -Refer to Figure 21-3.In graph (a) ,if income is equal to $120,the price of good y is

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An increase in income will cause a shift in the budget constraint

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Figure 21-2 -Refer to Figure 21-2.Which of the graphs in the figure could reflect a decrease in the prices of both goods?

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Figure 21-9 -Refer to Figure 21-9.Assume that the consumer depicted in the figure has an income of $40.Which of the following price-quantity combinations would be on her demand curve for marshmallows if the price of chocolate chips is $4?

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A rise in the interest rate will generally result in people consuming more when they are old.

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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

One of the primary research results in tax policy analysis over the last 20 years is that

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Figure 21-8 -Refer to Figure 21-8.The shift from point B to point C in the figure is due to the

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A decrease in a consumer's income

Correct AnswerverifiedShow Answer

Indifference curves that cross would suggest that

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Which of the following is a property of indifference curves?

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The theory of consumer choice provides the foundation for understanding

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The slope at any point on an indifference curve equals the absolute price at which one consumer is willing to substitute one good for the other.

Correct AnswerverifiedShow Answer

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