Question 1

If a consumer's marginal utility was 10 utils per unit of meat and 5 utils per unit of potatoes:

Accepted Answer

A)  the consumer should purchase less potatoes and more meat to maximize his satisfaction.
B)  the consumer would be in equilibrium if the per-unit price of meat was twice the price of potatoes.
C)  the consumer would be in equilibrium if the price per unit of meat was half the price of potatoes.
D)  the consumer's total utility could be increased by consuming more potatoes and less meat until the marginal utilities of the two goods were equal.E) A) and D)
F) All of the above

Question 2

The assumption of transitivity of preferences states that _____.

Accepted Answer

A)  a consumer can rank all possible consumption bundles
B)  consumers act rationally when choosing between consumption bundles
C)  more of a good is always better
D)  no two bundles can yield the same level of utilityE) B) and C)
F) All of the above

Question 3

Marginal utility is _____.

Accepted Answer

A)  the amount that total utility changes when consumption increases by one unit
B)  the level of utility after all units have been consumed
C)  the level of total utility divided by the number of units consumed.
D)  the amount that total utility changes when consumption is at its maximumE) A) and C)
F) None of the above

Question 4

Figure 3-1 shows the preferences of a consumer toward reading books and watching movies. 
-In Figure 3-1,the highest indifference curve is unattainable.Which of the following events would allow the consumer to reach the highest indifference curve,other things unchanged?

Accepted Answer

A)  A reduction in the price of books
B)  A reduction in the price of movie tickets
C)  A decrease in the income of the consumer
D)  An increase in the price of movie tickets and booksE) A) and D)
F) B) and D)

Question 5

Candies are on the vertical axis and pretzels are on the horizontal axis.Both goods command a positive price in the market place.The indifference curves are shaped such that the marginal rate of substitution increases rather than decreases.At equilibrium,the consumer will:

Accepted Answer

A)  consume both pretzels and candy in the ratio of their prices.
B)  consume only pretzels or only candy.
C)  consume both pretzels and candy in the ratio of their marginal utilities.
D)  consume equal amounts of pretzels and candy.E) A) and C)
F) A) and D)

Question 6

A set of indifference curves between an economic good and an economic bad must be _____.

Accepted Answer

A)  negatively sloped
B)  intersecting
C)  positively sloped
D)  horizontalE) None of the above
F) A) and B)

Question 7

An economic "bad" is a commodity for which _____.

Accepted Answer

A)  less is preferred to more after a certain level of consumption has been reached
B)  more is preferred to less regardless of the level of consumption
C)  satisfaction does not change as more is consumed
D)  less is preferred to more over all possible ranges of consumptionE) None of the above
F) B) and C)

Question 8

(
A)Microeconomic theories of fertility explain that the number of children that a couple have is balanced against the opportunity cost of raising children: the foregone wages of the mother,the other goods that the couple could have bought with their money,the time cost of raising children,the total resources of the parents,etc.Draw indifference curves for a couple who prefer a smaller number of children to a higher number.

Accepted Answer

An increase in the cost of raising child...

Question 9

Which of the products described below is mostly likely considered an inferior good?

Accepted Answer

A)  At lower prices people consume higher quantities of shredded wheat.
B)  As incomes increase canned meat product consumption falls.
C)  The higher the price of jeans the higher the demand for jeans.
D)  The lower the price of jeans the more the demand for shirts.E) None of the above
F) C) and D)

Question 10

The consumer's optimal consumption bundle is at the point where:

Accepted Answer

A)  the slope of the indifference curve equals the slope of the budget line.
B)  the indifference curve intersects the budget line.
C)  the ratio of the total utilities of the goods equals the ratio of the prices of the goods.
D)  the marginal utility of each good is maximized.E) A) and D)
F) None of the above

Question 11

A consumer attains equilibrium by _____.

Accepted Answer

A)  consuming all goods to the point where the marginal utility of each are equal
B)  consuming all goods to the point where the total utility of each are equal
C)  allocating income such that the total amount spent on each good is equal
D)  allocating income such that the marginal utility of the last dollar spent on each good is the sameE) A) and B)
F) B) and C)

Question 12

Which of the following is true when a consumer is optimizing her consumption choices across two or more goods?

Accepted Answer

A)  She is not necessarily on the highest indifference curve in her indifference map.
B)  The budget constraint intersects her indifference curve at her chosen consumption bundle.
C)  She equates the total utility per good for all goods.
D)  She is not necessarily spending all of her budget allotted to the goods.E) A) and B)
F) A) and C)

Question 13

Suppose a consumer must pay $P per visit to the local museum for each of the first 10 visits but only $P/2 per visit from the 11th visit on.With a composite consumption good on the Y-axis and visits to the museum on the X-axis,the budget line:

Accepted Answer

A)  is vertical after 10 visits.
B)  becomes steeper after 10 visits.
C)  becomes flatter after 10 visits.
D)  shifts outward after 10 visits.E) A) and B)
F) All of the above

Question 14

Suppose a consumer must pay $P per visit to the local museum for each of the first 5 visits but $2P per visit from the 6th visit on.With a composite consumption good on the Y-axis and visits to the museum on the X-axis,the budget line:

Accepted Answer

A)  is vertical after 5 visits.
B)  becomes steeper after 5 visits.
C)  becomes flatter after 5 visits.
D)  shifts outward after 5 visits.E) B) and D)
F) B) and C)

Question 15

Tim gets constant marginal utility of 4 utils from eating apples and a constant marginal utility of 5 utils from eating bananas.In other words,he considers them perfect substitutes and is willing to substitute 5 apples for 4 bananas and remain equally well off.He has $10 to spend on apples and bananas.The price of bananas is $1.Assume he can consume fractional amounts.Plot the demand curve for apples.(Hint: consider several different prices for apples. )

Accepted Answer

First,notice that the indifference curve...

Question 16

Suppose you have two indifference curves U1 and U2 representing the consumption of two normal goods.If U2 is twice as far from the origin as U1,then _____.

Accepted Answer

A)  consuming a bundle on U1 is preferred two times more than consuming a bundle on U2
B)  consuming a bundle on U1 has a higher utility than consuming a bundle on U2
C)  consuming a bundle on U2 is preferred two times less than consuming a bundle on U1
D)  consuming a bundle on U2 has a higher utility than consuming a bundle on U1E) None of the above
F) A) and D)

Question 17

A point lying inside the budget line indicates:

Accepted Answer

A)  an unattainable market basket for the consumer.
B)  the consumer is not spending all of his or her income.
C)  the consumer has exhausted his income on consumption.
D)  that one of the goods consumed is an economic bad.E) All of the above
F) A) and D)

Question 18

Prove that the slope of the budget line is equal to the negative of the price ratio.

Accepted Answer

Assume that the consumer has a disposabl...

Question 19

An indifference curve shows _____.

Accepted Answer

A)  all the combinations of two products between which the consumer is indifferent
B)  all possible combinations of the two products available to the consumer that can be purchased with a given level of income
C)  the single best bundle of consumption for the consumer given two products and a particular income level
D)  how the total satisfaction derived from consuming alternative market baskets changes along the curveE) B) and C)
F) A) and B)

Question 20

Negatively-sloped,straight-line indifference curves imply:

Accepted Answer

A)  that one of the goods has no effect on utility.
B)  that the goods are perfect complements.
C)  that the goods are perfect substitutes.
D)  that one of the goods is an economic "bad".E) A) and B)
F) All of the above

Exam 1: An Introduction to Microeconomics

Negatively-sloped,straight-line indifference curves imply:

Correct Answer
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Correct Answer
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An increase in the cost of raising child...
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Which of the products described below is mostly likely considered an inferior good?

Correct Answer
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Suppose you have two indifference curves U₁ and U₂ representing the consumption of two normal goods.If U₂ is twice as far from the origin as U₁,then _____.

Correct Answer
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A point lying inside the budget line indicates:

Correct Answer
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Suppose a consumer must pay $P per visit to the local museum for each of the first 5 visits but $2P per visit from the 6^th visit on.With a composite consumption good on the Y-axis and visits to the museum on the X-axis,the budget line:

Correct Answer
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A consumer attains equilibrium by _____.

Correct Answer
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An indifference curve shows _____.

Correct Answer
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Prove that the slope of the budget line is equal to the negative of the price ratio.

Correct Answer
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Assume that the consumer has a disposabl...
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Figure 3-1 shows the preferences of a consumer toward reading books and watching movies. -In Figure 3-1,the highest indifference curve is unattainable.Which of the following events would allow the consumer to reach the highest indifference curve,other things unchanged?

Correct Answer
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An economic "bad" is a commodity for which _____.

Correct Answer
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Which of the following is true when a consumer is optimizing her consumption choices across two or more goods?

Correct Answer
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If a consumer's marginal utility was 10 utils per unit of meat and 5 utils per unit of potatoes:

Correct Answer
verified

The assumption of transitivity of preferences states that _____.

Correct Answer
verified

Candies are on the vertical axis and pretzels are on the horizontal axis.Both goods command a positive price in the market place.The indifference curves are shaped such that the marginal rate of substitution increases rather than decreases.At equilibrium,the consumer will:

Correct Answer
verified

The consumer's optimal consumption bundle is at the point where:

Correct Answer
verified

A set of indifference curves between an economic good and an economic bad must be _____.

Correct Answer
verified

Marginal utility is _____.

Correct Answer
verified

Suppose a consumer must pay $P per visit to the local museum for each of the first 10 visits but only $P/2 per visit from the 11^th visit on.With a composite consumption good on the Y-axis and visits to the museum on the X-axis,the budget line:

Correct Answer
verified

Correct Answer
verified
First,notice that the indifference curve...
View Answer

Exam 1: An Introduction to Microeconomics

Negatively-sloped,straight-line indifference curves imply:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAn increase in the cost of raising child...View AnswerShow Answer

Which of the products described below is mostly likely considered an inferior good?

Correct AnswerverifiedShow Answer

Suppose you have two indifference curves U1 and U2 representing the consumption of two normal goods.If U2 is twice as far from the origin as U1,then _____.

Correct AnswerverifiedShow Answer

A point lying inside the budget line indicates:

Correct AnswerverifiedShow Answer

Suppose a consumer must pay $P per visit to the local museum for each of the first 5 visits but $2P per visit from the 6th visit on.With a composite consumption good on the Y-axis and visits to the museum on the X-axis,the budget line:

Correct AnswerverifiedShow Answer

A consumer attains equilibrium by _____.

Correct AnswerverifiedShow Answer

An indifference curve shows _____.

Correct AnswerverifiedShow Answer

Prove that the slope of the budget line is equal to the negative of the price ratio.

Correct AnswerverifiedAssume that the consumer has a disposabl...View AnswerShow Answer

Figure 3-1 shows the preferences of a consumer toward reading books and watching movies. -In Figure 3-1,the highest indifference curve is unattainable.Which of the following events would allow the consumer to reach the highest indifference curve,other things unchanged?

Correct AnswerverifiedShow Answer

An economic "bad" is a commodity for which _____.

Correct AnswerverifiedShow Answer

Which of the following is true when a consumer is optimizing her consumption choices across two or more goods?

Correct AnswerverifiedShow Answer

If a consumer's marginal utility was 10 utils per unit of meat and 5 utils per unit of potatoes:

Correct AnswerverifiedShow Answer

The assumption of transitivity of preferences states that _____.

Correct AnswerverifiedShow Answer

Candies are on the vertical axis and pretzels are on the horizontal axis.Both goods command a positive price in the market place.The indifference curves are shaped such that the marginal rate of substitution increases rather than decreases.At equilibrium,the consumer will:

Correct AnswerverifiedShow Answer

The consumer's optimal consumption bundle is at the point where:

Correct AnswerverifiedShow Answer

A set of indifference curves between an economic good and an economic bad must be _____.

Correct AnswerverifiedShow Answer

Marginal utility is _____.

Correct AnswerverifiedShow Answer

Suppose a consumer must pay $P per visit to the local museum for each of the first 10 visits but only $P/2 per visit from the 11th visit on.With a composite consumption good on the Y-axis and visits to the museum on the X-axis,the budget line:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedFirst,notice that the indifference curve...View AnswerShow Answer

Correct Answer
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Correct Answer
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An increase in the cost of raising child...
View Answer

Correct Answer
verified

Suppose you have two indifference curves U₁ and U₂ representing the consumption of two normal goods.If U₂ is twice as far from the origin as U₁,then _____.

Correct Answer
verified

Correct Answer
verified

Suppose a consumer must pay $P per visit to the local museum for each of the first 5 visits but $2P per visit from the 6^th visit on.With a composite consumption good on the Y-axis and visits to the museum on the X-axis,the budget line:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Assume that the consumer has a disposabl...
View Answer

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Suppose a consumer must pay $P per visit to the local museum for each of the first 10 visits but only $P/2 per visit from the 11^th visit on.With a composite consumption good on the Y-axis and visits to the museum on the X-axis,the budget line:

Correct Answer
verified

Correct Answer
verified
First,notice that the indifference curve...
View Answer