Question 1

A consumer's preferences for $1 bills and $20 bills can be represented by indifference curves that are

Accepted Answer

A)  bowed out from the origin.
B)  bowed in toward the origin.
C)  straight lines.
D)  right angles.E) A) and C)
F) None of the above

Question 2

The goal of the consumer is to

Accepted Answer

A)  maximize utility.
B)  minimize expenses.
C)  spend more income in the current time period than in the future.
D)  All of the above are the goals of the consumer.E) None of the above
F) A) and C)

Question 3

Samantha is maximizing total utility while consuming food and clothing. Her marginal utility from food is 50, and her marginal utility from clothing is 25. If clothing is priced at $10 per unit, the price of food per unit must be

Accepted Answer

A)  $2.
B)  $2.50.
C)  $5.
D)  $20.E) None of the above
F) All of the above

Question 4

Suppose a consumer has an income of $800 per month and that she spends her entire income each month on beer and bratwurst. The price of a pint of beer is $5, and the price of a bratwurst is $4. Which of the following combinations of beers and bratwursts represents a point that would lie to the interior of the consumer's budget constraint?

Accepted Answer

A)  160 beers and 200 bratwursts
B)  40 beers and 50 bratwursts
C)  80 beers and 100 bratwursts
D)  160 beers and 0 bratwurstsE) A) and B)
F) All of the above

Question 5

If the consumer's income and all prices simultaneously decrease by one-half, then the optimum consumption will

Accepted Answer

A)  shift outward relative to the original optimum.
B)  move leftward along the original budget constraint.
C)  shift inward relative to the original optimum.
D)  not change.E) B) and C)
F) A) and B)

Question 6

You can think of an indifference curve as an

Accepted Answer

A)  equal-cost curve.
B)  equal-marginal-cost curve.
C)  equal-utility curve.
D)  equal-marginal-utility curve.E) A) and D)
F) C) and D)

Question 7

Laura consumes only beer and chips. Her indifference curves are all bowed inward. Consider the bundles (2,6) , (4,4) , and (6,2) . If Laura is indifferent between (2,6)  and (6,2) , then Laura must

Accepted Answer

A)  prefer (4,4)  to (6,2) .
B)  be indifferent between (4,4)  and (6,2) .
C)  prefer (6,2)  to (4,4) .
D)  prefer (2,6)  to (4,4) .E) B) and C)
F) C) and D)

Question 8

Figure 21-31 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. 
-Refer to Figure 21-31. For Kevin, are sweaters and shirts substitutes, complements, or neither?

Accepted Answer

Kevin purchases 28 sweaters at...

Question 9

Figure 21-24 The figure shows three indifference curves and a budget constraint for a certain consumer named Steve. 
-Refer to Figure 21-24. About what percentage of his income is Steve spending on apples when he is at his optimum?

Accepted Answer

A)  33.3 percent
B)  38.2 percent
C)  44.4 percent
D)  56.7 percentE) B) and D)
F) A) and D)

Question 10

Figure 21-2 The downward-sloping line on the figure represents a consumer's budget
constraint. 
-Refer to Figure 21-2. Which of the following statements is not necessarily correct?

Accepted Answer

A)  Points W, X, and Y all cost the consumer the same amount of money.
B)  Point Z is unaffordable for the consumer given his budget constraint.
C)  Point V costs less than point Z.
D)  Points W, X, and Y give the consumer the same level of satisfaction.E) A) and B)
F) All of the above

Question 11

All Giffen goods are

Accepted Answer

A)  inferior goods, and all inferior goods are Giffen goods.
B)  inferior goods, but not all inferior goods are Giffen goods.
C)  normal goods, but not all normal goods are Giffen goods.
D)  normal goods, and all normal goods are Giffen goods.E) A) and C)
F) B) and C)

Question 12

Assume that a consumer's indifference curve is a downward-sloping straight line. As the consumer moves from left to right along the horizontal axis, the consumer's marginal rate of substitution

Accepted Answer

A)  increases.
B)  decreases.
C)  remains constant.
D)  increases, then decreases.E) A) and B)
F) B) and C)

Question 13

A typical indifference curve is upward sloping.

Accepted Answer

A) True 
 B)False

Question 14

Figure 21-11 
-Refer to Figure 21-11. As the consumer moves from point A to B to C to D, the consumer's marginal rate of substitution

Accepted Answer

A)  remains constant.
B)  increases.
C)  decreases.
D)  first increases, then decreases.E) A) and B)
F) B) and C)

Question 15

Which of the following examples would illustrate a backward-sloping labor supply-curve?

Accepted Answer

A)  An increase in a person's wages results in the person working fewer hours per week.
B)  A decrease in a person's wages results in the person working more hours per week.
C)  An increase in a person's wages results in the person working more hours per week.
D)  Both a and b are correct.E) C) and D)
F) B) and D)

Question 16

The following diagram shows one indifference curve representing the preferences for goods X and Y for one consumer.  What is the marginal rate of substitution between points A and B?

Accepted Answer

A)  2/5
B)  1
C)  5/2
D)  3E) A) and B)
F) A) and C)

Question 17

Which of the following statements is not​ true?

Accepted Answer

A)  ​When consumers purchase more of one good, they are giving up the ability to buy as much of other goods.
B)  ​When consumers choose to take more leisure time, they are giving up the ability to consume as much as before.
C)  ​Consumers face consumption tradeoffs because they have limited income.
D)  ​Consumers face consumption tradeoffs because they have limited preferences for goods.E) All of the above
F) A) and C)

Question 18

When Stanley has an income of $1,000, he consumes 30 units of good A and 50 units of good B. After Stanley's income increases to $1,500, he consumes 60 units of good A and 45 units of good B. Which of the following statements is correct?

Accepted Answer

A)  Both goods A and B are normal goods.
B)  Both goods A and B are inferior goods.
C)  Good A is a normal good, and good B is an inferior good.
D)  Good A is an inferior good, and good B is a normal good.E) B) and C)
F) None of the above

Question 19

A budget constraint illustrates bundles that a consumer prefers equally, while an indifference curve illustrates bundles that are equally affordable to a consumer.

Accepted Answer

A) True 
 B)False

Question 20

If consumers purchase more of a good when their income rises, the good is a normal good.

Accepted Answer

A) True 
 B)False

Exam 21: The Theory of Consumer Choice

Correct Answer
verified

A consumer's preferences for $1 bills and $20 bills can be represented by indifference curves that are

Correct Answer
verified

When Stanley has an income of $1,000, he consumes 30 units of good A and 50 units of good B. After Stanley's income increases to $1,500, he consumes 60 units of good A and 45 units of good B. Which of the following statements is correct?

Correct Answer
verified

If the consumer's income and all prices simultaneously decrease by one-half, then the optimum consumption will

Correct Answer
verified

If consumers purchase more of a good when their income rises, the good is a normal good.

Correct Answer
verified

A typical indifference curve is upward sloping.

Correct Answer
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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. Which of the following statements is not necessarily correct?

Correct Answer
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Laura consumes only beer and chips. Her indifference curves are all bowed inward. Consider the bundles (2,6) , (4,4) , and (6,2) . If Laura is indifferent between (2,6) and (6,2) , then Laura must

Correct Answer
verified

Which of the following statements is not true?

Correct Answer
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A budget constraint illustrates bundles that a consumer prefers equally, while an indifference curve illustrates bundles that are equally affordable to a consumer.

Correct Answer
verified

The goal of the consumer is to

Correct Answer
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Figure 21-24 The figure shows three indifference curves and a budget constraint for a certain consumer named Steve. -Refer to Figure 21-24. About what percentage of his income is Steve spending on apples when he is at his optimum?

Correct Answer
verified

Samantha is maximizing total utility while consuming food and clothing. Her marginal utility from food is 50, and her marginal utility from clothing is 25. If clothing is priced at $10 per unit, the price of food per unit must be

Correct Answer
verified

Which of the following examples would illustrate a backward-sloping labor supply-curve?

Correct Answer
verified

Figure 21-11 -Refer to Figure 21-11. As the consumer moves from point A to B to C to D, the consumer's marginal rate of substitution

Correct Answer
verified

All Giffen goods are

Correct Answer
verified

The following diagram shows one indifference curve representing the preferences for goods X and Y for one consumer. What is the marginal rate of substitution between points A and B?

Correct Answer
verified

Assume that a consumer's indifference curve is a downward-sloping straight line. As the consumer moves from left to right along the horizontal axis, the consumer's marginal rate of substitution

Correct Answer
verified

You can think of an indifference curve as an

Correct Answer
verified

Figure 21-31 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. -Refer to Figure 21-31. For Kevin, are sweaters and shirts substitutes, complements, or neither?

Correct Answer
verified
Kevin purchases 28 sweaters at...
View Answer

Exam 21: The Theory of Consumer Choice

Correct AnswerverifiedShow Answer

A consumer's preferences for $1 bills and $20 bills can be represented by indifference curves that are

Correct AnswerverifiedShow Answer

When Stanley has an income of $1,000, he consumes 30 units of good A and 50 units of good B. After Stanley's income increases to $1,500, he consumes 60 units of good A and 45 units of good B. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

If the consumer's income and all prices simultaneously decrease by one-half, then the optimum consumption will

Correct AnswerverifiedShow Answer

If consumers purchase more of a good when their income rises, the good is a normal good.

Correct AnswerverifiedShow Answer

A typical indifference curve is upward sloping.

Correct AnswerverifiedShow Answer

Figure 21-2 The downward-sloping line on the figure represents a consumer's budget constraint. -Refer to Figure 21-2. Which of the following statements is not necessarily correct?

Correct AnswerverifiedShow Answer

Laura consumes only beer and chips. Her indifference curves are all bowed inward. Consider the bundles (2,6) , (4,4) , and (6,2) . If Laura is indifferent between (2,6) and (6,2) , then Laura must

Correct AnswerverifiedShow Answer

Which of the following statements is not​ true?

Correct AnswerverifiedShow Answer

A budget constraint illustrates bundles that a consumer prefers equally, while an indifference curve illustrates bundles that are equally affordable to a consumer.

Correct AnswerverifiedShow Answer

The goal of the consumer is to

Correct AnswerverifiedShow Answer

Figure 21-24 The figure shows three indifference curves and a budget constraint for a certain consumer named Steve. -Refer to Figure 21-24. About what percentage of his income is Steve spending on apples when he is at his optimum?

Correct AnswerverifiedShow Answer

Samantha is maximizing total utility while consuming food and clothing. Her marginal utility from food is 50, and her marginal utility from clothing is 25. If clothing is priced at $10 per unit, the price of food per unit must be

Correct AnswerverifiedShow Answer

Which of the following examples would illustrate a backward-sloping labor supply-curve?

Correct AnswerverifiedShow Answer

Figure 21-11 -Refer to Figure 21-11. As the consumer moves from point A to B to C to D, the consumer's marginal rate of substitution

Correct AnswerverifiedShow Answer

All Giffen goods are

Correct AnswerverifiedShow Answer

The following diagram shows one indifference curve representing the preferences for goods X and Y for one consumer. What is the marginal rate of substitution between points A and B?

Correct AnswerverifiedShow Answer

Assume that a consumer's indifference curve is a downward-sloping straight line. As the consumer moves from left to right along the horizontal axis, the consumer's marginal rate of substitution

Correct AnswerverifiedShow Answer

You can think of an indifference curve as an

Correct AnswerverifiedShow Answer

Figure 21-31 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. -Refer to Figure 21-31. For Kevin, are sweaters and shirts substitutes, complements, or neither?

Correct AnswerverifiedKevin purchases 28 sweaters at...View AnswerShow Answer

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Which of the following statements is not true?

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Kevin purchases 28 sweaters at...
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