Question 1

A family on a trip budgets $200 for restaurant meals and fast food.The family can buy 20 restaurant meals if they don't buy any fast-food meals.What is the vertical intercept of the budget line when fast food is measured on the horizontal axis?

Accepted Answer

The vertical intercept represents the maximum number of restaurant meals the family can buy if they don't buy any fast-food meals, which is given as 20.

Question 2

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy)intercept of Ann's budget line is 12, and the vertical (video game)intercept of Ann's budget line is 24.Ann's income must be

Accepted Answer

Ann's income is $6 because she can buy 12 candy bars at 50 cents each (12 x $0.50 = $6) or 24 video games at 25 cents each (24 x $0.25 = $6).

Question 3

The slope of a budget line with x on the vertical axis and y on the horizontal axis equals

Accepted Answer

The slope of a budget line is equal to the negative of the ratio of the prices of the two goods. In this case, the price of x is on the vertical axis and the price of y is on the horizontal axis, so the slope is equal to -P_x/P_y.

Question 4

If a candy bar sells for 50 cents and video games are 25 cents each, the horizontal (candy)intercept of Ann's budget line is 12 and the vertical (video game)intercept of Ann's budget line is 24.Giving up one video game makes it possible for Ann to afford

Accepted Answer

The answer of If a candy bar sells for 50...

Question 5

Which of the following can be thought of as the consumer's consumption possibilities frontier?

Accepted Answer

The consumer's consumption possibilities are determined by their budget constraint or budget line, which shows the combinations of two goods that the consumer can afford given their income and the prices of the goods. Thus, the consumer's budget line is equivalent to their consumption possibilities frontier. The other answer choices are not equivalent to the consumer's consumption possibilities frontier.

Question 6

Chris budgets $30 this week for spending on his two favorite things, pizza and movies.The price of a movie is $5.Moreover, he could buy 3 pizzas if he doesn't go to the movies.If pizza is on the horizontal axis, what is the slope of the budget line?

Accepted Answer

The answer of Chris budgets $30 this week for spending...

Question 7

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy)intercept of Ann's budget line is 12, and the vertical (video game)intercept of Ann's budget line is 24.Which of the following best describes what would happen to the budget line if Ann's income increased?

Accepted Answer

An increase in income would shift the budget line to the right, allowing for more candy bars and/or video games to be purchased. The slope (opportunity cost) of the budget line remains constant, so it will remain parallel to the original line.

Question 8

Assume that you divide your food budget between fish and chicken.Which of the following would not alter the position of a budget line drawn with fish on the horizontal axis and chicken on the vertical axis?

Accepted Answer

A change in preference does not affect the budget line, as it only reflects the consumer's budget constraints, not their preferences.

Question 9

If a candy bar sells for 50 cents and video games are 25 cents each, the horizontal (candy)intercept of Ann's budget line is 12 and the vertical (video game)intercept of Ann's budget line is 24.Giving up one candy bar makes it possible for Ann to afford

Accepted Answer

To determine the slope of Ann's budget line, we can use the two intercepts given:

Slope = (change in y)/(change in x) = (24-0)/(0.5-0) = 48

This means that for every candy bar Ann gives up, she can buy 48 video games.

If Ann gives up one candy bar, she would have 11 left, which means she could afford:

11 candy bars * $0.50/candy bar = $5.50

With $5.50 left in her budget, she could afford:

$5.50 / $0.25/video game = 22 video games

However, if we assume that Ann wants to spend all of her money, she would give up one candy bar and buy 22 video games, rather than buying 24 video games and leaving $1.50 unspent.

Thus, giving up one candy bar makes it possible for Ann to afford 2 more video games, which corresponds to choice C.

Question 10

A family on a trip budgets $800 for restaurant meals and fast food.The family can buy 16 restaurant meals if they buy no fast-food meals.What is the price of a restaurant meal for the family?

Accepted Answer

If the family can buy 16 restaurant meals with a budget of $800, the price of each restaurant meal is $800 divided by 16, which equals $50.

Question 11

A family on a trip budgets $200 for restaurant meals and fast food.If the price of a fast-food meal for the whole family is $20, what is the horizontal intercept of the budget line when fast food is measured on the horizontal axis?

Accepted Answer

The horizontal intercept is found by dividing the total budget by the price of a fast-food meal: $200 / $20 = 10 meals.

Question 12

Within the framework of indifference curve analysis, what prevents the individual from purchasing more of all goods?

Accepted Answer

The budget constraint is what limits an individual's ability to purchase more of all goods. It represents the combination of prices and income that restricts the individual's purchasing power. Choosing to purchase more of one good requires giving up the opportunity to purchase more of other goods, which is reflected in the budget constraint. Legal prohibitions, the slope of the indifference curve, psychological considerations, and diminishing marginal utility may all influence an individual's consumption decisions, but they do not directly restrict the individual's ability to purchase more of all goods.

Question 13

The slope of a budget line equals minus the ratio of the

Accepted Answer

The slope of the budget line represents the rate at which one good can be exchanged for another. Specifically, it shows the ratio of the prices of the two goods. Thus, the correct choice is D, as the slope equals minus the ratio of the prices of the goods indicated on the two axes.

Question 14

A family on a trip budgets $200 for restaurant meals and fast food.If the price of a fast-food meal for the whole family is $20, what is the vertical intercept of the budget line when fast food is measured on the horizontal axis?

Accepted Answer

The answer of A family on a trip budgets $200...

Question 15

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy)intercept of Ann's budget line is 12, and the vertical (video game)intercept of Ann's budget line is 24.The slope of the budget line is

Accepted Answer

The slope of the budget line is calculated as the negative ratio of the price of the good on the horizontal axis to the price of the good on the vertical axis. Here, the price of candy bars is 50 cents and video games is 25 cents, so the slope is -50/25 = -2.

Question 16

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy)intercept of Ann's budget line is 12, and the vertical (video game)intercept of Ann's budget line is 24.Which of the following best describes what would happen to the budget line if Ann's income decreased?

Accepted Answer

Since the horizontal intercept of Ann's budget line is 12 (which corresponds to 24 candy bars), if her income decreases, she will not be able to purchase as many candy bars, so the budget line will shift leftward. Since the vertical intercept of Ann's budget line is 24 (which corresponds to 96 video games), this will remain constant. Therefore, the budget line will shift leftward to a parallel position.

Question 17

If a consumer's income rises,

Accepted Answer

When a consumer's income rises, her budget line shifts outward because she can now afford more of both goods, assuming prices remain constant. Indifference curves do not shift with changes in income; they represent preferences, not constraints.

Question 18

A family on a trip budgets $800 for restaurant meals and fast food.If the price of a fast-food meal for the whole family is $20, how many meals can the family buy if they don't eat at restaurants?

Accepted Answer

If the family spends all $800 on fast-food meals at $20 each, they can buy 800 / 20 = 40 meals.

Question 19

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy)intercept of Ann's budget line is 12, and the vertical (video game)intercept of Ann's budget line is 24.If Ann's income increased to $20, the vertical intercept would be

Accepted Answer

The vertical intercept is equal to the income divided by the price of the video game. If Ann's income increases to $20, the vertical intercept would be 20/0.25 = 80.

Question 20

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy)intercept of Ann's budget line is 12, and the vertical (video game)intercept of Ann's budget line is 24.If Ann's income increased to $20, the horizontal intercept would be

Accepted Answer

The horizontal intercept is equal to the income divided by the price of the candy bar. If Ann's income increases to $20, the horizontal intercept would be 20/0.5 = 40.

Quiz 6: Appendix--Indifference Curves and Utility Maximization

A family on a trip budgets $200 for restaurant meals and fast food.The family can buy 20 restaurant meals if they don't buy any fast-food meals.What is the vertical intercept of the budget line when fast food is measured on the horizontal axis?

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24.Ann's income must be

The slope of a budget line with x on the vertical axis and y on the horizontal axis equals

If a candy bar sells for 50 cents and video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12 and the vertical (video game) intercept of Ann's budget line is 24.Giving up one video game makes it possible for Ann to afford

Which of the following can be thought of as the consumer's consumption possibilities frontier?

Chris budgets $30 this week for spending on his two favorite things, pizza and movies.The price of a movie is $5.Moreover, he could buy 3 pizzas if he doesn't go to the movies.If pizza is on the horizontal axis, what is the slope of the budget line?

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24.Which of the following best describes what would happen to the budget line if Ann's income increased?

Assume that you divide your food budget between fish and chicken.Which of the following would not alter the position of a budget line drawn with fish on the horizontal axis and chicken on the vertical axis?

If a candy bar sells for 50 cents and video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12 and the vertical (video game) intercept of Ann's budget line is 24.Giving up one candy bar makes it possible for Ann to afford

A family on a trip budgets $800 for restaurant meals and fast food.The family can buy 16 restaurant meals if they buy no fast-food meals.What is the price of a restaurant meal for the family?

A family on a trip budgets $200 for restaurant meals and fast food.If the price of a fast-food meal for the whole family is $20, what is the horizontal intercept of the budget line when fast food is measured on the horizontal axis?

Within the framework of indifference curve analysis, what prevents the individual from purchasing more of all goods?

The slope of a budget line equals minus the ratio of the

A family on a trip budgets $200 for restaurant meals and fast food.If the price of a fast-food meal for the whole family is $20, what is the vertical intercept of the budget line when fast food is measured on the horizontal axis?

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24.The slope of the budget line is

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24.Which of the following best describes what would happen to the budget line if Ann's income decreased?

If a consumer's income rises,

A family on a trip budgets $800 for restaurant meals and fast food.If the price of a fast-food meal for the whole family is $20, how many meals can the family buy if they don't eat at restaurants?

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24.If Ann's income increased to $20, the vertical intercept would be

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24.If Ann's income increased to $20, the horizontal intercept would be