Question 1

Leah consumes at a point on her budget line where her marginal rate of substitution is less than the magnitude of the slope of her budget line.As Leah moves along her budget line toward her best affordable point,she will move

Accepted Answer

The answer of Leah consumes at a point on her...

Question 2

Use the figure below to answer the following question.  Figure 9.2.5
-Refer to Figure 9.2.5.The graphs show indifference curves for various goods.Graph ________ best describes the pair of goods baseballs and baseball bats.Graph ________ best describes the pair of goods desktop computers and laptop computers.

Accepted Answer

Graph 2 best describes baseballs and baseball bats as they have perfect substitutes, meaning consumers are indifferent between the two goods and are willing to switch between them at a constant rate. Graph 3 best describes desktop computers and laptop computers as they have different qualities and are not perfect substitutes, meaning consumers may have different preferences and are not willing to switch between the two goods at a constant rate. Graph 1 does not accurately describe either pair of goods.

Question 3

Use the figure below to answer the following question.  Figure 9.2.4
-Refer to Figure 9.2.4.Rashid buys only books and CDs.The figure shows his preferences.Rashid's indifference curves ________ display diminishing marginal rate of substitution because ________.

Accepted Answer

Diminishing marginal rate of substitution is illustrated by the decreasing slope of the indifference curves as one moves from left to right, indicating that Rashid is willing to give up fewer books for each additional CD as he consumes more CDs and fewer books.

Question 4

Which one of the following statements is true about the indifference curves for two goods that are close but not perfect substitutes?

Accepted Answer

Indifference curves for close but not perfect substitutes are bowed inward toward the origin and the marginal rate of substitution between the two goods decreases as more of the good measured on the x-axis and less of the good measured on the y-axis are consumed. Therefore, the correct statement is D.

Question 5

Leah consumes at a point on her budget line where her marginal rate of substitution is less than the magnitude of the slope of her budget line.As Leah moves towards her best affordable point,she will move to

Accepted Answer

Leah's current consumption point is not optimal because it violates the condition of equalizing the marginal rate of substitution (MRS) and the price ratio. As she moves towards her best affordable point, she will adjust her consumption bundle such that her MRS approaches the price ratio. This adjustment will involve moving to a higher indifference curve (since the MRS is decreasing along the current indifference curve). Therefore, the correct answer is (D) a higher indifference curve.

Question 6

Use the figure below to answer the following questions.  Figure 9.2.3
-Refer to Figure 9.2.3.When Rashid chooses the consumption point of 2 books and 6 CDs,his marginal rate of substitution is

Accepted Answer

The answer of Use the figure below to answer the...

Question 7

An indifference curve slopes downward because

Accepted Answer

An indifference curve represents all combinations of two goods that give a person the same level of satisfaction, or utility. As a person gives up some of good X (moves leftward along the curve), they must increase their consumption of good Y (moves upward along the curve) to remain indifferent. Thus, the slope of the curve is negative.

Question 8

Use the figure below to answer the following questions.  Figure 9.2.3
-Refer to Figure 9.2.3.Rashid buys only books and CDs.The figure shows his preferences.When Rashid chooses the consumption point of 3 books and 2 CDs,his marginal rate of substitution is

Accepted Answer

The marginal rate of substitution (MRS) is the rate at which a consumer is willing to trade one good for another while keeping their utility constant. In this case, Rashid is willing to give up 1 book for 2 CDs, so the MRS is 1 book per CD.

Question 9

At the best affordable point,what is the relationship between the indifference curve and the budget line?

Accepted Answer

At the best affordable point, the consumer maximizes utility by choosing a combination of goods where the slope of the indifference curve equals the slope of the budget line. This is because the slope of the budget line represents the rate at which the consumer can trade one good for another (i.e. the opportunity cost) and the slope of the indifference curve represents the rate at which the consumer is willing to trade one good for another (i.e. the marginal rate of substitution). At the point where these two slopes are equal, the consumer is buying the goods in the most efficient way possible and any other combination of goods would result in less utility.

Question 10

Use the information below to answer the following questions.
Fact 9.2.1 You May Be Paid More (or Less)Than You Think
It's so hard to put a price on happiness,isn't it? But if you've ever had to choose between a job you like and a better-paying one that you like less,you probably wished some economist would tell you how much job satisfaction is worth.Trust in management is by far the biggest component to consider.Say you get a new boss and your trust in management goes up a bit (say,up 1 point on a 10-point scale).That's like getting a 36 percent pay raise.In other words,that increased level of trust will boost your level of overall satisfaction in life by about the same amount as a 36 percent raise would.
Source: CNN,March 29,2006
-Refer to Fact 9.2.1.The news clip implies that the marginal rate of substitution is ________,which is likely ________ implication.

Accepted Answer

The news clip implies a constant marginal rate of substitution between trust in management and pay, which is likely an incorrect implication because the relationship between job satisfaction and pay is not linear or constant.

Question 11

If two goods are perfect substitutes,then their

Accepted Answer

When two goods are perfect substitutes, their indifference curves are negatively-sloped straight lines, indicating a constant rate of substitution between the two goods.

Question 12

If two consumption points are on different indifference curves,then one point is

Accepted Answer

Indifference curves represent a set of consumption bundles that give the same level of utility. If two consumption points are on different indifference curves, it means that the consumer prefers one point to the other because it provides a higher level of utility. Therefore, the answer is B - preferred to the other.

Question 13

Which of the following statements is false?

Accepted Answer

A consumer can have multiple indifference curves, each representing a different level of satisfaction or utility.

Question 14

When the iPhone10 was introduced,the demand for iPhone10 protective cases increased.This information tells us that the iPhone10 and iPhone10 protective cases are

Accepted Answer

iPhone 10 and iPhone 10 protective cases are complements because they are used together. When the demand for iPhone 10 increases, the demand for iPhone 10 protective cases also increases. This means that their indifference curves are close to L-shaped.

Question 15

A consumer's best affordable point occurs

Accepted Answer

The best affordable point for a consumer occurs on the budget line. This is because every point on the budget line represents a combination of goods that can be purchased using all of the available income. Any point inside the budget line would be affordable, but not the most preferred combination of goods, while any point outside the budget line would be unaffordable. Therefore, the consumer's best affordable point occurs on the budget line.

Question 16

Which one of the following is true at the best affordable choice of a consumer?

Accepted Answer

The best affordable choice of a consumer is where the budget line is tangent to the highest possible indifference curve, which represents the consumer's maximum level of satisfaction. This point is also known as the optimum or equilibrium point. At this point, the consumer spends all of their income (option C) and the marginal rate of substitution (MRS) is equal to the relative price of the goods measured on the x-axis. Therefore, options A and B are incorrect. Option D is not possible because the consumer cannot afford to consume outside the budget line. Option E may or may not be true depending on the shape and slope of the indifference curves and the budget line.

Question 17

Which of the following results in a rightward shift of your indifference curves for gasoline and movie rentals?

Accepted Answer

The answer of Which of the following results in a...

Question 18

As a consumer moves rightward along an indifference curve,

Accepted Answer

Moving rightward along an indifference curve means the consumer is considering different combinations of goods that provide the same level of utility or satisfaction, hence the term "indifferent." The other options imply changes in prices, income requirements, or preferences, which are not relevant to the concept of moving along an indifference curve.

Question 19

Jay has an income of $10 to buy peanuts and popcorn.The price of peanuts is $1 a bag and the price of popcorn is $2 a bag.He chooses to consume 5 bags of peanuts and 2 bags of popcorn.What can we say about this consumption choice?

Accepted Answer

The answer of Jay has an income of $10 to...

Question 20

The shape of a person's indifference curves between two goods depends on

Accepted Answer

The shape of indifference curves depends on the degree of substitutability between the two goods. If the two goods are perfect substitutes, the indifference curve will be a straight line. If the two goods are complements, the indifference curve will be L-shaped. If the two goods are neither perfect substitutes nor complements, the indifference curve will be bowed inward. Prices and income levels affect the consumer's choice and can shift the indifference curve, but they do not determine the shape of the curve.

Quiz 9: Possibilities, preferences, and Choices

Leah consumes at a point on her budget line where her marginal rate of substitution is less than the magnitude of the slope of her budget line.As Leah moves along her budget line toward her best affordable point,she will move

Use the figure below to answer the following question. Figure 9.2.5 -Refer to Figure 9.2.5.The graphs show indifference curves for various goods.Graph best describes the pair of goods baseballs and baseball bats.Graph best describes the pair of goods desktop computers and laptop computers.

Use the figure below to answer the following question. Figure 9.2.4 -Refer to Figure 9.2.4.Rashid buys only books and CDs.The figure shows his preferences.Rashid's indifference curves display diminishing marginal rate of substitution because .

Which one of the following statements is true about the indifference curves for two goods that are close but not perfect substitutes?

Leah consumes at a point on her budget line where her marginal rate of substitution is less than the magnitude of the slope of her budget line.As Leah moves towards her best affordable point,she will move to

Use the figure below to answer the following questions. Figure 9.2.3 -Refer to Figure 9.2.3.When Rashid chooses the consumption point of 2 books and 6 CDs,his marginal rate of substitution is

An indifference curve slopes downward because

Use the figure below to answer the following questions. Figure 9.2.3 -Refer to Figure 9.2.3.Rashid buys only books and CDs.The figure shows his preferences.When Rashid chooses the consumption point of 3 books and 2 CDs,his marginal rate of substitution is

At the best affordable point,what is the relationship between the indifference curve and the budget line?

If two goods are perfect substitutes,then their

If two consumption points are on different indifference curves,then one point is

Which of the following statements is false?

When the iPhone10 was introduced,the demand for iPhone10 protective cases increased.This information tells us that the iPhone10 and iPhone10 protective cases are

A consumer's best affordable point occurs

Which one of the following is true at the best affordable choice of a consumer?

Which of the following results in a rightward shift of your indifference curves for gasoline and movie rentals?

As a consumer moves rightward along an indifference curve,

Jay has an income of $10 to buy peanuts and popcorn.The price of peanuts is $1 a bag and the price of popcorn is $2 a bag.He chooses to consume 5 bags of peanuts and 2 bags of popcorn.What can we say about this consumption choice?

The shape of a person's indifference curves between two goods depends on

Quiz 9: Possibilities, preferences, and Choices

Leah consumes at a point on her budget line where her marginal rate of substitution is less than the magnitude of the slope of her budget line.As Leah moves along her budget line toward her best affordable point,she will move

Use the figure below to answer the following question. Figure 9.2.4 -Refer to Figure 9.2.4.Rashid buys only books and CDs.The figure shows his preferences.Rashid's indifference curves ________ display diminishing marginal rate of substitution because ________.

Which one of the following statements is true about the indifference curves for two goods that are close but not perfect substitutes?

Leah consumes at a point on her budget line where her marginal rate of substitution is less than the magnitude of the slope of her budget line.As Leah moves towards her best affordable point,she will move to

Use the figure below to answer the following questions. Figure 9.2.3 -Refer to Figure 9.2.3.When Rashid chooses the consumption point of 2 books and 6 CDs,his marginal rate of substitution is

An indifference curve slopes downward because

Use the figure below to answer the following questions. Figure 9.2.3 -Refer to Figure 9.2.3.Rashid buys only books and CDs.The figure shows his preferences.When Rashid chooses the consumption point of 3 books and 2 CDs,his marginal rate of substitution is

At the best affordable point,what is the relationship between the indifference curve and the budget line?

If two goods are perfect substitutes,then their

If two consumption points are on different indifference curves,then one point is

Which of the following statements is false?

When the iPhone10 was introduced,the demand for iPhone10 protective cases increased.This information tells us that the iPhone10 and iPhone10 protective cases are

A consumer's best affordable point occurs

Which one of the following is true at the best affordable choice of a consumer?

Which of the following results in a rightward shift of your indifference curves for gasoline and movie rentals?

As a consumer moves rightward along an indifference curve,

Jay has an income of $10 to buy peanuts and popcorn.The price of peanuts is $1 a bag and the price of popcorn is $2 a bag.He chooses to consume 5 bags of peanuts and 2 bags of popcorn.What can we say about this consumption choice?

The shape of a person's indifference curves between two goods depends on

Use the figure below to answer the following question. Figure 9.2.4 -Refer to Figure 9.2.4.Rashid buys only books and CDs.The figure shows his preferences.Rashid's indifference curves display diminishing marginal rate of substitution because .