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 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 2

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

Accepted Answer

Indifference curves represent different levels of utility or satisfaction for a consumer. Therefore, if two consumption points are on different indifference curves, the consumer prefers one point over the other because it provides a higher level of utility. Thus, the correct answer is B, preferred to the other.

Question 3

Use the figure below to answer the following question.
  
Figure 9.3.2
-Which one of the following statements about Figure 9.3.2 is true?

Accepted Answer

According to the graph, point T is located on a higher indifference curve than point Q, indicating that it is preferred to Q. However, T is located outside the budget constraint, so it is not affordable.

Question 4

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 5

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

Accepted Answer

Rashid's indifference curves do display diminishing marginal rate of substitution because the magnitude of the slope of both indifference curves decreases as Rashid consumes more albums and fewer books. This means that as Rashid consumes more albums and fewer books, he is willing to give up less and less books to obtain an additional album, indicating a decrease in the marginal utility of albums relative to books.

Question 6

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 total cost of 5 bags of peanuts is $5 and the total cost of 2 bags of popcorn is $4. This means that Jay has spent all of his $10 income. However, if we calculate the marginal utility of the last unit of peanuts consumed and the last unit of popcorn consumed, we may find that there are other consumption choices that would yield higher utility. Therefore, this consumption choice is not necessarily the "best" affordable choice.

Question 7

Use the figure below to answer the following questions.
  
Figure 9.3.1
-Consider the budget line and indifference curve in Figure 9.3.1.If the price of good X is $2 a unit,what is the price of good Y?

Accepted Answer

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

Question 8

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 albums,his marginal rate of substitution is ________.

Accepted Answer

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

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 their utility by choosing a point where the slope of the indifference curve (representing the consumer's preference) is equal to the slope of the budget line (representing the limitations of the consumer's budget). Therefore, the correct answer is D, where the slope of the indifference curve equals the slope of the budget line.

Question 10

Which of the following statements is FALSE?

Accepted Answer

A consumer has multiple indifference curves, each representing a different level of utility or satisfaction. The position of these curves will be different based on the consumer's preferences and available choices.

Question 11

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

Accepted Answer

At the best affordable choice, the consumer spends all of their income (since any unspent income indicates that the consumer could have consumed more while still staying within their budget). Therefore, option C is true. Options A, B, D, and E are all false at the best affordable choice.

Question 12

At the best affordable point,which statement is true?

Accepted Answer

At the best affordable point, the consumer maximizes utility subject to the budget constraint. This means that the slope (or marginal rate of substitution) of the indifference curve at that point equals the slope (or relative price or opportunity cost) of the budget line. Therefore, choice A is true.

Question 13

Use the figure below to answer the following question.
  
Figure 9.2.5
-An indifference curve slopes downward because ________.

Accepted Answer

An indifference curve shows the different combinations of two goods that give a consumer equal satisfaction or utility. The slope of an indifference curve represents the rate at which a person is willing to substitute one good for another while remaining indifferent or equally satisfied. Therefore, if a person gives up some of good X, they must increase their consumption of good Y to remain indifferent, which is why the indifference curve slopes downward. Option A is incorrect because it is not necessary that people are only happy when they increase consumption of all goods. Option C is incorrect because it does not explain why the indifference curve slopes downward. Option D is incorrect because an indifference curve is not a demand curve. Option E is incorrect because it describes the law of demand which is not relevant to the question.

Question 14

Use the figure below to answer the following questions.
  
Figure 9.3.1
-Consider the budget line and indifference curve in Figure 9.3.1.At the best affordable point,the marginal rate of substitution is

Accepted Answer

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

Question 15

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 16

A consumer choosing between apples and oranges is at her best affordable point.Then the price of apples decreases.If both apples and oranges are normal goods,which one of the following statements is true about her new best affordable point?

Accepted Answer

When the price of apples decreases, the consumer can afford more apples, leading to an increase in apple consumption. The effect on orange consumption is uncertain because it depends on the relative strength of the substitution and income effects.

Question 17

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 18

Use the figure below to answer the following questions.
  
Figure 9.3.1
-Consider the budget line and indifference curve in Figure 9.3.1.If the price of good X is $1 a unit,then the price of good Y is

Accepted Answer

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

Question 19

A consumer's best affordable point occurs

Accepted Answer

The best affordable point for the consumer is on the budget line, where the consumer is spending all of their income and maximizing their utility. Any points inside the budget line are affordable but not optimal, while any points outside the budget line are not affordable given the consumer's income. A corner solution, where the consumer only consumes one good, may be optimal but not necessarily the best affordable point if there are other affordable points on the budget line with higher utility.

Question 20

Peter's income increases and so does his consumption of both movies and pop,but his consumption of pop increases by less than his consumption of movies increases.Which one of the following statements is true for Peter?

Accepted Answer

When an individual's income increases and they consume more of both goods, it indicates that both goods are normal goods. Inferior goods would see a decrease in consumption with an increase in income.

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 towards her best affordable point,she will move to

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

Use the figure below to answer the following question. Figure 9.3.2 -Which one of the following statements about Figure 9.3.2 is true?

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

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

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?

Use the figure below to answer the following questions. Figure 9.3.1 -Consider the budget line and indifference curve in Figure 9.3.1.If the price of good X is $2 a unit,what is the price of good Y?

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 albums,his marginal rate of substitution is ________.

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

Which of the following statements is FALSE?

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

At the best affordable point,which statement is true?

Use the figure below to answer the following question. Figure 9.2.5 -An indifference curve slopes downward because ________.

Use the figure below to answer the following questions. Figure 9.3.1 -Consider the budget line and indifference curve in Figure 9.3.1.At the best affordable point,the marginal rate of substitution is

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

A consumer choosing between apples and oranges is at her best affordable point.Then the price of apples decreases.If both apples and oranges are normal goods,which one of the following statements is true about her new best affordable point?

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 questions. Figure 9.3.1 -Consider the budget line and indifference curve in Figure 9.3.1.If the price of good X is $1 a unit,then the price of good Y is

A consumer's best affordable point occurs

Peter's income increases and so does his consumption of both movies and pop,but his consumption of pop increases by less than his consumption of movies increases.Which one of the following statements is true for Peter?

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 towards her best affordable point,she will move to

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

Use the figure below to answer the following question. Figure 9.3.2 -Which one of the following statements about Figure 9.3.2 is true?

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

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

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?

Use the figure below to answer the following questions. Figure 9.3.1 -Consider the budget line and indifference curve in Figure 9.3.1.If the price of good X is $2 a unit,what is the price of good Y?

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 albums,his marginal rate of substitution is ________.

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

Which of the following statements is FALSE?

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

At the best affordable point,which statement is true?

Use the figure below to answer the following question. Figure 9.2.5 -An indifference curve slopes downward because ________.

Use the figure below to answer the following questions. Figure 9.3.1 -Consider the budget line and indifference curve in Figure 9.3.1.At the best affordable point,the marginal rate of substitution is

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

A consumer choosing between apples and oranges is at her best affordable point.Then the price of apples decreases.If both apples and oranges are normal goods,which one of the following statements is true about her new best affordable point?

Use the figure below to answer the following questions. Figure 9.3.1 -Consider the budget line and indifference curve in Figure 9.3.1.If the price of good X is $1 a unit,then the price of good Y is

A consumer's best affordable point occurs

Peter's income increases and so does his consumption of both movies and pop,but his consumption of pop increases by less than his consumption of movies increases.Which one of the following statements is true for Peter?

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