Question 1

Higher indifference curves:

Accepted Answer

Higher indifference curves represent higher levels of utility because they show combinations of goods that are preferred to those on lower curves. This means that as one moves to a higher curve, they are willing to give up more of one good to obtain more of the other, which indicates a higher level of satisfaction or utility.

Question 2

-(Exhibit: Consumer Equilibrium 2)Given the indifference curves in the exhibit, the highest level of total utility theoretically attainable is associated with point _______ on indifference curve _______ .

Accepted Answer

The highest level of total utility attainable is associated with the point that lies on the highest indifference curve that the consumer can reach given their budget constraint. Point J on indifference curve A represents the highest level of total utility because indifference curve A is the highest curve that can be reached, indicating the highest level of satisfaction or utility.

Question 3

-(Exhibit: Consumer Equilibrium 2)Given the budget constraint, a level of total utility not attainable is at point:

Accepted Answer

The answer of 
-(Exhibit: Consumer Equilibrium 2)Given the budget constraint,...

Question 4

A curve that represents combinations of two goods that yield equal levels of satisfaction is a(n):

Accepted Answer

An indifference curve represents combinations of two goods that yield equal levels of satisfaction, meaning the consumer is indifferent between any two points along the curve. A budget curve shows all the possible combinations of two goods that a consumer can purchase given their budget constraint. A marginal utility curve shows the relationship between marginal utility and quantity consumed. A price-consumption curve shows the effect of a change in the price of one good on the quantity consumed of that good and the other good.

Question 5

-(Exhibit: Consumer Equilibrium 2)The lowest level of total utility shown in the exhibit is associated with point _______ on curve _______ .

Accepted Answer

Point G on curve C represents the lowest level of total utility among the options provided.

Question 6

The maximum amount of one good a consumer would be willing to give up in order to obtain an additional unit of another is called the:

Accepted Answer

The definition provided describes the concept of the marginal rate of substitution, which measures the rate at which a consumer would be willing to trade off one good for another while maintaining the same level of utility.

Question 7

As a consumer moves upward along an indifference curve, giving up some of X (on the horizontal axis)to get more of Y (on the vertical axis), his or her marginal rate of substitution of X for Y:

Accepted Answer

The answer of As a consumer moves upward along an...

Question 8

The marginal rate of substitution assumes that:

Accepted Answer

The marginal rate of substitution (MRS) measures how much of one good a consumer is willing to give up in exchange for one unit of another good, while holding their overall level of satisfaction (utility) constant. Therefore, choice C - satisfaction remains unchanged - is the correct answer. Choices A, B, and D are all incorrect because they assume that something other than consumer preferences remains constant, which is not the case in the MRS calculation.

Question 9

-(Exhibit: Consumer Equilibrium 2)Assume the consumer is currently operating at point G.Given the budget constraint shown, the consumer would be able to realize more total utility by choosing point ________ , all other things held equal.

Accepted Answer

Point C lies on a higher indifference curve than point G, indicating that the consumer can achieve a higher level of utility by choosing point C. However, points D, E, F, H, J, and K are all unaffordable given the budget constraint. Therefore, point C is the best choice for the consumer.

Question 10

-(Exhibit: Consumer Equilibrium 2)Assume the consumer is currently operating at point I.The consumer could gain more utility by choosing point _______ , all other things held unchanged.

Accepted Answer

The answer of 
-(Exhibit: Consumer Equilibrium 2)Assume the consumer is...

Question 11

-Consumers generally try to obtain:

Accepted Answer

Consumers generally try to obtain the highest possible indifference curve, which represents the highest level of satisfaction or utility given their budget constraint. This is known as consumer optimization. Options A, B, and D do not accurately reflect consumer behavior.

Question 12

Greater levels of utility are achieved:

Accepted Answer

Greater levels of utility are achieved on higher indifference curves because higher indifference curves represent higher levels of satisfaction. As one moves up and to the right on the indifference curves, they are able to achieve greater levels of both goods, leading to a higher level of overall satisfaction.

Question 13

-(Exhibit: Consumer Equilibrium 2)Given the exhibit, which of the following is (are)true?

Accepted Answer

The answer of 
-(Exhibit: Consumer Equilibrium 2)Given the exhibit, which...

Question 14

A decreasing marginal rate of substitution indicates that an indifference curve is:

Accepted Answer

A decreasing marginal rate of substitution means that a consumer is willing to give up less and less of one good to obtain an additional unit of the other good. This results in bowed-in indifference curves, as the tradeoff between the two goods becomes more and more unequal. Choices A, B, and C are not correct because a straight line, vertical line, or horizontal line would indicate a constant marginal rate of substitution, not a decreasing one.

Question 15

-(Exhibit: Consumer Equilibrium 2)Given the exhibit and the budget constraint, the maximization of consumer utility would occur at point _______ with the consumption of _______ of X and _______ of Y.

Accepted Answer

The answer of 
-(Exhibit: Consumer Equilibrium 2)Given the exhibit and...

Question 16

If you are willing to give up 5 units of good Y (on the vertical axis)for 5 units of good X (on the horizontal axis), and your level of satisfaction is unchanged, the marginal rate of substitution is:

Accepted Answer

The marginal rate of substitution is the amount of good Y that you are willing to give up for one more unit of good X while keeping your satisfaction constant. Since you are willing to give up 5 units of good Y for 5 units of good X (a 1:1 trade-off), the marginal rate of substitution is 1. Therefore, the best choice would be to exchange 5 units of good Y for 5 units of good X, as this maintains your level of satisfaction while maximizing the amount of both goods that you have.

Question 17

-(Exhibit: Consumer Equilibrium 2)Given the exhibit, which of the following statements is (are)true?

Accepted Answer

Point I represents the consumer's equilibrium where the marginal rate of substitution (MRS) between two goods equals the ratio of their prices, maximizing utility.

Question 18

If you are willing to give up 10 units of good Y (on the vertical axis)for 5 units of good X (on the horizontal axis), and your level of satisfaction is unchanged, the marginal rate of substitution is:

Accepted Answer

The marginal rate of substitution (MRS) measures the rate at which a consumer is willing to trade one good for another while maintaining the same level of satisfaction. In this case, the consumer is willing to give up 10 units of good Y for 5 units of good X. This means that the MRS is 10/5, which simplifies to 2. Therefore, the best choice(s) would be to trade 5 units of good X for 10 units of good Y, as long as the level of satisfaction is maintained.

Question 19

In terms of indifference curves, an increase in total utility is represented by a:

Accepted Answer

An increase in total utility would mean that the individual is able to achieve a higher level of satisfaction from consuming a bundle of goods. This increase in satisfaction would be reflected in a shift to the right to a higher indifference curve, as the individual would be willing to give up more of one good for the other while still achieving the same level of satisfaction.

Question 20

-(Exhibit: Consumer Equilibrium 2)Which of the following statements is true?

Accepted Answer

None of the statements are true. Point F is the optimal point where the budget constraint touches the highest indifference curve. Point L is irrelevant to the exhibit. Points G and I are at different levels of total utility as they are on different indifference curves.

Quiz 7: Aggregate Demand and Aggregate Supply

Higher indifference curves:

-(Exhibit: Consumer Equilibrium 2) Given the indifference curves in the exhibit, the highest level of total utility theoretically attainable is associated with point _ on indifference curve _ .

-(Exhibit: Consumer Equilibrium 2) Given the budget constraint, a level of total utility not attainable is at point:

A curve that represents combinations of two goods that yield equal levels of satisfaction is a(n) :

-(Exhibit: Consumer Equilibrium 2) The lowest level of total utility shown in the exhibit is associated with point _ on curve _ .

The maximum amount of one good a consumer would be willing to give up in order to obtain an additional unit of another is called the:

As a consumer moves upward along an indifference curve, giving up some of X (on the horizontal axis) to get more of Y (on the vertical axis) , his or her marginal rate of substitution of X for Y:

The marginal rate of substitution assumes that:

-(Exhibit: Consumer Equilibrium 2) Assume the consumer is currently operating at point G.Given the budget constraint shown, the consumer would be able to realize more total utility by choosing point ________ , all other things held equal.

-(Exhibit: Consumer Equilibrium 2) Assume the consumer is currently operating at point I.The consumer could gain more utility by choosing point _______ , all other things held unchanged.

-Consumers generally try to obtain:

Greater levels of utility are achieved:

-(Exhibit: Consumer Equilibrium 2) Given the exhibit, which of the following is (are) true?

A decreasing marginal rate of substitution indicates that an indifference curve is:

-(Exhibit: Consumer Equilibrium 2) Given the exhibit and the budget constraint, the maximization of consumer utility would occur at point ___ with the consumption of _ of X and _____ of Y.

If you are willing to give up 5 units of good Y (on the vertical axis) for 5 units of good X (on the horizontal axis) , and your level of satisfaction is unchanged, the marginal rate of substitution is:

-(Exhibit: Consumer Equilibrium 2) Given the exhibit, which of the following statements is (are) true?

If you are willing to give up 10 units of good Y (on the vertical axis) for 5 units of good X (on the horizontal axis) , and your level of satisfaction is unchanged, the marginal rate of substitution is:

In terms of indifference curves, an increase in total utility is represented by a:

-(Exhibit: Consumer Equilibrium 2) Which of the following statements is true?

Quiz 7: Aggregate Demand and Aggregate Supply

Higher indifference curves:

-(Exhibit: Consumer Equilibrium 2) Given the indifference curves in the exhibit, the highest level of total utility theoretically attainable is associated with point _______ on indifference curve _______ .

-(Exhibit: Consumer Equilibrium 2) Given the budget constraint, a level of total utility not attainable is at point:

A curve that represents combinations of two goods that yield equal levels of satisfaction is a(n) :

-(Exhibit: Consumer Equilibrium 2) The lowest level of total utility shown in the exhibit is associated with point _______ on curve _______ .

The maximum amount of one good a consumer would be willing to give up in order to obtain an additional unit of another is called the:

As a consumer moves upward along an indifference curve, giving up some of X (on the horizontal axis) to get more of Y (on the vertical axis) , his or her marginal rate of substitution of X for Y:

The marginal rate of substitution assumes that:

-(Exhibit: Consumer Equilibrium 2) Assume the consumer is currently operating at point G.Given the budget constraint shown, the consumer would be able to realize more total utility by choosing point ________ , all other things held equal.

-(Exhibit: Consumer Equilibrium 2) Assume the consumer is currently operating at point I.The consumer could gain more utility by choosing point _______ , all other things held unchanged.

-Consumers generally try to obtain:

Greater levels of utility are achieved:

-(Exhibit: Consumer Equilibrium 2) Given the exhibit, which of the following is (are) true?

A decreasing marginal rate of substitution indicates that an indifference curve is:

-(Exhibit: Consumer Equilibrium 2) Given the exhibit and the budget constraint, the maximization of consumer utility would occur at point _______ with the consumption of _______ of X and _______ of Y.

If you are willing to give up 5 units of good Y (on the vertical axis) for 5 units of good X (on the horizontal axis) , and your level of satisfaction is unchanged, the marginal rate of substitution is:

-(Exhibit: Consumer Equilibrium 2) Given the exhibit, which of the following statements is (are) true?

If you are willing to give up 10 units of good Y (on the vertical axis) for 5 units of good X (on the horizontal axis) , and your level of satisfaction is unchanged, the marginal rate of substitution is:

In terms of indifference curves, an increase in total utility is represented by a:

-(Exhibit: Consumer Equilibrium 2) Which of the following statements is true?

-(Exhibit: Consumer Equilibrium 2) Given the indifference curves in the exhibit, the highest level of total utility theoretically attainable is associated with point _ on indifference curve _ .

-(Exhibit: Consumer Equilibrium 2) The lowest level of total utility shown in the exhibit is associated with point _ on curve _ .

-(Exhibit: Consumer Equilibrium 2) Given the exhibit and the budget constraint, the maximization of consumer utility would occur at point ___ with the consumption of _ of X and _____ of Y.