Question 1

-Suppose that a consumer used to be at point R on budget line AA' in Figure 6-5,and is now at point S on line BB'.Which of the following is true if the consumer enjoys both goods?

Accepted Answer

If the consumer enjoys both goods and moves from point R to point S on a new budget line, it indicates that the consumer is able to reach a higher utility level, assuming the new budget line allows for more consumption possibilities.

Question 2

Figure 6-3
Income = $ 200
Price per Ticket = $40
Price per Compact Disk $ 20
 
-Joe spends all of his money on concert tickets and compact disks.Figure 6-3 shows his budget constraint when his income is $200.The price of a ticket is $40,while the price of a compact disk is $20.What would happen to Joe's budget line if his income increased to $300 and the prices of concert tickets and compact disks each increased by 50 percent?

Accepted Answer

When both income and prices increase by the same percentage, the budget line remains unchanged because the relative affordability of the goods does not change.

Question 3

-Which panel in Figure 6-2 shows the combined effects of an increase in the price of oranges and a decrease in the price of apples?

Accepted Answer

Without the figure, it's impossible to determine which panel correctly represents the combined effects of an increase in the price of oranges and a decrease in the price of apples.

Question 4

Roger spends all of his money on racquetballs and food.What would happen to Roger's budget line if his income increased by 10 percent,holding prices constant?

Accepted Answer

An increase in income would enable Roger to purchase more racquetballs and food, thus causing his budget line to shift outward. Holding prices constant means that the slope of the budget line remains the same, but the intercepts on both the axes increase proportionately with the increase in income.

Question 5

An increase in the price of the good measured on the vertical axis of a budget line diagram will

Accepted Answer

The answer of An increase in the price of the...

Question 6

-Which panel in Figure 6-2 shows the effect of a decrease in the price of apples,other things constant?

Accepted Answer

A decrease in the price of apples, with other factors constant, typically results in a movement along the demand curve, which is shown in panel b.

Question 7

-Suppose that a consumer's original budget line was AC in Figure 6-4,but it has now changed to line AB.Which of the following must have occurred?

Accepted Answer

The answer of 
-Suppose that a consumer's original budget line...

Question 8

An increase in the price of the good measured on the horizontal axis of a budget line diagram will

Accepted Answer

According to the Slope-Intercept form of the budget line equation

P_{x}X+P_{y}Y=M

where P_{x} is the price of good X, X is the quantity of X consumed, P_{y} is the price of good Y, Y is the quantity of Y consumed, and M is the budget constraint.

The slope of the budget line is -P_{x}/P_{y}. Therefore, an increase in the price of good X will increase the slope of the budget line (assuming the price of good Y remains constant). This means that the budget line will become steeper, and the consumer will be able to afford less of both goods at any given point on the line. Hence, the correct answer is B.

Question 9

-Suppose that a consumer used to be at point S on budget line BB' in Figure 6-5,and is now at point R on line AA'.Which of the following is true?

Accepted Answer

The answer of 
-Suppose that a consumer used to be...

Question 10

If income and the prices of both goods all double,the budget line will

Accepted Answer

If the income and the prices of both goods all double, it means that the ratio of the prices of the two goods and the ratio of the income to the prices of the two goods remain the same. Therefore, the budget line will remain unchanged, as it represents all the different combinations of the two goods that can be purchased at a given income and prices.

Question 11

If food is measured on the horizontal axis of a budget line diagram,and clothing is measured on the vertical axis,an increase in

Accepted Answer

An increase in the price of food will decrease the slope of the budget line because it will make food more expensive relative to clothing, so consumers will be able to buy less food for the same amount of money.

Question 12

Which of the following could change a consumer's budget line?

Accepted Answer

A change in the price of one or more goods would directly affect the budget line, since it represents the different combinations of goods that can be purchased with a given income at given prices. As prices change, the slope and position of the budget line would be modified, shifting the feasible options for the consumer. The other options (A, B, C, E) could affect the consumer's preferences, opportunities, or external conditions, but not the budget line itself.

Question 13

Imagine a budget line depicting a consumer's possible allocation of a given income between fruit and vegetables.If the consumer's income increases at the same time the price of vegetables rises,the budget line's intercept with the

Accepted Answer

The intercept with the vegetable axis depends on the relative changes in income and the price of vegetables. If income increases proportionally more than the price of vegetables, the intercept moves away from the origin; if less, it moves toward the origin; if equal, it remains unchanged.

Question 14

If the price of good X (measured on the horizontal axis of a budget line diagram)increases at the same time that the price of good Y (measured on the vertical axis)decreases,the budget line

Accepted Answer

When the price of good X increases, the budget line becomes steeper because the consumer can afford less of good X for the same amount of good Y.

Question 15

If food is measured on the horizontal axis of budget line diagram,and clothing is measured on the vertical axis,an increase in

Accepted Answer

The answer of If food is measured on the horizontal...

Question 16

Economists usually assume that all consumers have the same tastes and preferences.

Accepted Answer

Economists do not assume that all consumers have the same tastes and preferences. In fact, they recognize and study individual differences in preferences and how they affect consumer behavior in the market.

Question 17

-Suppose that a consumer's original budget line was AB in Figure 6-4,but it has now changed to line AC.Which of the following must have occurred?

Accepted Answer

The answer of 
-Suppose that a consumer's original budget line...

Question 18

-Which panel in Figure 6-2 shows the effect of an increase in the price of oranges,other things constant?

Accepted Answer

An increase in the price of oranges, holding other factors constant, would typically result in a movement along the demand curve, leading to a decrease in the quantity demanded. Panel C likely illustrates this effect.

Question 19

If the price of good X (measured on the horizontal axis of a budget line diagram)increases at the same time that the price of good Y (measured on the vertical axis)increases,the budget line

Accepted Answer

When the price of good X increases at the same time the price of good Y increases, the budget line may become either steeper or flatter. It depends on the ratio of the price changes.

For example, if the price of X doubles while the price of Y increases by only 10%, the budget line will become steeper, as the relative price of X compared to Y has increased. On the other hand, if the price of X increases by only 10% while the price of Y doubles, the budget line will become flatter, as the relative price of Y compared to X has increased.

Thus, the answer is E, as the change in the slope of the budget line depends on the relative size of the price changes for X and Y.

Question 20

-Which panel in Figure 6-2 shows the effect of an increase in income,other things constant?

Accepted Answer

The answer of 
-Which panel in Figure 6-2 shows the...

Quiz 6: Consumer Choice