Question 1

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What happens if Max's mother gives him 30 pounds of burger?

Accepted Answer

The answer of 
-Max has allocated $100 toward meats for...

Question 2

With respect to consuming food and shelter,two consumers face the same prices and both claim to be in equilibrium.We therefore know that

Accepted Answer

Since the two consumers face the same prices and both claim to be in equilibrium, it means that they are consuming the goods in such a way that the marginal utility per dollar spent on any good is the same. This implies that the marginal rate of substitution (MRS) of one good for another is the same for both consumers. Therefore, both consumers have the same MRS of food for shelter. However, we cannot conclude that they have the same marginal utility for food or shelter as this information is not provided.

Question 3

Lisa has an income of $100.She spends all of her income on pizza and burritos.A pizza costs $10 and a burrito costs $5.However,the store where Lisa buys her burritos has a special deal.After you've bought 6 burritos,then you can buy each burrito for $2.50.Draw Lisa's opportunity set.

Accepted Answer

The answer of Lisa has an income of $100.She spends...

Question 4

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What is the price of chicken?

Accepted Answer

The answer of 
-Max has allocated $100 toward meats for...

Question 5

The slope of the budget line represents the rate at which the consumer is willing to trade one good for another at any given bundle.

Accepted Answer

This describes the slope of the indifference curve.The slope of the budget line represents the rate at which the consumer must trade one good for another at any given bundle.

Question 6

By selecting a bundle where MRS = MRT,the consumer is saying

Accepted Answer

The statement "I am willing to trade one good for the other at the same rate that I am required to do so" accurately reflects the condition where the marginal rate of substitution (MRS) equals the marginal rate of transformation (MRT), indicating that the consumer's willingness to trade between two goods matches the market's rate of trade between those goods.

Question 7

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What happens if Max receives a $100 cash grant to buy either meat or chicken?

Accepted Answer

The correct answer cannot be determined without additional information such as the prices of the meats, Max's preferences, and how the budget increase affects his consumption choices.

Question 8

Explain the difference between the marginal rate of substitution and the marginal rate of transformation.

Accepted Answer

The answer of Explain the difference between the marginal rate...

Question 9

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What happens if Max's mother gives him 10 pounds of burger?

Accepted Answer

The answer of 
-Max has allocated $100 toward meats for...

Question 10

Johnny has allocated $30 toward coffee and tea and feels that coffee and tea are perfect substitutes.Due to differences in caffeine levels,his MRS of tea for coffee equals 2.If coffee and tea sell for the same price,Johnny will

Accepted Answer

The answer of Johnny has allocated $30 toward coffee and...

Question 11

Assume the price of beer is $4,the price of pizza is $10 and the consumer's income is $250.Which consumption bundle will NOT be the consumer's choice?

Accepted Answer

The answer of Assume the price of beer is $4,the...

Question 12

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.Which of the following best describes Max's preferences?

Accepted Answer

The answer of 
-Max has allocated $100 toward meats for...

Question 13

An optimum that occurs as a corner solution

Accepted Answer

An optimum that occurs as a corner solution means that one of the goods is consumed at its maximum possible level while the other(s) are consumed at zero. This can only happen when there is only one good available. Therefore, option A is the correct choice.

Question 14

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.Which bundle will Max choose?

Accepted Answer

Max will choose the bundle where his budget line is tangent to the highest indifference curve he can reach, which represents the highest level of satisfaction he can achieve given his budget. Bundle B is at this tangency point.

Question 15

Economists assume consumers select a bundle of goods that maximizes their well-being subject to

Accepted Answer

Consumers have limited income and they select a bundle of goods that maximizes their well-being subject to their budget constraint, i.e., the total cost of the bundle of goods cannot exceed their income. Hence, option A is the correct answer. B, C, and D are not sufficient on their own to explain how consumers maximize their well-being.

Question 16

Joe subscribes to an Internet provider that charges $2 per hour.Draw his budget line for Internet access on the horizontal axis and money spent on all other goods on the vertical axis assuming he has $100 per month to spend.Another company offers unlimited Internet access for a flat monthly fee of $20.Draw this budget line.

Accepted Answer

The answer of Joe subscribes to an Internet provider that...

Question 17

The consumer is in equilibrium when

Accepted Answer

The consumer is in equilibrium when the marginal rate of substitution (MRS) equals the marginal rate of transformation (MRT), the ratio of prices equals the ratio of marginal utilities, and the budget line is tangent to the indifference curve. All these conditions are equivalent and describe the point where the consumer maximizes utility given their budget constraint.

Question 18

By selecting a bundle where MRS = MRT,the consumer is

Accepted Answer

By selecting a bundle where MRS = MRT, the consumer is reaching the highest possible indifference curve she can afford. This is because MRS represents the rate at which the consumer is willing to trade one good for another while holding utility constant, and MRT represents the rate at which the market is willing to trade one good for another. When these rates are equal, the consumer cannot increase her utility by reallocating her consumption of the two goods. Therefore, she has reached the highest possible indifference curve she can afford.

Question 19

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.If the price of burger increases,

Accepted Answer

The answer of 
-Max has allocated $100 toward meats for...

Question 20

A consumer derives utility for "all other goods," g,and cigarettes,s.The price of "all other goods" equals $9 and the price of cigarettes is $10.Now suppose the government implements a $0.50 per-unit tax on cigarettes to encourage a decrease in smoking.How does the tax affect the marginal rate of transformation,MRT?

Accepted Answer

The answer of A consumer derives utility for "all other...

Quiz 4: Consumer Choice

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What happens if Max's mother gives him 30 pounds of burger?

With respect to consuming food and shelter,two consumers face the same prices and both claim to be in equilibrium.We therefore know that

Lisa has an income of $100.She spends all of her income on pizza and burritos.A pizza costs $10 and a burrito costs $5.However,the store where Lisa buys her burritos has a special deal.After you've bought 6 burritos,then you can buy each burrito for $2.50.Draw Lisa's opportunity set.

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What is the price of chicken?

The slope of the budget line represents the rate at which the consumer is willing to trade one good for another at any given bundle.

By selecting a bundle where MRS = MRT,the consumer is saying

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What happens if Max receives a $100 cash grant to buy either meat or chicken?

Explain the difference between the marginal rate of substitution and the marginal rate of transformation.

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What happens if Max's mother gives him 10 pounds of burger?

Johnny has allocated $30 toward coffee and tea and feels that coffee and tea are perfect substitutes.Due to differences in caffeine levels,his MRS of tea for coffee equals 2.If coffee and tea sell for the same price,Johnny will

Assume the price of beer is $4,the price of pizza is $10 and the consumer's income is $250.Which consumption bundle will NOT be the consumer's choice?

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.Which of the following best describes Max's preferences?

An optimum that occurs as a corner solution

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.Which bundle will Max choose?

Economists assume consumers select a bundle of goods that maximizes their well-being subject to

The consumer is in equilibrium when

By selecting a bundle where MRS = MRT,the consumer is

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.If the price of burger increases,