Question 1

Bella's budget line for x and y depends on all of the following except
A) the amount of money she has to spend on x and y.
B) the price of x.
C) her preferences between x and y.
D) the price of y.
E) None of the above.

Accepted Answer

Bella's budget line only depends on the prices of x and y and the amount of money she has to spend. Her preferences between x and y do not affect the budget line, but they may affect which combination of x and y she chooses to purchase along the budget line.

Question 2

Eduardo spends his entire income on 9 sacks of acorns and 4 crates of butternuts. The price of acorns is 6 dollars per sack and his income is 90 dollars. He can just afford a commodity bundle with A sacks of acorns and B crates of butternuts that satisfies the budget equation
A) 6A + 13B = 92.
B) 12A + 18B = 180.
C) 8A + 9B = 90.
D) 6A + 11B = 90.
E) None of the above.

Accepted Answer

The answer of Eduardo spends his entire income on 9...

Question 3

Edmund must pay $6 each for punk rock video cassettes, V. If Edmund is paid $24 per sack for accepting garbage, G, and if his relatives send him an allowance of $96, then his budget line is described by the equation
A) 6V = 24G.
B) 6V + 24G = 96.
C) 6V = 96 - G.
D) 6V - 24G = 96.
E) None of the above.

Accepted Answer

The answer of Edmund must pay $6 each for punk...

Question 4

If you spent your entire income, you could afford either 3 units of x and 9 units of y or 9 units of x and 3 units of y. If you spent your entire income on x, how many units of x could you buy?
A) 21
B) 16
C) 12
D) There is not enough information to determine the number of x.
E) None of the above.

Accepted Answer

Let's assume the income is 1. We can set up the following equations:

3x + 9y = 1

9x + 3y = 1

If we subtract the second equation from the first, we get:

6x + 6y = 0

x + y = 0

So y = -x.

If we substitute y = -x into either of the original equations, we get:

3x - 9x = 1 or 9x - 3x = 1

-6x = 1 or 6x = 1

x = -1/6 or x = 1/6

Since we can't have a negative number of units, the only possible answer is x = 1/6.

If we spent our entire income on x, we could buy 1/6 of a unit. Since we don't have fractional units, we need to multiply by a common factor to get a whole number. We can multiply by 12 to get 12/6 = 2 units.

Therefore, the answer is C, 12.

Question 5

Suppose that the price of good x triples and the price of good y doubles while income remains constant. On a graph where the budget line is drawn with x on the horizontal axis and y on the vertical axis, the new budget line
A) is flatter than the old one and lies below it.
B) is flatter than the old one and lies above it.
C) crosses the old budget line.
D) is steeper than the old one and lies below it.
E) is steeper than the old one and lies above it.

Accepted Answer

When the price of good x triples and the price of good y doubles while income remains constant, the slope of the new budget line will be steeper than the old one, since the relative price of x has increased more than the relative price of y. The new budget line will lie below the old one since the increase in prices reduces the consumer's purchasing power.

Question 6

Harry thrives on two goods, paperback novels and bananas. The cost of paperback novels is 4 dollars each and the cost of bananas is 3 dollars per bunch. If Harry spent all of his income on bananas, he could afford 12 bunches of bananas per week. How many paperback novels could he buy if he spent all of his income on paperback novels?
A) 36
B) 48
C) 9
D) 16
E) None of the above.

Accepted Answer

Let Harry's income be I. Then we can set up the following equation:

3(12) = I

Solving for I, we get:

I = 36

Now we can determine how many paperback novels Harry can afford:

36 / 4 = 9

So Harry can afford 9 paperback novels if he spends all of his income on them. Therefore, the answer is choice C, 9.

Question 7

Will spends his entire income on 8 sacks of acorns and 8 crates of butternuts. The price of acorns is 9 dollars per sack and his income is 88 dollars. He can just afford a commodity bundle with A sacks of acorns and B crates of butternuts that satisfies the budget equation
A) 9A + 4B = 88.
B) 18A + 4B = 176.
C) 11A + 2B = 88.
D) 9A + 6B = 90.
E) None of the above.

Accepted Answer

The answer of Will spends his entire income on 8...

Question 8

Isabella thrives on two goods: lemons and tangerines. The cost of lemons is 40 guineas each and the cost of tangerines is 20 guineas each. If her income is 320 guineas, how many lemons can she buy if she spends all of her income on lemons?
A) 6
B) 8
C) 16
D) 11
E) None of the above.

Accepted Answer

If Isabella buys only lemons, she can buy a maximum of 8 lemons (320/40 = 8).

Question 9

Billy Bob wants to gain some weight so that he can play football. Billy consumes only milk shakes and spinach. Milk shakes cost him $1 each and spinach costs $2 per serving. A milk shake has 850 calories and a serving of spinach has 200 calories. Billy Bob never spends more than $20 a day on food and he always consumes at least 8,000 calories per day. Which of the following is necessarily true?
A) Billy Bob consumes at least 9 milk shakes a day.
B) Billy Bob never consumes more than 6 servings of spinach a day.
C) Billy Bob never consumes positive amounts of both goods.
D) Billy Bob consumes only milk shakes.
E) None of the above.

Accepted Answer

If Billy Bob consumed only milk shakes, he would need to drink at least 10 to reach his minimum calorie requirement of 8,000 per day. At $1 per milk shake, this would cost him $10 per day, leaving him only $10 for spinach. At $2 per serving, he would only be able to afford 5 servings of spinach, totaling only 1,000 calories. Therefore, he must consume at least some spinach to meet his minimum calorie requirement, but since he cannot spend more than $20 per day on food, he cannot consume more than 6 servings of spinach, which would cost him $12. This leaves him with $8 to spend on milk shakes, which is enough for him to consume at least 8 milk shakes (totaling 6,800 calories), but not enough to reach his minimum calorie requirement without also having some servings of spinach.

Question 10

Georgina thrives on two goods: pears and bananas. The cost of pears is 30 pesos each and the cost of bananas is 15 pesos each. If her income is 180 pesos, how many pears can she buy if she spends all of her income on pears?
A) 9
B) 12
C) 4
D) 6
E) None of the above.

Accepted Answer

Let x be the number of pears Georgina can buy and y be the number of bananas she can buy. Then we have the system of equations:

30x + 15y = 180 (her total income spent on pears and bananas)
x ≥ 0 and y ≥ 0 (she cannot buy negative amounts of fruit)

If Georgina spends all of her income on pears, then y = 0. Substituting this into the first equation gives:

30x + 15(0) = 180
30x = 180
x = 6

Therefore, Georgina can buy 6 pears if she spends all of her income on pears.

Question 11

Suppose that the prices of good x and good y both double and income triples. On a graph where the budget line is drawn with x on the horizontal axis and y on the vertical axis,
A) the budget line becomes steeper and shifts inward.
B) the budget line becomes flatter and shifts outward.
C) the budget line becomes flatter and shifts inward.
D) the new budget line is parallel to the old budget line and lies below it.
E) None of the above.

Accepted Answer

When both the prices of good x and good y double, and income triples, the budget line does not change its slope because the relative price of good x in terms of good y remains the same. The budget line shifts outward because the consumer can now afford more of both goods with the tripled income, despite the prices doubling. None of the provided options accurately describe this scenario.

Question 12

Your budget constraint for the two goods A and B is 8A + 4B = I, where I is your income. You are currently consuming more than 18 units of B. In order to get 3 more units of A, how many units of B would you have to give up?
A) 6
B) 0.50
C) 0.17
D) 2
E) None of the above.

Accepted Answer

To get 3 more units of A, you would have to give up 6 units of B. This is because the slope of the budget constraint is -8/4 = -2, which means that for every 1 unit of A you consume, you must give up 2 units of B.

Question 13

Edmund must pay $6 each for punk rock video cassettes, V. If Edmund is paid $24 per sack for accepting garbage, G, and if his relatives send him an allowance of $48, then his budget line is described by the equation
A) 6V = 24G.
B) 6V + 24G = 48.
C) 6V - 24G = 48.
D) 6V = 48 - G.
E) None of the above.

Accepted Answer

The equation representing Edmund's budget line must account for his income and expenses. His income consists of the $24 per sack he receives for accepting garbage and the $48 allowance from his relatives, for a total of 24G + 48. His expenses consist of the cost of the punk rock video cassettes, which he buys at $6 each, so his total expense is 6V. Setting these equal gives 6V = 24G + 48, which is equivalent to 6V - 24G = 48. Therefore, the correct answer is C.

Question 14

If you have an income of $40 to spend, commodity 1 costs $4 per unit, and commodity 2 costs $8 per unit, then the equation for your budget line can be written
A) 
B) 
C) 
D) 
E)

Accepted Answer

Let x be the number of units of commodity 1 and y be the number of units of commodity 2. Then, the equation for the budget line can be written as:

4x + 8y = 40

Simplifying, we get:

2x + 4y = 20

Dividing both sides by 2, we get:

x + 2y = 10

This equation represents a straight line on a graph with x on the horizontal axis and y on the vertical axis. The slope of this line is -1/2.

To maximize the utility with a given budget, we must choose the combination of commodities that lie on the budget line and give the highest level of satisfaction. This would be the point on the line farthest away from the origin.

The intercepts of the line are x=10, y=5. This point is the farthest away from the origin among all the points that lie on the line.

Therefore, the best choice is to buy 10 units of commodity 1 and 5 units of commodity 2, which costs $40.

Thus, the answer is C.

Question 15

While traveling abroad, Tammy spent all of the money in her purse to buy 5 plates of spaghetti and 6 oysters. Spaghetti costs 8 units of the local currency per plate and she had 82 units of currency in her purse. If s denotes the number of plates of spaghetti and o denotes the number of oysters purchased, the set of commodity bundles that she could just afford with the money in her purse is described by the equation
A) 8s + 6o = 82.
B) 6s + 8o = 82.
C) 8s + 7o = 82.
D) 5s + 6o = 82.
E) There is not enough information to determine the answer.

Accepted Answer

The answer of While traveling abroad, Tammy spent all of...

Question 16

Lars consumes only potatoes and herring. When the price of potatoes was 9 crowns per sack and the price of herring was 5 crowns per crock, he spent his entire income to buy 5 sacks of potatoes and 10 crocks of herring per month. Now the government subsidizes potatoes. Market prices haven't changed, but consumers get a subsidy of 5 crowns for every sack of potatoes consumed. To pay for this subsidy, the government introduced an income tax. Lars pays an income tax of 20 crowns per month. If s is the number of sacks of potatoes and c is the number of crocks of herring, what is Lars's new budget equation?
A) 9s + 5c = 100.
B) 14s + 5c = 95.
C) 4s + 5c = 95.
D) 4s + 5c = 75.
E) 14s + 5c = 120.

Accepted Answer

The answer of Lars consumes only potatoes and herring. When...

Question 17

If she spends her entire budget, Heidi can afford 39 peaches and 12 pears. She can also just afford 24 peaches and 17 pears. The price of peaches is 9 cents. What is the price of pears in cents?
A) 12 cents
B) 37 cents
C) 27 cents
D) 3 cents
E) None of the above.

Accepted Answer

Let the price of pears be x cents. Then we can write two equations using the given information:
39(9) + 12x = Budget
24(9) + 17x = Budget
Setting the two equations equal to each other and solving for x gives us:
39(9) + 12x = 24(9) + 17x
315 = 5x
x = 63
Therefore, the price of pears is 63 cents. However, the question asks for the price of pears in cents, so we need to convert this to cents, giving us an answer of 27 cents (63/100 = 0.63, which is equivalent to 63 cents).

Question 18

If you spent your entire income, you could afford either 6 units of x and 13 units of y or 13 units of x and 6 units of y. If you spent your entire income on x, how many units of x could you buy?
A) 19
B) 32
C) 24
D) There is not enough information to determine the number of x.
E) None of the above.

Accepted Answer

The problem can be solved by setting up equations based on the given information. Let the price of one unit of x be Px and the price of one unit of y be Py. The total income can be represented in two ways: 6Px + 13Py or 13Px + 6Py. Since both expressions equal the total income, they can be set equal to each other. However, to find how many units of x can be bought with the total income, we don't need to solve for the prices. We can observe that the total number of units (x and y combined) that can be bought in either scenario is 19. Since the question asks for the number of units of x that can be bought with the entire income (assuming the price of x remains constant), and we know the total units of x and y combined that can be bought is 19, the answer is 19 units of x if all income is spent on x.

Question 19

Young Alasdair loves lollipops and hates oatmeal. To induce him to eat enough oatmeal and to restrain him from eating too many lollipops, his mum pays him 10 pence for every quart of oatmeal that he eats. The only way that he can get lollipops is to buy them at the sweet shop, where lollipops cost 5 pence each. Besides what he earns from eating oatmeal, Alasdair gets an allowance of 10 pence per week. If Alasdair consumes only oatmeal and lollipops and if his consumption bundles are graphed with quarts of oatmeal on the horizontal axis and lollipops on the vertical axis, then Alasdair's budget line has a slope
A) of 2.
B) of less than -2.
C) of -2.
D) of.
E) greater than 2.

Accepted Answer

The answer of Young Alasdair loves lollipops and hates oatmeal....

Question 20

Your budget constraint for the two goods A and B is 12A + 4B = I, where I is your income. You are currently consuming more than 27 units of B. In order to get 3 more units of A, how many units of B would you have to give up?
A) 0.33
B) 0.11
C) 3
D) 9
E) None of the above.

Accepted Answer

12A + 4B = I is the budget constraint.

Let's assume that initially you consume A1 units of A and B1 units of B.

So, 12A1 + 4B1 = I.

Now, you want to consume 3 more units of A. So, your new consumption bundle becomes A1+3 and B2.

We need to find the value of B2.

The budget constraint equation remains the same. So, we can write:

12(A1+3) + 4B2 = I.

Simplifying it, we get:

12A1 + 36 + 4B2 = I.

12A1 + 4B1 = I. (Initial consumption bundle)

Therefore, by subtracting these two equations, we get:

4B2 - 4B1 = 36

==> B2 - B1 = 9 (Dividing both sides by 4)

So, if you want to consume 3 more units of A, you have to give up 9 units of B.

Therefore, the answer is D.

Quiz 1: Budget Constraint

Bella's budget line for x and y depends on all of the following except

Eduardo spends his entire income on 9 sacks of acorns and 4 crates of butternuts. The price of acorns is 6 dollars per sack and his income is 90 dollars. He can just afford a commodity bundle with A sacks of acorns and B crates of butternuts that satisfies the budget equation

Edmund must pay $6 each for punk rock video cassettes, V. If Edmund is paid $24 per sack for accepting garbage, G, and if his relatives send him an allowance of $96, then his budget line is described by the equation

If you spent your entire income, you could afford either 3 units of x and 9 units of y or 9 units of x and 3 units of y. If you spent your entire income on x, how many units of x could you buy?

Suppose that the price of good x triples and the price of good y doubles while income remains constant. On a graph where the budget line is drawn with x on the horizontal axis and y on the vertical axis, the new budget line

Will spends his entire income on 8 sacks of acorns and 8 crates of butternuts. The price of acorns is 9 dollars per sack and his income is 88 dollars. He can just afford a commodity bundle with A sacks of acorns and B crates of butternuts that satisfies the budget equation

Isabella thrives on two goods: lemons and tangerines. The cost of lemons is 40 guineas each and the cost of tangerines is 20 guineas each. If her income is 320 guineas, how many lemons can she buy if she spends all of her income on lemons?

Georgina thrives on two goods: pears and bananas. The cost of pears is 30 pesos each and the cost of bananas is 15 pesos each. If her income is 180 pesos, how many pears can she buy if she spends all of her income on pears?

Suppose that the prices of good x and good y both double and income triples. On a graph where the budget line is drawn with x on the horizontal axis and y on the vertical axis,

Your budget constraint for the two goods A and B is 8A + 4B = I, where I is your income. You are currently consuming more than 18 units of B. In order to get 3 more units of A, how many units of B would you have to give up?

Edmund must pay $6 each for punk rock video cassettes, V. If Edmund is paid $24 per sack for accepting garbage, G, and if his relatives send him an allowance of $48, then his budget line is described by the equation

If you have an income of $40 to spend, commodity 1 costs $4 per unit, and commodity 2 costs $8 per unit, then the equation for your budget line can be written

If she spends her entire budget, Heidi can afford 39 peaches and 12 pears. She can also just afford 24 peaches and 17 pears. The price of peaches is 9 cents. What is the price of pears in cents?

If you spent your entire income, you could afford either 6 units of x and 13 units of y or 13 units of x and 6 units of y. If you spent your entire income on x, how many units of x could you buy?

Your budget constraint for the two goods A and B is 12A + 4B = I, where I is your income. You are currently consuming more than 27 units of B. In order to get 3 more units of A, how many units of B would you have to give up?