Question 1

One point on a standard indifference curve is eight cookies and two brownies;another is six cookies and four brownies.Which of the following combinations of cookies and brownies could lie on this indifference curve?

Accepted Answer

The combination of four cookies and eight brownies lies on the same indifference curve as the given points because both combinations have the same level of utility for the individual. Option A has more brownies and fewer cookies than the first point, so it will provide a higher utility level. Option B has more cookies and fewer brownies than the second point, so it will also provide a different level of satisfaction. Option C has fewer cookies and fewer brownies than any of the given points, so it will provide a lower level of satisfaction.

Question 2

Increases in the price of the good measured on the horizontal axis will make the horizontal intercept _____ and make the budget line _____.

Accepted Answer

An increase in the price of the good on the horizontal axis will reduce the quantity of that good the consumer can afford, which will shift the horizontal intercept to the left, making it smaller. This will make the budget line steeper.

Question 3

An indifference curve typically:

Accepted Answer

An indifference curve shows combinations of two goods that yield equal satisfaction (utility) to the consumer. It slopes downward because as the quantity of one good increases, the consumer is willing to give up some of it to obtain more of the other good while maintaining the same level of satisfaction. This is the law of diminishing marginal rate of substitution. The slope of the curve represents the rate at which the consumer is willing to trade one good for the other, also known as the marginal rate of substitution.

Question 4

Decreases in the price of the good measured on the vertical axis will make the vertical intercept _____ and make the budget line _____.

Accepted Answer

The answer of Decreases in the price of the good...

Question 5

Manny consumes only bananas and DVDs,and he is on his highest possible indifference curve.Two bundles on this indifference curve are bundle A (five bananas and two DVDs)and bundle B (three bananas and three DVDs).Between points A and B,what is Manny's marginal rate of substitution of bananas for DVDs?

Accepted Answer

The marginal rate of substitution (MRS) is the rate at which a consumer can give up some amount of one good in exchange for another good while maintaining the same level of utility. Between bundles A and B, Manny gives up 2 bananas to gain 1 DVD, so the MRS is 2 bananas per 1 DVD, which is 0.5 DVDs per banana.

Question 6

Use the following to answer question 109: -(Figure: A Changing Budget Constraint for Strawberries and Shortcake)Use Figure A Changing Budget Constraint for Strawberries and Shortcake.Seb's original budget line is given by BL₁ and his original indifference curve is given by I₁.Which of the following would have caused his budget line to move to BL₂?

Accepted Answer

The answer of Use the following to answer question 109:...

Question 7

Use the following to answer questions : 
-(Figure: Indifference Curve Map I)Use Figure Indifference Curve Map I.It shows that:

Accepted Answer

Indifference curves further from the origin represent higher utility levels. If point D is on a higher indifference curve than point A, then utility is higher at point D.

Question 8

Decreases in the price of the good measured on the horizontal axis will make the horizontal intercept _____ and make the budget line _____.

Accepted Answer

The answer of Decreases in the price of the good...

Question 9

Suppose the government decides to help poor families with kids by subsidizing the purchase of milk.The subsidy takes the form of a 50% discount on the price of milk.Suppose also that poor families buy only milk and soda,which are substitutes,although not perfect substitutes.What happens to the amount of milk poor families buy?

Accepted Answer

With the subsidy, the price of milk for poor families will decrease, making it relatively cheaper than soda. Since milk and soda are substitutes, poor families will most likely shift their consumption towards milk, increasing the amount of milk they buy.

Question 10

Max consumes only yoghurt and almonds,and he is on his highest possible indifference curve.Bundle A (four yoghurts and two almonds)and bundle B (three yoghurts and three almonds)are on this indifference curve.Between points A and B,what is Max's marginal rate of substitution of yoghurt for almonds?

Accepted Answer

The marginal rate of substitution (MRS) is the rate at which Max is willing to give up almonds for yoghurt while remaining on the same indifference curve. Between bundles A and B, Max gives up 1 yoghurt to gain 1 almond, so the MRS is 1.

Question 11

Use the following to answer questions : 
-For most goods,indifference curves:

Accepted Answer

Indifference curves slope downward because as you consume more of one good, you need to consume less of another good to maintain the same level of utility, reflecting the trade-off between the two goods.

Question 12

Which of the following is NOT TRUE of indifference curves for ordinary goods?

Accepted Answer

Indifference curves farther from the origin represent higher levels of utility, not lower levels.

Question 13

Increases in the price of the good measured on the vertical axis will make the vertical intercept _____ and make the budget line _____.

Accepted Answer

The answer of Increases in the price of the good...

Question 14

Greater levels of utility are represented by:

Accepted Answer

Indifference curves represent various levels of utility, with curves farther from the origin representing greater levels of utility.

Question 15

Suppose the government decides to help poor families with kids by subsidizing the purchase of milk.The subsidy takes the form of a 50% discount in the price of milk.Suppose also that poor families buy only milk and Spam (an inferior good).What happens to the amount of Spam poor families buy?

Accepted Answer

Since milk is a normal good, poor families will consume more of it when the price decreases. However, since Spam is an inferior good, poor families will consume less of it when their income increases (as a result of the subsidy). Therefore, the amount of Spam poor families buy will decrease.

Question 16

Gwen is consuming the optimal consumption bundle of potatoes and steak.Call this bundle A.Her income is $100,the price of steak is $10,and the price of potatoes is $1.Put potatoes on the vertical axis and put steak on the horizontal axis.Her income increases to $500,and the prices of steak and potatoes remain constant.With the increase in income,Gwen changes her consumption of the two goods and now maximizes utility at bundle B.If potatoes are inferior goods for Gwen,

Accepted Answer

The answer of Gwen is consuming the optimal consumption bundle...

Question 17

For most goods,as we move down an indifference curve:

Accepted Answer

Moving down an indifference curve represents a decrease in utility, but not a decrease in the consumption of any particular good. As we consume more of a particular good, our marginal utility (the additional satisfaction we gain from consuming one more unit of that good) decreases. This causes the slope of the indifference curve to get flatter as we move down it.

Question 18

One point on an indifference curve that displays a diminishing marginal rate of substitution between apples and oranges is 10 apples and two oranges;another is eight apples and four oranges.Which of the following combinations of apples and oranges could also lie on this indifference curve?

Accepted Answer

The answer of One point on an indifference curve that...

Question 19

Use the following to answer questions : 
-(Figure: Indifference Curve Map I)Use Figure Indifference Curve Map I.It shows that:

Accepted Answer

Bundle D is preferred to bundle C, which is preferred to bundles A and B. Therefore, the best choice would be bundle D or bundle C, depending on the individual's preferences and budget constraints. Bundle D provides higher quantities of both goods, but may be more expensive than bundle C.

Question 20

The slope of a(n)_____ curve shows the rate at which two goods can be exchanged _____.

Accepted Answer

The slope of an indifference curve represents the rate at which two goods can be exchanged without changing the total utility of the consumer, indicating how much of one good a consumer is willing to give up to obtain one more unit of another good while maintaining the same level of overall satisfaction.

Quiz 22: Consumer Preferences

One point on a standard indifference curve is eight cookies and two brownies;another is six cookies and four brownies.Which of the following combinations of cookies and brownies could lie on this indifference curve?

Increases in the price of the good measured on the horizontal axis will make the horizontal intercept _ and make the budget line _.

An indifference curve typically:

Decreases in the price of the good measured on the vertical axis will make the vertical intercept _ and make the budget line _.

Use the following to answer questions : -(Figure: Indifference Curve Map I) Use Figure Indifference Curve Map I.It shows that:

Decreases in the price of the good measured on the horizontal axis will make the horizontal intercept _ and make the budget line _.

Use the following to answer questions : -For most goods,indifference curves:

Which of the following is NOT TRUE of indifference curves for ordinary goods?

Increases in the price of the good measured on the vertical axis will make the vertical intercept _ and make the budget line _.

Greater levels of utility are represented by:

Suppose the government decides to help poor families with kids by subsidizing the purchase of milk.The subsidy takes the form of a 50% discount in the price of milk.Suppose also that poor families buy only milk and Spam (an inferior good) .What happens to the amount of Spam poor families buy?

For most goods,as we move down an indifference curve:

One point on an indifference curve that displays a diminishing marginal rate of substitution between apples and oranges is 10 apples and two oranges;another is eight apples and four oranges.Which of the following combinations of apples and oranges could also lie on this indifference curve?

Use the following to answer questions : -(Figure: Indifference Curve Map I) Use Figure Indifference Curve Map I.It shows that:

The slope of a(n) _ curve shows the rate at which two goods can be exchanged _.

Quiz 22: Consumer Preferences

One point on a standard indifference curve is eight cookies and two brownies;another is six cookies and four brownies.Which of the following combinations of cookies and brownies could lie on this indifference curve?

Increases in the price of the good measured on the horizontal axis will make the horizontal intercept _____ and make the budget line _____.

An indifference curve typically:

Decreases in the price of the good measured on the vertical axis will make the vertical intercept _____ and make the budget line _____.

Use the following to answer questions : -(Figure: Indifference Curve Map I) Use Figure Indifference Curve Map I.It shows that:

Decreases in the price of the good measured on the horizontal axis will make the horizontal intercept _____ and make the budget line _____.

Use the following to answer questions : -For most goods,indifference curves:

Which of the following is NOT TRUE of indifference curves for ordinary goods?

Increases in the price of the good measured on the vertical axis will make the vertical intercept _____ and make the budget line _____.

Greater levels of utility are represented by:

Suppose the government decides to help poor families with kids by subsidizing the purchase of milk.The subsidy takes the form of a 50% discount in the price of milk.Suppose also that poor families buy only milk and Spam (an inferior good) .What happens to the amount of Spam poor families buy?

For most goods,as we move down an indifference curve:

One point on an indifference curve that displays a diminishing marginal rate of substitution between apples and oranges is 10 apples and two oranges;another is eight apples and four oranges.Which of the following combinations of apples and oranges could also lie on this indifference curve?

Use the following to answer questions : -(Figure: Indifference Curve Map I) Use Figure Indifference Curve Map I.It shows that:

The slope of a(n) _____ curve shows the rate at which two goods can be exchanged _____.

Increases in the price of the good measured on the horizontal axis will make the horizontal intercept _ and make the budget line _.

Decreases in the price of the good measured on the vertical axis will make the vertical intercept _ and make the budget line _.

Decreases in the price of the good measured on the horizontal axis will make the horizontal intercept _ and make the budget line _.

Increases in the price of the good measured on the vertical axis will make the vertical intercept _ and make the budget line _.

The slope of a(n) _ curve shows the rate at which two goods can be exchanged _.