Question 1

If a consumer prefers Apples to Bananas and prefers Bananas to Citrus Fruit,in order to satisfy assumptions about preferences she has to prefer&#10;A) Bananas to Apples.&#10;B) Citrus Fruit to Bananas.&#10;C) Apples to Citrus Fruit.&#10;D) Citrus Fruit to Apples.

Accepted Answer

This follows the transitivity property of consumer preferences, which states that if a consumer prefers good A over good B, and prefers good B over good C, then the consumer must prefer good A over good C.

Question 2

Indifference curves for perfect substitutes must be parallel lines with a slope of negative one.

Accepted Answer

Indifference curves for perfect substitutes are parallel lines,but the slope is not necessarily negative one.

Question 3

A consumer's willingness to trade one good for another can be expressed by the consumer's&#10;A) indifference curve.&#10;B) marginal rate of substitution.&#10;C) Both A and B above.&#10;D) None of the above.

Accepted Answer

Both the indifference curve and marginal rate of substitution can be used to express a consumer's willingness to trade one good for another. The indifference curve shows the combinations of two goods that give the consumer the same level of satisfaction, whereas the marginal rate of substitution shows the amount of one good that a consumer is willing to give up to obtain an additional unit of another good. Therefore, both A and B are correct.

Question 4

The principle that &#34;More is better&#34; results in indifference curves&#10;A) sloping down.&#10;B) not intersecting.&#10;C) reflecting greater preferences the further they are from the origin.&#10;D) All of the above.

Accepted Answer

The principle that "More is better" implies that consumers prefer more of a good to less, leading to indifference curves that slope downwards (as you need to give up some of one good to get more of another while maintaining utility), do not intersect (since each curve represents a different level of utility), and reflect greater preferences the further they are from the origin (as being further from the origin represents having more of both goods).

Question 5

Indifference curves that are upward-sloping violate&#10;A) the assumption of transitivity.&#10;B) the assumption of completeness.&#10;C) the assumption that more is better.&#10;D) none of the assumptions.

Accepted Answer

Indifference curves are supposed to slope downward, reflecting the trade-off between two goods. An upward-sloping indifference curve would imply that a consumer prefers less of both goods to more, which contradicts the assumption that more of a good is preferred to less (the assumption that more is better).

Question 6

The statement &#34;There is no accounting for taste&#34; implies&#10;A) individuals all have the same preferences.&#10;B) individuals all have different cardinal preferences but the same ordinal preferences.&#10;C) individuals all have different ordinal preferences but the same cardinal preferences.&#10;D) individuals all have different ordinal and cardinal preferences.

Accepted Answer

The statement "There is no accounting for taste" suggests that individuals have varying tastes and preferences that cannot be explained or quantified. This implies that different people have different ordinal (ranking) and cardinal (numerical value) preferences when it comes to items or experiences. Therefore, the best choice is D which indicates that individuals have different ordinal and cardinal preferences.

Question 7

An indifference curve represents bundles of goods that a consumer&#10;A) views as equally desirable.&#10;B) ranks from most preferred to least preferred.&#10;C) refers to any other bundle of goods.&#10;D) All of the above.

Accepted Answer

An indifference curve represents bundles of goods that a consumer views as equally desirable. It does not rank the bundles from most preferred to least preferred, nor does it refer to any other specific bundle of goods. Therefore, option A is the correct choice.

Question 8

Measuring &#34;y&#34; on the vertical axis and &#34;x&#34; on the horizontal axis,convexity of indifference curves implies that the MRS of &#34;y&#34; for &#34;x&#34;&#10;A) is decreasing as &#34;x&#34; increases.&#10;B) is increasing as &#34;x&#34; increases.&#10;C) is constant as &#34;x&#34; increases.&#10;D) cannot be calculated for large levels of &#34;x&#34;.

Accepted Answer

The convexity of indifference curves means that the absolute slope, or MRS, of "y" for "x" is diminishing as "x" increases. This is because the curve is getting flatter as we move to the right, meaning that a smaller amount of "y" needs to be given up to receive an additional unit of "x." Therefore, the MRS of "y" for "x" is decreasing as "x" increases.

Question 9

Diminishing marginal rate of substitution can be seen when indifference curves&#10;A) cross.&#10;B) are convex.&#10;C) are downward sloping.&#10;D) become flatter as we move down and to the right.

Accepted Answer

The diminishing marginal rate of substitution is represented by indifference curves that become flatter as we move down and to the right, indicating that a consumer is willing to give up less of one good to obtain more of another good as they have more of it.

Question 10

Indifference curves cannot intersect.

Accepted Answer

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As seen in the above figure,points a and c are on the same indifference curve and are therefore equally preferred.Points b and c are also on the same indifference curve and are therefore equally preferred.Transitivity implies that the consumer would be indifferent between a and b; however,since more is preferred to less,a is preferred to b.Thus,as a result of the assumption of transitivity and the assumption that more is preferred to less,indifference curves cannot intersect.

Question 11

Indifference curves on the same indifference map can have different shapes.

Accepted Answer

The answer of Indifference curves on the same indifference map...

Question 12

If two goods are perfect substitutes,then the indifference curves for those two goods would be&#10;A) upward sloping and concave to the origin.&#10;B) downward sloping and convex to the origin.&#10;C) downward sloping and straight.&#10;D) L-shaped.

Accepted Answer

The answer of If two goods are perfect substitutes,then the...

Question 13

Convexity of indifference curves implies that consumers are willing to&#10;A) give up more &#34;y&#34; to get an extra &#34;x&#34; the more &#34;x&#34; they have.&#10;B) give up more &#34;y&#34; to get an extra &#34;x&#34; the less &#34;x&#34; they have.&#10;C) settle for less of both &#34;x&#34; and &#34;y&#34;.&#10;D) acquire more &#34;x&#34; only if they do not have to give up any &#34;y&#34;.

Accepted Answer

The answer of Convexity of indifference curves implies that consumers...

Question 14

If two indifference curves were to intersect at a point,this would violate the assumption of&#10;A) transitivity.&#10;B) completeness.&#10;C) Both A and B above.&#10;D) None of the above.

Accepted Answer

The answer of If two indifference curves were to intersect...

Question 15

Indifference curves that are thick violate&#10;A) the assumption of transitivity.&#10;B) the assumption that more is better.&#10;C) the assumption of completeness.&#10;D) none of the assumptions.

Accepted Answer

The answer of Indifference curves that are thick violate&#10;A) the...

Question 16

Economists use a preference map to illustrate that&#10;A) more is better than less.&#10;B) preferences are transitive.&#10;C) preferences are complete.&#10;D) All of the above.

Accepted Answer

The answer of Economists use a preference map to illustrate...

Question 17

Indifference curves cannot ever be concave for two goods.

Accepted Answer

The answer of Indifference curves cannot ever be concave for...

Question 18

The indifference curves for left shoes and right shoes would most likely be&#10;A) upward sloping and concave to the origin.&#10;B) downward sloping and convex to the origin.&#10;C) downward sloping and straight lines.&#10;D) L-shaped.

Accepted Answer

The answer of The indifference curves for left shoes and...

Question 19

The assumption of completeness means that&#10;A) the consumer can rank all possible consumption bundles.&#10;B) more of a good is always better.&#10;C) the consumers can rank all affordable consumption bundles.&#10;D) all preferences conditions are met.

Accepted Answer

The answer of The assumption of completeness means that&#10;A) the...

Question 20

Lisa views pizzas and burritos as goods.If she prefers a bundle of 4 burritos and 4 pizzas to a bundle of 4 burritos and 5 pizzas,which property of consumer preference is violated? What change in the assumptions could lead a rational consumer to prefer the first bundle?

Accepted Answer

The answer of Lisa views pizzas and burritos as goods.If...

Question 21

If the utility function (U)between food (F)and clothing (C)can be represented as U =   ,the marginal utility of food equals&#10;A)   .&#10;B)   .&#10;C) 1/2   .&#10;D) 1/2   .

Accepted Answer

The answer of If the utility function (U)between food (F)and...

Question 22

If two bundles are on the same indifference curve,then&#10;A) the consumer derives the same level of utility from each.&#10;B) the consumer derives the same level of ordinal utility from each but not the same level of cardinal utility.&#10;C) no comparison can be made between the two bundles since utility cannot really be measured.&#10;D) B and C.

Accepted Answer

The answer of If two bundles are on the same...

Question 23

Explain why most indifference curves are convex.

Accepted Answer

The answer of Explain why most indifference curves are convex....

Question 24

Assuming that good &#34;x&#34; is measured on the x-axis and good &#34;y&#34; is measured on the y-axis,if the utility for the two goods &#34;x&#34; and &#34;y&#34; can be measured as U = y,then it can be concluded that&#10;A) &#34;x&#34; and &#34;y&#34; are perfect complements.&#10;B) &#34;x&#34; is a &#34;bad&#34;.&#10;C) the indifference curves on the x,y graph are upward sloping.&#10;D) the indifference curves on the x,y graph are horizontal.

Accepted Answer

The answer of Assuming that good &#34;x&#34; is measured on...

Question 25

Utility is the set of numerical values that&#10;A) yields an absolute level of pleasure from a bundle of goods.&#10;B) reflects the relative ranking of various bundles of goods.&#10;C) describes how much more a consumer prefers one bundle to another.&#10;D) yields a cardinal ranking of bundles.

Accepted Answer

The answer of Utility is the set of numerical values...

Question 26

If Fred's marginal rate of substitution of salad for pizza equals 5,then&#10;A) he would give up 5 pizzas to get the next salad.&#10;B) he would give up 5 salads to get the next pizza.&#10;C) he will eat five times as much pizza as salad.&#10;D) he will eat five times as much salad as pizza.

Accepted Answer

The answer of If Fred's marginal rate of substitution of...

Question 27

Draw the indifference curves for nickels and dimes.Would they ever have a non-constant slope? Explain.

Accepted Answer

The answer of Draw the indifference curves for nickels and...

Question 28

If two goods,&#34;x&#34; and &#34;y&#34;,are perfect substitutes,then which of the following best represents the utility function for the two goods?&#10;A) U = x + y&#10;B) U = x &#8727; y&#10;C) U =   +  &#10;D) Any of the above.

Accepted Answer

The answer of If two goods,&#34;x&#34; and &#34;y&#34;,are perfect substitutes,then...

Question 29

Assuming that good &#34;x&#34; is measured on the x-axis and good &#34;y&#34; is measured on the y-axis,if the utility for the two goods &#34;x&#34; and &#34;y&#34; can be measured as U = x,then it can be concluded that&#10;A) &#34;x&#34; and &#34;y&#34; are perfect complements.&#10;B) &#34;y&#34; is a &#34;bad&#34;.&#10;C) the indifference curves on the x,y graph are upward sloping.&#10;D) the indifference curves on the x,y graph are vertical.

Accepted Answer

The answer of Assuming that good &#34;x&#34; is measured on...

Question 30

People view alcohol and marijuana as perfect substitutes.This means that&#10;A) individuals will consume either alcohol or marijuana, but not both, regardless of price.&#10;B) as the price of alcohol decreases, marijuana use decreases.&#10;C) the marginal utility for alcohol and marijuana is constant.&#10;D) Both B and C.

Accepted Answer

The answer of People view alcohol and marijuana as perfect...

Question 31

Some people view cosmetic surgery (c)and facials (f)as perfect substitutes as measured by the utility function U(c,f)= 5c + 10f.What is the marginal utility of cosmetic surgery?&#10;A) MU = 5.&#10;B) MU = 10.&#10;C) MU = 15.&#10;D) None of the above.

Accepted Answer

The answer of Some people view cosmetic surgery (c)and facials...

Question 32

If Fred's marginal utility of pizza equals 10 and his marginal utility of salad equals 2,then&#10;A) he would give up 5 pizzas to get the next salad.&#10;B) he would give up 5 salads to get the next pizza.&#10;C) he will eat five times as much pizza as salad.&#10;D) he will eat five times as much salad as pizza.

Accepted Answer

The answer of If Fred's marginal utility of pizza equals...

Question 33

Clifford lives by the motto &#34;Eat,drink and be merry today,for tomorrow doesn't matter.&#34; If today's consumption is measured on the horizontal axis and tomorrow's consumption is measured on the vertical axis,Clifford's indifference curves&#10;A) are horizontal straight lines.&#10;B) are vertical straight lines.&#10;C) show decreasing utility as one moves upward.&#10;D) cannot be determined from the information given.

Accepted Answer

The answer of Clifford lives by the motto &#34;Eat,drink and...

Question 34

If the utility function (U)between food (F)and clothing (C)can be represented as U =   ,the marginal rate of substitution of clothing for food equals&#10;A) -C/F.&#10;B) -F/C.&#10;C) -   .&#10;D) -   .

Accepted Answer

The answer of If the utility function (U)between food (F)and...

Question 35

If the utility function (U)between food (F)and clothing (C)can be represented as U =   ,the marginal utility of food&#10;A) is not positive.&#10;B) does not diminish as food increases.&#10;C) is not affected by the amount clothing.&#10;D) increases as one obtains more clothing.

Accepted Answer

The answer of If the utility function (U)between food (F)and...

Question 36

Draw the indifference curves for rock concerts and food for each of the following:&#10;(a)a typical 17-year-old&#10;(b)a typical 75-year-old

Accepted Answer

The answer of Draw the indifference curves for rock concerts...

Question 37

Clifford lives by the motto &#34;Eat drink and be merry today,for tomorrow doesn't matter.&#34; If today's consumption is represented by &#34;x&#34; and tomorrow's consumption is represented by &#34;y&#34;,then which of the following best represents Clifford's utility function?&#10;A) U = x - y&#10;B) U = x/y&#10;C) U = x&#10;D) U = y

Accepted Answer

The answer of Clifford lives by the motto &#34;Eat drink...

Question 38

If Johnny likes homework (H)but hates exercise (E),which of the following might best represent his utility function for homework and exercise?&#10;A) U = H + E&#10;B) U = H/E&#10;C) U =   +  &#10;D) U =   &#215;

Accepted Answer

The answer of If Johnny likes homework (H)but hates exercise...

Question 39

Adrian's total utilities of two consumption bundles are 50 and 100.This implies that&#10;A) the consumer prefers the first bundle.&#10;B) the consumer prefers the second bundle.&#10;C) the consumer likes the second bundle twice as much.&#10;D) the consumer likes the first bundle twice as much.

Accepted Answer

The answer of Adrian's total utilities of two consumption bundles...

Question 40

If the utility for two goods &#34;x&#34; and &#34;y&#34; is measured as U = x + y,then it can be concluded that&#10;A) &#34;x&#34; and &#34;y&#34; are perfect substitutes.&#10;B) &#34;x&#34; and &#34;y&#34; are perfect complements.&#10;C) &#34;x&#34; and &#34;y&#34; are both bads.&#10;D) the indifference curves on the x,y graph will be upward sloping.

Accepted Answer

The answer of If the utility for two goods &#34;x&#34;...

Question 41

If both prices increases by 50%,&#10;A) budget constraint will be unchanged.&#10;B) slope of the budget constraint stay the same.&#10;C) slope of the budget constraint will decrease.&#10;D) budget constraint will shift outward in a parallel fashion.

Accepted Answer

The answer of If both prices increases by 50%,&#10;A) budget...

Question 42

What is the difference between ordinal and cardinal measurement?

Accepted Answer

The answer of What is the difference between ordinal and...

Question 43

Joe's income is $500,the price of food (F)is $2,and the price of shelter (S)is $100.Which of the following bundles is in Joe's opportunity set?&#10;A) 50 units of food, 5 units of shelter&#10;B) 200 units of food, 2 units of shelter&#10;C) 100 units of food, 1 unit of shelter&#10;D) 150 units of food, 3 units of shelter

Accepted Answer

The answer of Joe's income is $500,the price of food...

Question 44

If the consumer's income increases while the prices of both goods remain unchanged,what will happen to the budget line?&#10;A) The budget line rotates inward from the intercept on the horizontal axis.&#10;B) The budget line rotates outward from the intercept on the vertical axis.&#10;C) The budget line shifts inward without a change in slope.&#10;D) The budget line shifts outward without a change in slope.

Accepted Answer

The answer of If the consumer's income increases while the...

Question 45

Suppose Joe's utility for lobster (L)and soda (S)can be represented as U = L^0.5 S^0.5.Draw the indifference curve that yields a utility level of 9.Calculate the MUL,MUS,and MRS of L for S on that indifference curve when S = 3.

Accepted Answer

The answer of Suppose Joe's utility for lobster (L)and soda...

Question 46

Joe's income is $500,the price of food (F)is $2 per unit,and the price of shelter (S)is $100.Which of the following represents his marginal rate of transformation of food for shelter?&#10;A) -5&#10;B) -50&#10;C) -.02&#10;D) None of the above.

Accepted Answer

The answer of Joe's income is $500,the price of food...

Question 47

Betty consumes good x and good y.If the price of x = $3 and the price of y = $4,then&#10;A) an extra unit of x costs 4/3 units of y.&#10;B) an extra unit of y costs 4/3 units of x.&#10;C) an extra unit of x costs 3/4 units of y.&#10;D) Both B and C.

Accepted Answer

The answer of Betty consumes good x and good y.If...

Question 48

A consumer buys food (F)and shelter (S).If the consumer's income rises and there is no change in the prices of F or S,the marginal rate of transformation of F for S will&#10;A) increase.&#10;B) decrease.&#10;C) stay the same.&#10;D) change, but there is not enough information to know how.

Accepted Answer

The answer of A consumer buys food (F)and shelter (S).If...

Question 49

Individuals derive utility from picnics,p,and kayak trips,k.Assuming that an individual's utility is U(p,k)= k^0.5p^0.5and income is $100,what is the marginal rate of substitution (MRS)between picnics and kayak trips?

A) MRS = 1.
B) MRS = -1.
C) MRS = -

<strong>Individuals derive utility from picnics,p,and kayak trips,k.Assuming that an individual's utility is U(p,k)= k<sup>0.5</sup>p<sup>0.5</sup><sup> </sup>and income is $100,what is the marginal rate of substitution (MRS)between picnics and kayak trips?</strong> A) MRS = 1. B) MRS = -1. C) MRS = - D) There is no substitution because picnics and kayak trips are perfect complements. <div style=padding-top: 35px>

D) There is no substitution because picnics and kayak trips are perfect complements.

Accepted Answer

The answer of Individuals derive utility from picnics,p,and kayak trips,k.Assuming...

Question 50

Lisa eats both pizzas and burritos.If the price of a pizza increases,Lisa's opportunity set&#10;A) becomes larger.&#10;B) becomes smaller.&#10;C) is unchanged.&#10;D) cannot be determined without more information.

Accepted Answer

The answer of Lisa eats both pizzas and burritos.If the...

Question 51

If the price of one good increases while the price of the other good and the consumer's income remain unchanged,what will happen to the budget line?&#10;A) The budget line rotates inward from the intercept on the axis of the good that did not change in price.&#10;B) The budget line rotates outward from the intercept on the axis of the good that did not change in price.&#10;C) The budget line shifts inward without a change in slope.&#10;D) The budget line shifts outward without a change in slope.

Accepted Answer

The answer of If the price of one good increases...

Question 52

If the prices of both goods and income increase by the same percentage,what will happen to the budget line?&#10;A) The budget line rotates inward from the intercept on the axis of the good that did not change in price.&#10;B) The budget line rotates outward from the intercept on the axis of the good that did not change in price.&#10;C) The budget line shifts outward without a change in slope.&#10;D) Nothing.

Accepted Answer

The answer of If the prices of both goods and...

Question 53

The marginal rate of transformation of y for x represents&#10;A) the slope of the budget constraint.&#10;B) the rate at which the consumer must give up y to get one more x.&#10;C) -   /   .&#10;D) All of the above.

Accepted Answer

The answer of The marginal rate of transformation of y...

Question 54

Joe's income is $500,the price of food (F)is $2 per unit,and the price of shelter (S)is $100.Which of the following represents his budget constraint?&#10;A) 500 = 2F + 100S&#10;B) F = 250 - 50S&#10;C) S = 5 - .02F&#10;D) All of the above.

Accepted Answer

The answer of Joe's income is $500,the price of food...

Question 55

Joe's budget constraint equals 500 = 2F + 100S,where $500 is Joe's income,$2 is the price of food (F)and $100 is the price of shelter (S).How much food can Joe buy if he buys one unit of shelter?&#10;A) 2 units&#10;B) 200 units&#10;C) 250 units&#10;D) 400 units

Accepted Answer

The answer of Joe's budget constraint equals 500 = 2F...

Question 56

The absolute value of the slope of an indifference curve equals the ratio of the marginal utilities of the two goods involved.

Accepted Answer

The answer of The absolute value of the slope of...

Question 57

If the utility function (U)between bananas (B)and jam (J)can be represented as U = 3ln(B)+4ln(J)the marginal utility of jam equals&#10;A) 4B.&#10;B) 3B/J.&#10;C) 4/J.&#10;D) B/J.

Accepted Answer

The answer of If the utility function (U)between bananas (B)and...

Question 58

If the utility function (U)between bananas (B)and jam (J)can be represented as U(B,J)= 3ln(B)+4ln(J),what is the marginal rate of substitution (MRS)between bananas and jam?&#10;A) 4B.&#10;B) -3J/(4B).&#10;C) 4/(3J).&#10;D) 3B/J.

Accepted Answer

The answer of If the utility function (U)between bananas (B)and...

Question 59

Joe's income is $500,the price of food (F)is $2 per unit,and the price of shelter (S)is $100.Which of the following represents his budget constraint?&#10;A) 500 = 100F + 2S&#10;B) 500 = 2F + 100S&#10;C) S = 500 - 2F&#10;D) All of the above.

Accepted Answer

The answer of Joe's income is $500,the price of food...

Question 60

If both prices decreases by 50%,&#10;A) budget constraint will be unchanged.&#10;B) slope of the budget constraint will increase.&#10;C) slope of the budget constraint will decrease.&#10;D) budget constraint will shift outward in a parallel fashion.

Accepted Answer

The answer of If both prices decreases by 50%,&#10;A) budget...

Question 61

&#10;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?&#10;A) a&#10;B) b&#10;C) c&#10;D) d

Accepted Answer

The answer of  &#10;Max has allocated $100 toward meats...

Question 62

&#10;Keith is indifferent between canned soup and fresh soup.In the figure above,Keith's indifference curves are represented by I1,I2,I3,and I4 curves.Which of the following choices Keith cannot afford?&#10;A) 3 canned soups and 2 fresh soups&#10;B) 2 canned soups and 1 fresh soup&#10;C) only 4 canned soups&#10;D) only 2 fresh soups

Accepted Answer

The answer of  &#10;Keith is indifferent between canned soup...

Question 63

With respect to consuming food and shelter,two consumers face the same prices and both claim to be in equilibrium.We therefore know that&#10;A) they both have the same marginal utility for food.&#10;B) they both have the same marginal utility for shelter.&#10;C) they both have the same MRS of food for shelter.&#10;D) All of the above.

Accepted Answer

The answer of With respect to consuming food and shelter,two...

Question 64

Economists assume consumers select a bundle of goods that maximizes their well-being subject to&#10;A) their budget constraint.&#10;B) their income.&#10;C) relative prices.&#10;D) their marginal rate of substitution.

Accepted Answer

The answer of Economists assume consumers select a bundle of...

Deck 4: Consumer Choice