Question 1

Use the following to answer question: 
-(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A(n)_____ in the price of potatoes would rotate the budget line,changing the intercept on the _____ axis and moving it _____ the origin.

Accepted Answer

The answer of Use the following to answer question: 
-(Figure...

Question 2

Use the following to answer question: 
-(Figure: Budget Lines for Tea and Scones)Use Figure: Budget Lines for Tea and Scones.For months now,Agnes has had $20 per month to spend on tea and scones.The price of each cup of tea and each scone has been $1.Which chart shows what will happen to her budget line if her income decreases to $10?

Accepted Answer

When Agnes's income decreases from $20 to $10, her budget line will shift inward, parallel to the original line, indicating she can now afford fewer tea and scones. Chart C represents this inward shift.

Question 3

Use the following to answer question: 
-(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.An increase in income would:

Accepted Answer

An increase in income would shift the budget line to the right, as the consumer would have more money to spend, increasing the maximum quantity of both goods they can purchase.

Question 4

Chuck spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.If the price of each good doubles and Chuck's income doubles:

Accepted Answer

When both Chuck's income and the prices of the goods he buys double, his purchasing power remains the same, meaning his budget line, which represents all possible combinations of the two goods he can afford, will not change.

Question 5

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.If Faruq spends all of his income,the opportunity cost of one milkshake is equal to _____ tacos.

Accepted Answer

Since Faruq spends all of his income, he can either buy 10 tacos and no milkshakes or 50 milkshakes and no tacos. Therefore, the opportunity cost of one milkshake is equal to the number of tacos that Faruq has to give up for one milkshake, which is 10/50 or 1/5. So the answer is D.

Question 6

Joe's budget line reflects the _____ available to Joe if he spends _____ of his income.

Accepted Answer

A budget line shows all the possible consumption bundles that can be purchased with a given income. Therefore, option A is the correct answer. Option B is incorrect because the budget line shows all possible consumption bundles, not just some. Option C and D are not correct because the budget line is not related to utility, but rather to the physical constraints of income and prices.

Question 7

Use the following to answer question: 
-(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A(n)_____ in the price of clams would rotate the budget line,changing the intercept on the _____ axis and moving it _____ the origin.

Accepted Answer

An increase in the price of clams would rotate the budget line counterclockwise around the intercept on the vertical axis, thereby changing the intercept on the horizontal axis and moving it toward the origin.

Question 8

Use the following to answer question: 
-(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A(n)_____ in the price of potatoes would rotate the budget line,changing the intercept on the _____ axis and moving it _____ the origin.

Accepted Answer

The answer of Use the following to answer question: 
-(Figure...

Question 9

Use the following to answer question: 
-(Figure: Budget Lines for Tea and Scones)Use Figure: Budget Lines for Tea and Scones.For months now,Agnes has had $20 per month to spend on tea and scones.The price of each cup of tea and each scone has been $1.Which chart shows what will happen to her budget line if the price of a cup of tea falls to $0.50?

Accepted Answer

The answer of Use the following to answer question: 
-(Figure:...

Question 10

Abdul spends all of his income on food (F)and shelter (S).His budget line is given by the equation 5F + 20S = 100.Which consumption bundle is part of his consumption possibilities?

Accepted Answer

The answer of Abdul spends all of his income on...

Question 11

Use the following to answer question: 
-(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A decrease in income would:

Accepted Answer

A decrease in income would lead to a decrease in the budget line shift to the left. This is because the consumer would have less money to spend on goods and services, resulting in a decrease in the maximum quantity of goods they can afford at any given price.

Question 12

Use the following to answer question: 
-(Figure: Budget Lines for Tea and Scones)Use Figure: Budget Lines for Tea and Scones.For months now,Agnes has had $20 per month to spend on tea and scones.The price of each cup of tea and each scone has been $1.Which chart shows what will happen to her budget line if the price of a scone rises to $2?

Accepted Answer

When the price of scones doubles from $1 to $2, while the price of tea remains the same and the budget remains unchanged, the maximum quantity of scones that can be purchased decreases. This results in a pivot of the budget line, where the intercept on the axis representing scones decreases, as shown in option B.

Question 13

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.If Faruq spends all of his income,the opportunity cost of one taco equals _____ milkshakes.

Accepted Answer

If Faruq spends all of his income, he can buy 10 tacos or 50 milkshakes (($100/$10) and ($100/$2) respectively). The opportunity cost of one taco equals the number of milkshakes he could have bought with the same amount of money. So, the opportunity cost of one taco is 5 milkshakes. Therefore, he should buy more tacos only if the marginal utility of tacos (satisfaction from the last taco he buys) is greater than 1/5 (the opportunity cost of one taco in terms of milkshakes). As we do not have any information on marginal utility, we cannot determine the best choice(s) for him.

Question 14

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.The slope of Faruq's budget line is equal to:

Accepted Answer

The slope of the budget line is calculated by taking the negative of the price ratio of the two goods. Here, it's -($10/$2) = -5. This represents the rate at which Faruq can trade tacos for milkshakes, maintaining the same level of spending.

Question 15

Use the following to answer question: 
-(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A(n)_____ in the price of clams would rotate the budget line,changing the intercept on the _____ axis and moving it _____ the origin.

Accepted Answer

A decrease in the price of clams would increase the consumer's purchasing power, allowing them to buy more of both goods. This would cause the budget line to shift outward (away from the origin) and change the intercept on the horizontal axis (representing the quantity of clams). Therefore, the correct answer is B.

Question 16

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.If Faruq purchases 10 milkshakes,he can purchase _____ tacos.

Accepted Answer

If Faruq spends all of his income on tacos and milkshakes, then we know that:

$100 = price of tacos * number of tacos + price of milkshakes * number of milkshakes

Substituting the given values:

$100 = $10 * number of tacos + $2 * 10 milkshakes

Simplifying:

$100 = $10 * number of tacos + $20

$80 = $10 * number of tacos

number of tacos = 8

Therefore, if Faruq purchases 10 milkshakes, he can purchase 8 tacos.

Question 17

Chuck spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.The vertical intercept for Chuck's budget line is _____ milkshakes.

Accepted Answer

The vertical intercept occurs when Chuck spends all of his income on milkshakes. Since each milkshake costs $2 and his income is $100, he can buy $100/$2 = 50 milkshakes.

Question 18

Use the following to answer question: 
-(Figure: Budget Lines for Tea and Scones)Use Figure: Budget Lines for Tea and Scones.For months now,Agnes has had $20 per month to spend on tea and scones.The price of each cup of tea and each scone has been $1.Which chart shows what will happen to her budget line if the price of both a cup of tea and a scone increase to $2?

Accepted Answer

When the price of both tea and scones increase to $2, Agnes' budget line will shift inward as she will not be able to purchase as many cups of tea and scones with her limited budget of $20. The budget line in Chart C shows a shift inward, reflecting the impact of the price increase.

Question 19

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.The horizontal intercept for Faruq's budget line is _____ tacos.

Accepted Answer

The equation for Faruq's budget line is: 
10T + 2M = 100
Solve for T when M = 0:
10T + 2(0) = 100
T = 10
So the horizontal intercept is 10 tacos.

The best choice(s) is/are determined by finding the point(s) on the budget line that maximizes Faruq's satisfaction. This involves finding the point(s) where the budget line is tangent to an indifference curve. Without information on Faruq's preferences, we cannot determine the best choice(s).

Question 20

Use the following to answer question: 
-(Figure: Budget Lines for Tea and Scones)Use Figure: Budget Lines for Tea and Scones.For months now,Agnes has had $20 per month to spend on tea and scones.The price of each cup of tea and each scone is $1.Which chart shows what will happen to her budget line if her income increases to $25?

Accepted Answer

The budget line shifts outward from the original position, indicating that with more income, Agnes can afford more of both tea and scones while still spending all her income. The slope remains the same because the prices of tea and scones have not changed, only the amount she can spend has increased.

Quiz 10: The Rational Consumer

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.A(n) ___ in the price of potatoes would rotate the budget line,changing the intercept on the _ axis and moving it ___ the origin.

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.An increase in income would:

Chuck spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.If the price of each good doubles and Chuck's income doubles:

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.If Faruq spends all of his income,the opportunity cost of one milkshake is equal to _____ tacos.

Joe's budget line reflects the _ available to Joe if he spends _ of his income.

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.A(n) ___ in the price of clams would rotate the budget line,changing the intercept on the _ axis and moving it ___ the origin.

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.A(n) ___ in the price of potatoes would rotate the budget line,changing the intercept on the _ axis and moving it ___ the origin.

Abdul spends all of his income on food (F) and shelter (S) .His budget line is given by the equation 5F + 20S = 100.Which consumption bundle is part of his consumption possibilities?

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.A decrease in income would:

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.If Faruq spends all of his income,the opportunity cost of one taco equals _____ milkshakes.

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.The slope of Faruq's budget line is equal to:

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.A(n) ___ in the price of clams would rotate the budget line,changing the intercept on the _ axis and moving it ___ the origin.

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.If Faruq purchases 10 milkshakes,he can purchase _____ tacos.

Chuck spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.The vertical intercept for Chuck's budget line is _____ milkshakes.

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.The horizontal intercept for Faruq's budget line is _____ tacos.

Quiz 10: The Rational Consumer

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.A(n) _____ in the price of potatoes would rotate the budget line,changing the intercept on the _____ axis and moving it _____ the origin.

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.An increase in income would:

Chuck spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.If the price of each good doubles and Chuck's income doubles:

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.If Faruq spends all of his income,the opportunity cost of one milkshake is equal to _____ tacos.

Joe's budget line reflects the _____ available to Joe if he spends _____ of his income.

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.A(n) _____ in the price of clams would rotate the budget line,changing the intercept on the _____ axis and moving it _____ the origin.

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.A(n) _____ in the price of potatoes would rotate the budget line,changing the intercept on the _____ axis and moving it _____ the origin.

Abdul spends all of his income on food (F) and shelter (S) .His budget line is given by the equation 5F + 20S = 100.Which consumption bundle is part of his consumption possibilities?

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.A decrease in income would:

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.If Faruq spends all of his income,the opportunity cost of one taco equals _____ milkshakes.

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.The slope of Faruq's budget line is equal to:

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.A(n) _____ in the price of clams would rotate the budget line,changing the intercept on the _____ axis and moving it _____ the origin.

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.If Faruq purchases 10 milkshakes,he can purchase _____ tacos.

Chuck spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.The vertical intercept for Chuck's budget line is _____ milkshakes.

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.The horizontal intercept for Faruq's budget line is _____ tacos.

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.A(n) ___ in the price of potatoes would rotate the budget line,changing the intercept on the _ axis and moving it ___ the origin.

Joe's budget line reflects the _ available to Joe if he spends _ of his income.

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.A(n) ___ in the price of clams would rotate the budget line,changing the intercept on the _ axis and moving it ___ the origin.

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.A(n) ___ in the price of potatoes would rotate the budget line,changing the intercept on the _ axis and moving it ___ the origin.

Use the following to answer question: -(Figure and Table: The Budget Line) Use Figure and Table: The Budget Line.A(n) ___ in the price of clams would rotate the budget line,changing the intercept on the _ axis and moving it ___ the origin.