Question 1

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

Accepted Answer

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

Question 2

Manny consumes only bananas and DVDs,and he is on his highest possible indifference curve.Two bundles on this indifference curve are bundle A (5 bananas and 2 DVDs),and bundle B (3 bananas and 3 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 Manny is willing to give up bananas for DVDs while remaining on the same indifference curve. Between bundles A and B, Manny gives up 2 bananas to gain 1 DVD, so the MRS is 2/1 = 0.5.

Question 3

Use the following to answer question: 
-(Figure: Indifference Curves and Consumption Bundles)Use Figure Indifference Curves and Consumption Bundles.In the figure,the initial optimum is at a.The price of hot dogs increases,and the new equilibrium point is c.The change in hot dog consumption due to the income effect of the price change is:

Accepted Answer

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

Question 4

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

Accepted Answer

According to the indifference curve map, bundle D provides the highest level of utility, which is preferred to bundle C, which is preferred to bundles A and B. Therefore, the best choice would be bundle D, followed by bundle C.

Question 5

One point on a standard indifference curve is 8 cookies and 2 brownies;another is 6 cookies and 4 brownies.Which of the following combinations of cookies and brownies could lie on this indifference curve?

Accepted Answer

Since the two given points lie on the same indifference curve, they must provide the same level of utility to the consumer. Therefore, any other combination of cookies and brownies that also provides the same level of utility should also lie on this indifference curve.

To determine which of the given options meet this criteria, we can compare the total number of cookies and brownies in each option to the two points given in the question.

Option A has 6 cookies and 10 brownies, which is more brownies than the first point on the indifference curve (8 cookies and 2 brownies). This means that the consumer would prefer option A over the first point, and therefore it cannot lie on the same indifference curve.

Option B has 7 cookies and 6 brownies, which is a different combination than either of the points given in the question.

Option C has 4 cookies and 4 brownies, which is less cookies and less brownies than either of the points given in the question. This means that the consumer would prefer either of the points over option C, and therefore it cannot lie on the same indifference curve.

Option D has 4 cookies and 8 brownies, which has the same number of cookies as the first point on the indifference curve and the same number of brownies as the second point on the indifference curve. This means that the consumer would be indifferent between option D and the two points given in the question, and therefore it could lie on the same indifference curve.

Question 6

Use the following to answer question: 
-(Figure: Indifference Curves and Consumption Bundles)Use Figure Indifference Curves and Consumption Bundles.For this consumer pizza is a(n)_____ good and hot dogs are a(n)_____ good.

Accepted Answer

Indifference curves typically represent combinations of goods that provide the same level of utility to a consumer. If both pizza and hot dogs are on the indifference curve, they are likely normal goods, as the consumer derives utility from both.

Question 7

Use the following to answer question: 
-(Figure: Indifference Curves and Consumption Bundles)Use Figure Indifference Curves and Consumption Bundles.The lines AA and BC are parallel.The optimal consumption point could shift from b to c as a result of any of the following EXCEPT:

Accepted Answer

A change in tastes would shift the consumer's preferences and could result in a shift from point b to point c on the indifference curve. However, an equal percentage increase in the prices of hot dogs and pizza while income is unchanged, a decrease in income with prices constant, or both would result in a parallel shift of the budget constraint, keeping the optimal consumption point at point b.

Question 8

One point on an indifference curve that displays a diminishing marginal rate of substitution between apples and oranges is 10 apples and 2 oranges;another is 8 apples and 4 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 9

Suppose peanut butter is an inferior good for Ilya and the price of peanut butter rises.What will happen to Ilya's consumption of peanut butter?

Accepted Answer

When the price of an inferior good like peanut butter rises, the substitution effect leads consumers to buy less of it because it becomes relatively more expensive compared to other goods. However, for an inferior good, the income effect (which occurs because the consumer effectively feels poorer due to the price increase) leads to an increase in consumption, as consumers might shift towards more of the inferior good as it becomes a larger part of their consumption bundle.

Question 10

Greater levels of utility are represented by:

Accepted Answer

Indifference curves represent the different combinations of goods that provide the same level of utility to a consumer. The farther away an indifference curve is from the origin, the higher the level of utility it represents, as it reflects a combination of goods that provide more total satisfaction to the consumer. Therefore, greater levels of utility are represented by indifference curves that are farther from the origin.

Question 11

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

Accepted Answer

Indifference curves represent combinations of goods that provide the same level of utility. Higher indifference curves represent higher utility levels. If point D is on a higher indifference curve than point A, then utility is higher at point D.

Question 12

In terms of indifference curves,a demand curve is generated by changes in:

Accepted Answer

A demand curve is generated by changes in the price of one good, holding everything else constant. This reflects how quantity demanded of the good changes as its price varies. Indifference curves and budget constraints are used to illustrate how consumers make choices based on these price changes, but the demand curve itself is specifically about the relationship between the price of a single good and the quantity demanded of that good.

Question 13

An indifference curve typically:

Accepted Answer

An indifference curve typically slopes downward, meaning that as the quantity consumed of one good increases, the quantity consumed of the other good must decrease to keep the consumer equally satisfied. This is the basic characteristic of an indifference curve. Choice B is incorrect because indifference curves show combinations of two goods that yield equal utility, not equal money income. Choice C is incorrect because indifference curves do not slope upward. Choice D is incorrect because indifference curves can be concave, convex, or linear, depending on the individual's preferences.

Question 14

A _____ can be generated from indifference curves by changing _____.

Accepted Answer

A demand curve can be generated from indifference curves by changing the price of one good while keeping other factors constant, showing how quantity demanded changes with price.

Question 15

Max consumes only yogurt and almonds,and he is on his highest possible indifference curve.Bundle A (4 yogurts and 2 almonds)and bundle B (3 yogurts and 3 almonds)are on this indifference curve.Between points A and B,what is Max's marginal rate of substitution of yogurt for almonds?

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. In this case, moving from bundle A to bundle B, Max gives up 1 yogurt to gain 1 additional almond, making the MRS of yogurt for almonds 1:1.

Question 16

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.

Question 17

Consumers buy both alcoholic and nonalcoholic beverages.If the government tries to discourage people from drinking alcoholic beverages by imposing an excise tax on them but gives consumers an income subsidy to keep the consumers on their original indifference curves:

Accepted Answer

When an excise tax is imposed on alcoholic beverages, their price will increase, leading to a decrease in demand for alcoholic beverages. As a result, consumers will switch to non-alcoholic beverages, indicating that more non-alcoholic and fewer alcoholic beverages will be consumed. However, if consumers receive an income subsidy, their purchasing power will increase, allowing them to buy more of both goods. This will cause the consumption of non-alcoholic beverages to increase even more, while reducing the reduction in the consumption of alcoholic beverages caused by the excise tax. Therefore, the best choice is B: fewer alcoholic and more nonalcoholic beverages will be consumed.

Question 18

Javon is consuming his optimal utility-maximizing consumption bundle of lobster and macaroni-and-cheese dinners.Call this bundle A.His income is $100,the price of a macaroni-and-cheese dinner is $5,and the price of a lobster is $20.Put lobsters on the vertical axis and put macaroni-and-cheese dinners on the horizontal axis.His income increases to $500 and the prices of macaroni-and-cheese dinners and lobster remain constant.With the increase in income,Javon changes his consumption of the two goods and now maximizes utility at bundle B.If macaroni-and-cheese dinners are an inferior good for Javon:

Accepted Answer

With an increase in income and macaroni-and-cheese being an inferior good, Javon will consume less of it and more of the normal good, lobster, at bundle B.

Question 19

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

Accepted Answer

As we move down an indifference curve, the consumer already has a certain level of satisfaction, so they become less willing to give up one good for the other. Therefore, the marginal rate of substitution decreases, and the slope of the indifference curve becomes flatter.

Question 20

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.

Quiz 22: Consumer Preferences and Consumer Choice

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

Manny consumes only bananas and DVDs,and he is on his highest possible indifference curve.Two bundles on this indifference curve are bundle A (5 bananas and 2 DVDs) ,and bundle B (3 bananas and 3 DVDs) .Between points A and B,what is Manny's marginal rate of substitution of bananas for DVDs?

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

One point on a standard indifference curve is 8 cookies and 2 brownies;another is 6 cookies and 4 brownies.Which of the following combinations of cookies and brownies could lie on this indifference curve?

Use the following to answer question: -(Figure: Indifference Curves and Consumption Bundles) Use Figure Indifference Curves and Consumption Bundles.For this consumer pizza is a(n) _ good and hot dogs are a(n) _ good.

Use the following to answer question: -(Figure: Indifference Curves and Consumption Bundles) Use Figure Indifference Curves and Consumption Bundles.The lines AA and BC are parallel.The optimal consumption point could shift from b to c as a result of any of the following EXCEPT:

One point on an indifference curve that displays a diminishing marginal rate of substitution between apples and oranges is 10 apples and 2 oranges;another is 8 apples and 4 oranges.Which of the following combinations of apples and oranges could also lie on this indifference curve?

Suppose peanut butter is an inferior good for Ilya and the price of peanut butter rises.What will happen to Ilya's consumption of peanut butter?

Greater levels of utility are represented by:

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

In terms of indifference curves,a demand curve is generated by changes in:

An indifference curve typically:

A _ can be generated from indifference curves by changing _.

Max consumes only yogurt and almonds,and he is on his highest possible indifference curve.Bundle A (4 yogurts and 2 almonds) and bundle B (3 yogurts and 3 almonds) are on this indifference curve.Between points A and B,what is Max's marginal rate of substitution of yogurt for almonds?

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

Consumers buy both alcoholic and nonalcoholic beverages.If the government tries to discourage people from drinking alcoholic beverages by imposing an excise tax on them but gives consumers an income subsidy to keep the consumers on their original indifference curves:

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

For most goods,indifference curves:

Quiz 22: Consumer Preferences and Consumer Choice

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

Manny consumes only bananas and DVDs,and he is on his highest possible indifference curve.Two bundles on this indifference curve are bundle A (5 bananas and 2 DVDs) ,and bundle B (3 bananas and 3 DVDs) .Between points A and B,what is Manny's marginal rate of substitution of bananas for DVDs?

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

One point on a standard indifference curve is 8 cookies and 2 brownies;another is 6 cookies and 4 brownies.Which of the following combinations of cookies and brownies could lie on this indifference curve?

Use the following to answer question: -(Figure: Indifference Curves and Consumption Bundles) Use Figure Indifference Curves and Consumption Bundles.For this consumer pizza is a(n) _____ good and hot dogs are a(n) _____ good.

Use the following to answer question: -(Figure: Indifference Curves and Consumption Bundles) Use Figure Indifference Curves and Consumption Bundles.The lines AA and BC are parallel.The optimal consumption point could shift from b to c as a result of any of the following EXCEPT:

One point on an indifference curve that displays a diminishing marginal rate of substitution between apples and oranges is 10 apples and 2 oranges;another is 8 apples and 4 oranges.Which of the following combinations of apples and oranges could also lie on this indifference curve?

Suppose peanut butter is an inferior good for Ilya and the price of peanut butter rises.What will happen to Ilya's consumption of peanut butter?

Greater levels of utility are represented by:

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

In terms of indifference curves,a demand curve is generated by changes in:

An indifference curve typically:

A _____ can be generated from indifference curves by changing _____.

Max consumes only yogurt and almonds,and he is on his highest possible indifference curve.Bundle A (4 yogurts and 2 almonds) and bundle B (3 yogurts and 3 almonds) are on this indifference curve.Between points A and B,what is Max's marginal rate of substitution of yogurt for almonds?

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

Consumers buy both alcoholic and nonalcoholic beverages.If the government tries to discourage people from drinking alcoholic beverages by imposing an excise tax on them but gives consumers an income subsidy to keep the consumers on their original indifference curves:

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

For most goods,indifference curves:

Use the following to answer question: -(Figure: Indifference Curves and Consumption Bundles) Use Figure Indifference Curves and Consumption Bundles.For this consumer pizza is a(n) _ good and hot dogs are a(n) _ good.

A _ can be generated from indifference curves by changing _.

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