Question 1

Mario sees popcorn and pretzels as perfect substitutes.He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels.If the price of a cup of popcorn is $3 and the price of a cup of pretzels is $1, Mario will eat:
A)only pretzels.
B)only popcorn.
C)mostly pretzels.
D)The answer is impossible to determine.

Accepted Answer

The answer of Mario sees popcorn and pretzels as perfect...

Question 2

Mr.Black always consumes coffee and cream in fixed proportions-8 ounces of coffee to 1 ounce of cream.This implies that for Mr.Black:
A)coffee and cream are perfect substitutes.
B)the indifference curves for coffee and cream are tangent. 
C)8 ounces of coffee and 2 ounces of cream yield more utility than 8 ounces of coffee and 1 ounce of cream.
D)coffee and cream are perfect complements.

Accepted Answer

The fixed proportion of 8 ounces of coffee to 1 ounce of cream indicates that coffee and cream are perfect complements, as they need to be consumed together in a specific ratio to maximize utility.

Question 3

Jake considers fries and onion rings perfect substitutes.The indifference curve between fries and onion rings must be:
A)a right angle.
B)concave.
C)perfectly vertical.
D)a straight line.

Accepted Answer

The answer of Jake considers fries and onion rings perfect...

Question 4

LaToya sees honey and sugar as perfect substitutes.She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar.If the price of honey is half that of sugar, LaToya will use:
A)only honey.
B)only sugar.
C)a lot of honey and a little sugar.
D)a lot of sugar and a little honey.

Accepted Answer

The answer of LaToya sees honey and sugar as perfect...

Question 5

Alison is a traveling salesperson who drives many miles each day to visit her clients.She gets utility from the purchase of gasoline, but she doesn't care which brand of gasoline she consumes.Suppose she has a daily budget of $100 for gasoline and can purchase from two companies, PB and Noxxe.Today she notices that the price of a gallon of gas at PB is $2.50 and the price of a gallon of gas at Noxxe is $3.33.What is her optimal bundle of gas?
A)40 gallons at PB and 30 gallons at Noxxe.
B)zero gallons at PB and 30 gallons at Noxxe.
C)20 gallons at PB and 15 gallons at Noxxe.
D)40 gallons at PB and zero gallons at Noxxe.

Accepted Answer

Alison should buy the maximum amount of gasoline from the cheaper option, PB, where the price per gallon is $2.50. With a $100 budget, she can buy 40 gallons from PB and none from Noxxe, maximizing her utility.

Question 6

Cookie Monster always consumes cookies and milk in fixed proportions: 4 cookies to 8 ounces of milk.Which of the following combinations of cookies and milk will give Cookie Monster the highest total utility?
A)8 cookies and 16 ounces of milk
B)4 cookies and 8 ounces of milk
C)4 cookies and 16 ounces of milk
D)4 cookies and 4 ounces of milk

Accepted Answer

Cookie Monster always consumes cookies and milk in proportion to 4 cookies and 8 ounces of milk. Therefore, the highest total utility will be achieved when he consumes 8 cookies and 16 ounces of milk.

Question 7

Ms.Sweettooth always consumes iced tea and sugar in fixed proportions: 8 ounces of iced tea to 3 teaspoons of sugar.This implies that for Ms.Sweettooth the marginal rate of substitution of iced tea for sugar is:
A)3/8.
B)8/3.
C)diminishing but between 8 and
D)3.undefined.

Accepted Answer

The answer of Ms.Sweettooth always consumes iced tea and sugar...

Question 8

If Coke and Pepsi are perfect substitutes for Lynn, her indifference curves are:
A)right angles.
B)concave from the origin.
C)downward-sloping straight lines.
D)vertical lines.

Accepted Answer

The answer of If Coke and Pepsi are perfect substitutes...

Question 9

Cookie Monster always consumes cookies and milk in fixed proportions: 4 cookies to 8 ounces of milk.This implies that for Cookie Monster the marginal rate of substitution of cookies for milk is:
A)1/2.
B)2.
C)diminishing but between 8 and 4.
D)undefined.

Accepted Answer

The answer of Cookie Monster always consumes cookies and milk...

Question 10

Mario sees popcorn and pretzels as perfect substitutes.He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels.If the price of a cup of popcorn equals the price of a cup of pretzels, Mario will eat:
A)only pretzels.
B)only popcorn.
C)mostly pretzels.
D)The answer is impossible to determine.

Accepted Answer

Since Mario considers popcorn and pretzels perfect substitutes and is always willing to substitute 3 cups of popcorn for 1 cup of pretzels, he will always choose the cheaper option. If the price of a cup of popcorn equals the price of a cup of pretzels, then 3 cups of popcorn will cost the same as 1 cup of pretzels. Therefore, Mario will choose to eat only pretzels in order to maximize his consumption while minimizing his spending.

Question 11

Mario sees popcorn and pretzels as perfect substitutes.He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels.His indifference curves for popcorn and pretzels are and at the optimal consumption bundle his marginal rate of substitution of popcorn in place of pretzels is
________.
A)right angles; 3
B)right angles; 0.33
C)straight lines;
D)3 straight lines; 1/3

Accepted Answer

The answer of Mario sees popcorn and pretzels as perfect...

Question 12

Ms.Sweettooth always consumes iced tea and sugar in fixed proportions: 8 ounces of iced tea to 3 teaspoons of sugar.Which of the following combinations of iced tea and sugar will give Ms.Sweettooth the highest total utility?
A)8 ounces of iced tea and 3 teaspoons of sugar
B)24 ounces of iced tea and 3 teaspoons of sugar
C)8 ounces of iced tea and 9 teaspoons of sugar
D)All of the combinations noted give the same total utility.

Accepted Answer

Ms. Sweettooth's utility is maximized when the ratio of iced tea to sugar is 8:3. Option A has the correct ratio, but increasing the amount of iced tea while keeping the same amount of sugar (option B) or increasing the amount of sugar while keeping the same amount of iced tea (option A) will not increase her total utility. Option C, on the other hand, maintains the correct ratio while increasing the total amount of both iced tea and sugar, therefore giving Ms. Sweettooth the highest total utility. Since Ms.Sweettooth always consumes iced tea and sugar in fixed proportions of 8 ounces of iced tea to 3 teaspoons of sugar, the ratio is always the same. Therefore, to maximize total utility, the only option is to consume more of both iced tea and sugar. Option C has the highest quantity of sugar, which will increase the total utility since Ms.Sweettooth has a sweet tooth. Hence, option C is the best choice.

Question 13

LaToya sees honey and sugar as perfect substitutes.She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar.If honey is three times as expensive as sugar, LaToya will use:
A)only honey.
B)only sugar.
C)some honey and some sugar.
D)a lot of sugar and a little honey.

Accepted Answer

The answer of LaToya sees honey and sugar as perfect...

Question 14

Josh is a house painter who always purchases two new paintbrushes for every new gallon of paint, regardless of the relative prices.If we were to graph these indifference curves, they would appear as:
A)straight downward-sloping lines.
B)downward-sloping lines with a diminishing marginal rate of substitution.
C)right angles.
D)upward-sloping straight lines.

Accepted Answer

Josh's behavior indicates perfect complements, as he always buys two paintbrushes per gallon of paint. Indifference curves for perfect complements are right angles.

Question 15

LaToya sees honey and sugar as perfect substitutes.She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar.If honey is twice as expensive as sugar, LaToya will:
A)use only honey.
B)use only sugar.
C)use a lot of honey and a little sugar.
D)be willing to purchase either sugar or honey.

Accepted Answer

Since LaToya sees honey and sugar as perfect substitutes, she will be willing to use either of them depending on their relative prices. However, since honey is twice as expensive as sugar, she will likely use more sugar and less honey to save money. Therefore, the best choice is D, which means that LaToya is willing to purchase either sugar or honey depending on their relative prices. Since LaToya sees honey and sugar as perfect substitutes, she is willing to use either one depending on the price. If honey is twice as expensive as sugar, she will likely use more sugar than honey, but she will still be willing to purchase either one. Therefore, the best choice is D.

Question 16

Mario sees popcorn and pretzels as perfect substitutes.He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels.If the price of a cup of popcorn is $4 and the price of a cup of pretzels is $1, Mario will eat:
A)only pretzels.
B)only popcorn.
C)mostly pretzels.
D)The answer is impossible to determine.

Accepted Answer

The answer of Mario sees popcorn and pretzels as perfect...

Question 17

Mario sees popcorn and pretzels as perfect substitutes.He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels.If Mario consumes only pretzels, then we know that the relative price of popcorn in terms of pretzels is:
A)less than 1/3.
B)greater than
C)1/3.less than 3.
D)greater than 3.

Accepted Answer

The answer of Mario sees popcorn and pretzels as perfect...

Question 18

Mr.Black always consumes coffee and cream in fixed proportions-8 ounces of coffee to 1 ounce of cream.This implies that for Mr.Black the marginal rate of substitution of coffee for cream is:
A)1/8.
B)8.
C)diminishing but between 8 and 1.
D)undefined.

Accepted Answer

Mr. Black consumes coffee and cream in fixed proportions, meaning they are perfect complements. In such cases, the marginal rate of substitution is undefined because the consumer does not substitute one good for the other.

Question 19

Mario sees popcorn and pretzels as perfect substitutes.He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels.If Mario consumes only popcorn, then we know that the relative price of popcorn in terms of pretzels is:
A)less than 1/3.
B)greater than
C)1/3.less than 3.
D)greater than 3.

Accepted Answer

Mario is willing to substitute 3 cups of popcorn for 1 cup of pretzels, indicating that he values 1 cup of pretzels as equivalent to 3 cups of popcorn. Therefore, the relative price of popcorn in terms of pretzels must be less than 1/3 for him to consume only popcorn.

Question 20

Ms.Sweettooth always consumes iced tea and sugar in fixed proportions: 8 ounces of iced tea to 3 teaspoons of sugar.This implies that for Ms.Sweettooth:
A)iced tea and sugar are perfect substitutes.
B)the indifference curves for iced tea and sugar are parallel.
C)8 ounces of iced tea and 3 teaspoons of sugar yield exactly the same utility as 16 ounces of iced tea and 6 teaspoons of sugar.
D)iced tea and sugar are perfect complements.

Accepted Answer

Ms.Sweettooth always consumes iced tea and sugar in fixed proportions, which indicates perfect complementarity between the two goods. Therefore, the best choice(s) for Ms.Sweettooth is to consume 8 ounces of iced tea with 3 teaspoons of sugar, as any deviation from this fixed proportion will decrease her utility. Ms. Sweettooth always consumes 8 ounces of iced tea and 3 teaspoons of sugar in fixed proportions, which implies that they are perfect complements, since the consumption of one good is always in a fixed ratio with the consumption of the other good. Perfect complements have an L-shaped indifference curve, which means that only one combination of the goods can yield maximum utility. Therefore, the best choice for Ms. Sweettooth is always 8 ounces of iced tea and 3 teaspoons of sugar.

Quiz 10: The Rational Consumer

Mario sees popcorn and pretzels as perfect substitutes.He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels.If the price of a cup of popcorn is $3 and the price of a cup of pretzels is $1, Mario will eat:

Mr.Black always consumes coffee and cream in fixed proportions-8 ounces of coffee to 1 ounce of cream.This implies that for Mr.Black:

Jake considers fries and onion rings perfect substitutes.The indifference curve between fries and onion rings must be:

LaToya sees honey and sugar as perfect substitutes.She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar.If the price of honey is half that of sugar, LaToya will use:

Cookie Monster always consumes cookies and milk in fixed proportions: 4 cookies to 8 ounces of milk.Which of the following combinations of cookies and milk will give Cookie Monster the highest total utility?

Ms.Sweettooth always consumes iced tea and sugar in fixed proportions: 8 ounces of iced tea to 3 teaspoons of sugar.This implies that for Ms.Sweettooth the marginal rate of substitution of iced tea for sugar is:

If Coke and Pepsi are perfect substitutes for Lynn, her indifference curves are:

Cookie Monster always consumes cookies and milk in fixed proportions: 4 cookies to 8 ounces of milk.This implies that for Cookie Monster the marginal rate of substitution of cookies for milk is:

Mario sees popcorn and pretzels as perfect substitutes.He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels.If the price of a cup of popcorn equals the price of a cup of pretzels, Mario will eat:

Mario sees popcorn and pretzels as perfect substitutes.He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels.His indifference curves for popcorn and pretzels are and at the optimal consumption bundle his marginal rate of substitution of popcorn in place of pretzels is ________.

Ms.Sweettooth always consumes iced tea and sugar in fixed proportions: 8 ounces of iced tea to 3 teaspoons of sugar.Which of the following combinations of iced tea and sugar will give Ms.Sweettooth the highest total utility?

LaToya sees honey and sugar as perfect substitutes.She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar.If honey is three times as expensive as sugar, LaToya will use:

Josh is a house painter who always purchases two new paintbrushes for every new gallon of paint, regardless of the relative prices.If we were to graph these indifference curves, they would appear as:

LaToya sees honey and sugar as perfect substitutes.She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar.If honey is twice as expensive as sugar, LaToya will:

Mario sees popcorn and pretzels as perfect substitutes.He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels.If the price of a cup of popcorn is $4 and the price of a cup of pretzels is $1, Mario will eat:

Mario sees popcorn and pretzels as perfect substitutes.He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels.If Mario consumes only pretzels, then we know that the relative price of popcorn in terms of pretzels is:

Mr.Black always consumes coffee and cream in fixed proportions-8 ounces of coffee to 1 ounce of cream.This implies that for Mr.Black the marginal rate of substitution of coffee for cream is:

Mario sees popcorn and pretzels as perfect substitutes.He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels.If Mario consumes only popcorn, then we know that the relative price of popcorn in terms of pretzels is:

Ms.Sweettooth always consumes iced tea and sugar in fixed proportions: 8 ounces of iced tea to 3 teaspoons of sugar.This implies that for Ms.Sweettooth: