Question 1

A budget line
A) shows the limits to what can be consumed.
B) has a slope equal to a relative price.
C) rotates or shifts only when the consumer's budget changes.
D) Answers B and C are both correct.
E) Answers A and B are both correct.

Accepted Answer

A budget line shows the limits to what can be consumed (option A) and has a slope equal to a relative price (option B). It does not rotate or shift when the consumer's budget changes, but rather shifts to represent changes in prices or income (option C is incorrect). Therefore, answers A and B are both correct, making option E the best choice.

Question 2

Sarah earns $500 per week selling baskets made out of tree vines.With this money she buys sushi and rose bushes.Each piece of sushi costs $1 and each rose bush costs $10.If Sarah spends $170 per week on sushi,the maximum quantity of rose bushes can she buy each week is ________ bushes.
A) 33
B) 330
C) 3
D) 17
E) None of the above answers is correct.

Accepted Answer

A

Question 3

-The figure above shows Sarah's budget line.Sarah earns $500 per week selling baskets made out of tree vines.With this money she buys sushi and rose bushes.Each piece of sushi costs $1 and each rose bush costs $10.Sarah will be at what point on her budget line if she spends $500 per week on rose bushes?
A) Point a
B) Point b
C) Point c
D) Point f
E) Point e

Accepted Answer

A

Question 4

Suppose a consumer has $100 to spend on two goods,shoes and shirts.If the price of a pair of shoes is $20 per pair and the price of a shirt is $15 each,which of the following combinations is unaffordable to the consumer?
A) 5 pairs of shoes and 0 shirts
B) 2 pairs of shoes and 4 shirts
C) 0 pairs of shoes and 7 shirts
D) 2 pairs of shoes and 3 shirts
E) 0 pairs of shoes and 0 shirts

Accepted Answer

The cost of 0 pairs of shoes and 7 shirts is $105 ($15 * 7), which exceeds the consumer's budget of $100, making it unaffordable.

Question 5

Timmy makes $100 per week as a taxidermist.He spends all this income to buy pizza and hair gel.The price of a pizza is $10 and the price of a bottle of hair gel is $4.If Timmy buys 5 bottles of hair gel,then he buys ________ pizzas.
A) 10
B) 4
C) 8
D) 20
E) None of the above answers is correct.

Accepted Answer

If he buys 5 bottles of hair gel, he spends 4*5=$<<4*5=20>>20 on hair gel. His remaining money after buying hair gel is 100-20=$<<100-20=80>>80. He can buy 8 pizzas with $80 because 80/10=<<80/10=8>>8. Therefore, the answer is C (8 pizzas).

Question 6

In order to draw Lucky's budget line,we need to know
A) only Lucky's budget.
B) only the prices of the goods Lucky consumes.
C) both Lucky's budget and the prices of the goods Lucky consumes.
D) Lucky's budget, the prices of the goods lucky consumes, and the utilities of the goods Lucky does not consume.
E) the utilities of the goods Lucky consumes.

Accepted Answer

In order to draw Lucky's budget line, we need to know Lucky's budget and the prices of the goods Lucky consumes. The budget line represents all the combinations of goods that Lucky can consume at a given budget and price level. Therefore, we need both of these pieces of information to accurately draw the budget line. The utilities of the goods Lucky does not consume are not needed for drawing the budget line. The utilities of the goods Lucky consumes are also not necessary as the budget line only represents the affordability constraint, not the preferences or choices of the consumer.

Question 7

If a consumer has $30 to spend on apples and bananas,where on the apple axis would the consumer's budget line intersect if the price of apples is $3 a pound?
A) 30 pounds
B) 10 pounds
C) 3 pounds
D) 0 pounds
E) It is impossible to determine with the given information.

Accepted Answer

If the consumer has $30 to spend and the price of apples is $3 a pound, then the consumer can afford to buy 10 pounds of apples ($30 / $3 per pound = 10 pounds). At this point on the apple axis, the budget line would intersect with the vertical axis representing the amount spent on apples, and the horizontal axis representing the amount spent on bananas.

Question 8

Which of the following is shown by a budget line?
i.The combinations of goods a person can afford
ii.The production possibilities for a person
iii.The combinations of goods a person cannot afford
A) i only
B) i and ii
C) i and iii
D) ii and iii
E) ii only

Accepted Answer

The answer of Which of the following is shown by...

Question 9

Which of the following statements is correct?
A) The slope of the budget line shows the opportunity cost of the good measured along the x-axis.
B) Along the budget line, consuming more of one good implies consuming more of the other.
C) The slope of the budget line shows there is no tradeoff between the two goods because the consumer can buy each of them.
D) If the consumer's budget increases, the budget line shifts leftward and its slope does not change.
E) None of the above answers is correct.

Accepted Answer

The slope of the budget line represents the opportunity cost of the good measured along the x-axis, as it shows how much of one good the consumer must give up to gain one unit of the other good.

Question 10

A consumption point inside the budget line
A) is unaffordable.
B) is possible to afford but has some unspent income.
C) shows that the consumer has chosen to spend all of his or her income on both products.
D) shows that the consumer spends income on only one of the goods.
E) is affordable and, because it is inside the budget line, means that all the person's budget has been spent.

Accepted Answer

A consumption point inside the budget line indicates that the consumer can afford the combination of goods but has not spent all of their income, hence there is some unspent income.

Question 11

Which of the following statements is correct?
A) Consumers have the ability to buy everything they desire.
B) A consumer's budget line shows the limits to what a consumer can buy.
C) A consumer's budget line shows the goods with the highest marginal utilities.
D) Rich consumers are unaffected by prices.
E) A budget line changes only if the person's budget changes.

Accepted Answer

A budget line shows the different combinations of two goods a consumer can buy with a given level of income and prices. It serves as a constraint on what a consumer can buy, indicating the limits to their consumption choices. Therefore, statement B is correct. Statements A, C, and D are incorrect as they oversimplify the complexity of consumer behavior and market conditions. Statement E is also incorrect as a budget line can also change due to changes in prices or income.

Question 12

A budget line shows the
A) quantities of goods a buyer can purchase with given income and prices.
B) relationship between price and quantity demanded.
C) total utility a consumer realizes from consuming different quantities of a good.
D) quantities of consumption that maximizes marginal utility.
E) the prices of the two goods a buyer can purchase.

Accepted Answer

A budget line shows the maximum combinations of goods or services that a consumer can buy with a given income and given prices. It represents an individual's budget constraint and shows the trade-off between two goods or services that a consumer must make given their limited income.

Question 13

$\begin{array}{c}
\begin{array}{c}
\
\text { Possibility}\
\hline{A}\
B\
C\
D
\end{array}
\begin{array}{c}
\text {Movies}\
\text {(per month)}\
\hline6\
4\
2\
0
\end{array}
\begin{array}{c}
\text {Plays}\
\text {(permonth)}\
\hline0\
1\
2\
3
\end{array}
\end{array}$

-Susan can watch movies or attend plays.The table above gives combinations of movies and plays that are on her budget line.If the price of a movie is $10,then her budget for movies and plays is
A) $10 per month.
B) $50 per month.
C) $60 per month.
D) $120 per month.
E) unknown from the information.

Accepted Answer

The budget line for Susan is given by the equation $6M+2P=60$, where $M$ is the number of movies and $P$ is the number of plays. If the price of a movie is $10, then her budget for movies is $6M=60-2P$, which means that she has a monthly budget of $60$ dollars. Therefore, the answer is (C) $60$ dollars per month. As for the best choice, it depends on her preferences. If she likes both movies and plays equally, then the optimal choice is at point $B$ which gives her 4 movies and 1 play per month. If she prefers movies over plays, then the optimal choice is at point $A$ which gives her 6 movies and 0 plays per month. If she prefers plays over movies, then the optimal choice is at point $D$ which gives her 0 movies and 3 plays per month.

Question 14

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each,steaks cost $10 each.With this level of income,which consumption points are not possible?
A) 200 lures, 0 steaks
B) 100 lures, 60 steaks
C) 80 lures, 20 steaks
D) 0 lures, 50 steaks
E) 50 lures, 50 steaks

Accepted Answer

The total weekly income is $1,000. The cost of lures is $5 each, and the cost of steaks is $10 each. For choice B, 100 lures at $5 each would cost $500, and 60 steaks at $10 each would cost $600, totaling $1,100, which exceeds the $1,000 budget, making it not possible.

Question 15

The point where the budget line intersects the y-axis represents a combination of goods that contains
A) some of both goods.
B) only the good measured on the y-axis.
C) only the good measured on the x-axis.
D) no goods.
E) the quantity of the good measured on the y-axis that has zero marginal utility.

Accepted Answer

The point where the budget line intersects the y-axis represents the quantity of the good measured on the y-axis that can be purchased with all the available income when none of the other good is purchased. Therefore, the answer is only the good measured on the y-axis (choice B).

Question 16

The budget line is the boundary between
A) preferred and nonpreferred consumption combinations.
B) affordable and unaffordable consumption combinations.
C) goods and bads.
D) income and expenditure.
E) income and consumption.

Accepted Answer

The budget line represents all the affordable consumption combinations of two goods that a consumer can purchase at a given income level and prices. It forms the boundary between affordable and unaffordable consumption combinations. Therefore, option B is the correct answer.

Question 17

-The figure above shows Sarah's budget line.Sarah earns $500 per week selling baskets made out of tree vines.With this money she buys sushi and rose bushes.Each piece of sushi costs $1 and each rose bush costs $10.Sarah will be at what point on her budget line if she spends $200 per week on sushi?
A) Point a
B) Point b
C) Point c
D) Point d
E) Point f

Accepted Answer

The answer of 
-The figure above shows Sarah's budget line.Sarah...

Question 18

Katie has $15.She likes M&M candies and Hershey's white chocolate bars.M&M candies are $1.50 a pack and (the large)Hershey bars are $3.00 each.Katie can choose to buy
A) 4 Hershey bars and 2 packs of M&Ms.
B) 2 Hershey bars and 6 packs of M&Ms.
C) 5 Hershey bars and 10 packs of M&Ms.
D) Answers A and B are correct.
E) Answers A, B, and C are correct.

Accepted Answer

Option A: 4 Hershey bars at $3 each = $12, and 2 packs of M&Ms at $1.50 each = $3. Total = $15.Option B: 2 Hershey bars at $3 each = $6, and 6 packs of M&Ms at $1.50 each = $9. Total = $15.Option C: 5 Hershey bars at $3 each = $15, leaving no money for M&Ms, so it's incorrect.Options A and B are both possible ways for Katie to spend exactly $15 on her preferred candies.

Question 19

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each,steaks cost $10 each.If Reb purchases 124 lures per week,how many steaks can he buy?
A) 620
B) 38
C) 123
D) 380
E) 100

Accepted Answer

Reb spends $5 * 124 = $620 on lures. He has $1000 - $620 = $380 left. Steaks cost $10 each, so he can buy $380 / $10 = 38 steaks.

Question 20

Timmy makes $100 per week as a taxidermist.He spends all this income to buy pizza and hair gel.The price of a pizza is $10 and the price of a bottle of hair gel is $4.If Timmy buys 6 pizzas per week,how many bottles of gel can he purchase?
A) 10
B) 60
C) 20
D) 40
E) None of the above answers is correct.

Accepted Answer

The answer of Timmy makes $100 per week as a...

Quiz 13: Consumer Choice and Demand

A budget line

Sarah earns $500 per week selling baskets made out of tree vines.With this money she buys sushi and rose bushes.Each piece of sushi costs $1 and each rose bush costs $10.If Sarah spends $170 per week on sushi,the maximum quantity of rose bushes can she buy each week is ________ bushes.

Suppose a consumer has $100 to spend on two goods,shoes and shirts.If the price of a pair of shoes is $20 per pair and the price of a shirt is $15 each,which of the following combinations is unaffordable to the consumer?

Timmy makes $100 per week as a taxidermist.He spends all this income to buy pizza and hair gel.The price of a pizza is $10 and the price of a bottle of hair gel is $4.If Timmy buys 5 bottles of hair gel,then he buys ________ pizzas.

In order to draw Lucky's budget line,we need to know

If a consumer has $30 to spend on apples and bananas,where on the apple axis would the consumer's budget line intersect if the price of apples is $3 a pound?

Which of the following is shown by a budget line? i.The combinations of goods a person can afford ii.The production possibilities for a person iii.The combinations of goods a person cannot afford

Which of the following statements is correct?

A consumption point inside the budget line

Which of the following statements is correct?

A budget line shows the

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each,steaks cost $10 each.With this level of income,which consumption points are not possible?

The point where the budget line intersects the y-axis represents a combination of goods that contains

The budget line is the boundary between

-The figure above shows Sarah's budget line.Sarah earns $500 per week selling baskets made out of tree vines.With this money she buys sushi and rose bushes.Each piece of sushi costs $1 and each rose bush costs $10.Sarah will be at what point on her budget line if she spends $200 per week on sushi?

Katie has $15.She likes M&M candies and Hershey's white chocolate bars.M&M candies are $1.50 a pack and (the large) Hershey bars are $3.00 each.Katie can choose to buy

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each,steaks cost $10 each.If Reb purchases 124 lures per week,how many steaks can he buy?

Timmy makes $100 per week as a taxidermist.He spends all this income to buy pizza and hair gel.The price of a pizza is $10 and the price of a bottle of hair gel is $4.If Timmy buys 6 pizzas per week,how many bottles of gel can he purchase?