Question 1

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

Question 2

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 different combinations of goods that a buyer can purchase with a given income and prices. It shows the trade-off between the two goods and illustrates the constraints faced by the buyer in terms of affordability.

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 c
C)Point e
D)Point f
E)Point b

Accepted Answer

A

Question 4

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 Timmy buys 5 bottles of hair gel for $4 each, he spends a total of 5 x $4 = $20 on hair gel. This leaves him with $100 - $20 = $80 to spend on pizza.
If Timmy buys pizzas for $10 each, he can buy $80/$10 = 8 pizzas. Therefore, the answer is choice C, 8 pizzas.

Question 5

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.

Question 6

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 the combinations of two goods that a consumer can afford given their income and the prices of the goods. Therefore, it is the boundary between affordable and unaffordable consumption combinations.

Question 7

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

Since Reb earns $1,000 per week, his weekly expenses on lures would be:
$5/lure * 124 lures = $620
This leaves him with $1,000 - $620 = $380 to spend on steaks.
The number of steaks he can buy is:
$380 ÷ $10/steak = 38 steaks

Question 8

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 y-axis represents the good that can be purchased with the entire budget while the x-axis represents the other good. Therefore, the point where the budget line intersects the y-axis indicates the quantity of the good that can be purchased when the entire budget is spent on it, and hence, only the good measured on the y-axis is represented at this point.

Question 9

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

To draw a budget line, we need two pieces of information: the consumer's budget and the prices of the goods they consume. Therefore, both Lucky's budget and the prices of the goods they consume are necessary to draw their budget line.

Question 10

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

B) 100 lures, 60 steaks is not possible because 100 lures at $5 each cost $500, and 60 steaks at $10 each cost $600, totaling $1100, which exceeds Reb's weekly income of $1000.

Question 11

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...

Question 12

-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 answer of 
-Susan can watch movies or attend plays.The...

Question 13

-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 f
E)Point d

Accepted Answer

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

Question 14

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

A budget line shows the combinations of goods a person can afford given their budget constraint. It does not show the production possibilities for a person, nor does it show the combinations of goods they cannot afford. Therefore, the correct choices are i and iii.

Question 15

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)Both answer A and answer B are correct.
E)Answer A, answer B, and answer C are correct.

Accepted Answer

The answer of Katie has $15.She likes M&M candies and...

Question 16

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 that a consumer can purchase given their income and the prices of the goods. It shows the limits of what a consumer can buy based on their budget constraints. Therefore, statement B is correct. Statements A, C, and D are false. While statement E is partially true, a person's budget line can also change if there is a change in the price of one or both goods.

Question 17

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 chooses not to spend all of their income, leaving some unspent.

Question 18

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

The answer of Sarah earns $500 per week selling baskets...

Question 19

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 apples cost $3 a pound and the consumer has $30 to spend, they can buy 10 pounds of apples (10 x $3 = $30). Therefore, the budget line would intersect the apple axis at 10 pounds.

Question 20

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, as it represents the combination of two goods that can be purchased with a given budget. The slope of the budget line is equal to the relative price of the two goods, which is the ratio of their prices. The budget line will only rotate or shift when the consumer's budget changes, as the prices and relative prices of the goods remain constant. Therefore, both statements A and B are correct, making answer choice E the correct option.

Quiz 13: Consumer Choice and Demand

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 budget line shows the

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.

Which of the following statements is correct?

The budget line is the boundary between

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?

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

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

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?

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?

-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

-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?

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

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

Which of the following statements is correct?

A consumption point inside the 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.

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 budget line