Question 1

-Use the above figure. What does point N represent?

Accepted Answer

Point N represents a consumer not maximizing her satisfaction because it is not on the highest possible indifference curve given the budget constraint.

Question 2

Using indifference curve analysis, an optimum is characterized by

Accepted Answer

In indifference curve analysis, an optimum (point of consumer equilibrium) is reached where the marginal rate of substitution (MRS) between two goods is equal to the ratio of their prices. This condition ensures that the consumer is maximizing utility given their budget constraint.

Question 3

-In the above figure, point C is

Accepted Answer

The answer of 
-In the above figure, point C is
...

Question 4

-Use the above figure. What would make all possible points attainable for the individual to consume?

Accepted Answer

A decrease in the price of good y would allow the individual to purchase more of good y for the same amount of money, making more points on the consumption possibility curve attainable.

Question 5

A consumer optimum is characterized by

Accepted Answer

A consumer optimum is where the consumer maximizes utility given their budget constraint. This means that the consumer will allocate their budget such that the marginal utility per dollar spent is equal for all goods consumed. This can be represented by the marginal rate of substitution (MRS) of one good divided by its price being equal to the MRS of the other good divided by its price. Therefore, choice A is partially correct. However, in a consumer optimum, the MRS does not necessarily have to be equal to unity (choice B). Rather, the MRS must be equal to the ratio of the prices of the two goods (choice C). Choice D is incorrect because the income of the consumer is not directly related to the consumer optimum, as the optimum is solely determined by the prices and marginal utilities of the goods.

Question 6

-Refer to the above figure. Given the indifference map and budget constraint represented above the consumer will maximize utility when she consumes at

Accepted Answer

The answer of 
-Refer to the above figure. Given the...

Question 7

-Refer to the above figure. Given the indifference map and budget constraint represented above, what are all possible points at which that the individual can consume?

Accepted Answer

The individual can consume at any point along the budget constraint, which includes points A, B, and C. These points represent different combinations of goods that the individual can afford given their budget.

Question 8

A consumer is maximizing utility when

Accepted Answer

The consumer is maximizing utility when the slope of the budget constraint equals the marginal rate of substitution (MRS). This occurs at the point where the consumer has allocated their entire budget in such a way that the ratio of the marginal utilities of the two goods consumed is equal to the ratio of their prices. This is the point of tangency between the budget constraint and the highest possible indifference curve, known as the consumer's optimal consumption bundle.

Question 9

-Use the above figure. When the budget line rotates from "b" to "c"

Accepted Answer

The answer of 
-Use the above figure. When the budget...

Question 10

If a consumer chooses a combination of goods that are inside of her budget line, than

Accepted Answer

Choosing a combination of goods inside the budget line indicates that the consumer is not utilizing her entire budget to achieve the highest possible satisfaction. The budget line represents all combinations of goods that can be purchased with a given budget, and points on the line maximize satisfaction given the budget constraint. Points inside the budget line mean the consumer could consume more or different combinations of goods to potentially increase satisfaction, thus not maximizing it.

Question 11

When indifference curve analysis is used, a consumer optimum occurs at the point at which

Accepted Answer

The consumer optimum occurs when the indifference curve is tangent to the budget line. This is because at this point, the marginal rate of substitution (MRS) between two goods is equal to the relative price of the two goods. This means that the consumer is allocating their income in the most efficient way possible and is maximizing their overall satisfaction. Choices A, C, and D do not accurately represent the concept of consumer optimum in indifference curve analysis.

Question 12

-Use the above figure. When the budget line rotates from "c" to "b"

Accepted Answer

The answer of 
-Use the above figure. When the budget...

Question 13

-Refer to the above figure. Given the indifference map and budget constraint represented above, what would make all possible points attainable for the individual to consume?

Accepted Answer

A decrease in the price of Good X would make the budget constraint less steep, allowing the individual to afford more of Good X and potentially more of Good Y, making more points on the indifference map attainable.

Question 14

If the quantity of hamburgers is measured along the horizontal axis and the quantity of movies is measured along the vertical axis, an increase in the price of a movie would be shown by

Accepted Answer

An increase in the price of movies makes them relatively more expensive compared to hamburgers. This change is represented by a rotation of the budget constraint around the horizontal intercept (hamburgers), making the vertical intercept (movies) closer to the origin, as fewer movies can now be purchased with the same budget.

Question 15

-In the above figure, budget line DF would swivel in to the left if

Accepted Answer

The answer of 
-In the above figure, budget line DF...

Question 16

If an individual consumes only two goods and consumption of one good increases, then in order to keep the consumer on the same indifference curve, consumption of the other good must

Accepted Answer

If the consumption of one good increases, it means the consumer needs to give up some quantity of the other good to maintain the same level of utility. Therefore, consumption of the other good must decrease.

Question 17

-Use the above figure. The optimal position for the consumer is at

Accepted Answer

The optimal position for a consumer is where the highest possible indifference curve is tangent to the budget line, which is at point K in this scenario. This point represents the highest level of utility that the consumer can achieve given their budget constraint.

Question 18

-Use the above figure. When the budget line rotates from "b" to "c"

Accepted Answer

The answer of 
-Use the above figure. When the budget...

Question 19

-Use the above figure. When the budget line rotates from "c" to "b"

Accepted Answer

The answer of 
-Use the above figure. When the budget...

Question 20

A consumer will achieve the highest level of utility possible when she consumes

Accepted Answer

Option A describes the point where the consumer achieves the highest level of utility possible, known as the consumer's optimal consumption bundle. This occurs when the highest indifference curve (representing the most preferred consumption bundle) is tangent to the budget constraint (representing the consumer's affordable consumption bundles). This point maximizes the consumer's satisfaction given their income and preferences. B is not correct as the indifference curve crossing the budget constraint does not necessarily represent the optimal consumption bundle. C and D are both incorrect as both options are to the left of the budget constraint, which represents consumption bundles that the consumer cannot afford.

Quiz 20: Consumer Choice

-Use the above figure. What does point N represent?

Using indifference curve analysis, an optimum is characterized by

-In the above figure, point C is

-Use the above figure. What would make all possible points attainable for the individual to consume?

A consumer optimum is characterized by

-Refer to the above figure. Given the indifference map and budget constraint represented above the consumer will maximize utility when she consumes at

-Refer to the above figure. Given the indifference map and budget constraint represented above, what are all possible points at which that the individual can consume?

A consumer is maximizing utility when

-Use the above figure. When the budget line rotates from "b" to "c"

If a consumer chooses a combination of goods that are inside of her budget line, than

When indifference curve analysis is used, a consumer optimum occurs at the point at which

-Use the above figure. When the budget line rotates from "c" to "b"

-Refer to the above figure. Given the indifference map and budget constraint represented above, what would make all possible points attainable for the individual to consume?

If the quantity of hamburgers is measured along the horizontal axis and the quantity of movies is measured along the vertical axis, an increase in the price of a movie would be shown by

-In the above figure, budget line DF would swivel in to the left if

If an individual consumes only two goods and consumption of one good increases, then in order to keep the consumer on the same indifference curve, consumption of the other good must

-Use the above figure. The optimal position for the consumer is at

-Use the above figure. When the budget line rotates from "b" to "c"

-Use the above figure. When the budget line rotates from "c" to "b"

A consumer will achieve the highest level of utility possible when she consumes