Question 1

In the goal of consumer optimization, it is assumed that

Accepted Answer

A)   consumption equals disposable income.
B)   savings are positive.
C)   more is preferred to less.
D)   the consumer is rational.
E)   the consumer consumes more than his or her disposable income.

Question 2

When consumption and leisure are both normal goods, an increase in real dividend income minus taxation, the rational consumer

Accepted Answer

A)   increases consumption and increases labour supply.
B)   increases consumption and reduces labour supply.
C)   reduces consumption and increases labour supply.
D)   reduces consumption and reduces labour supply.
E)   increases consumption and savings.

Question 3

Of the following, which is the least likely example of an increase in total factor productivity?

Accepted Answer

A)   the introduction of the assembly line
B)   the invention of the personal computer
C)   good weather
D)   a reduction in the relative price of energy
E)   an educated work force

Question 4

We assume that the representative consumer's preferences exhibit the properties that

Accepted Answer

A)   they be convex and that more is always preferred to less.
B)   more is always preferred to less and that each consumer has one strictly favourite good.
C)   each consumer has one strictly preferred good and that consumption and leisure are both normal goods.
D)   consumption and leisure are both normal goods and that the consumer likes diversity in his or her consumption bundle.
E)   more is always preferred to less and that consumers do not like diversity in his or her consumption bundle.

Question 5

In a typical aggregate production function, total factor productivity denotes the quantity of aggregate output that we cannot explain solely by the contributions of the labour and capital inputs. a)In reality, what explains total factor productivity and its movements over time? b)Discuss the problems we might face in trying to measure the factors contributing to changes in productivity over time.

Accepted Answer

There are many factors that contribute t...

Question 6

In a one-period economy

Accepted Answer

A)   consumption equals disposable income.
B)   consumption equals disposable income plus the value of non-market work.
C)   savings is always positive.
D)   consumers may increase their consumption by borrowing.
E)   consumers save more than they consume.

Question 7

A dynamic decision is one that

Accepted Answer

A)   is made very quickly.
B)   involves only the present.
C)   involves only the future.
D)   involves planning over more than one time period.
E)   involved planning over exactly two time periods.

Question 8

The Solow residual is a measure of

Accepted Answer

A)   average labour productivity.
B)   average capital productivity.
C)   total factor productivity.
D)   the rate of growth of real GDP.
E)   the marginal product of labour.

Question 9

The time constraint for the consumer is

Accepted Answer

A)   the amount of time for decision making.
B)   expressed as leisure time - time spent working = total time available.
C)   expressed as leisure time - sleep time = time spent working.
D)   expressed as leisure time + time spent working = total time available.
E)   a result of consumers' busy work schedule.

Question 10

In macroeconomic analysis, the representative consumer

Accepted Answer

A)   denotes the consumer with the average amount of income.
B)   plays the role of a stand-in for all consumers in the economy.
C)   is the consumer who bargains with firms for all workers in the economy.
D)   is always a misleading fiction.
E)   is the consumer with an average standard of living.

Question 11

At the optimal consumption bundle, the marginal rate of substitution of leisure for consumption is equal to

Accepted Answer

A)   the real wage and the budget line is tangent to an indifference curve.
B)   minus the real wage and the budget line is tangent to the indifference curve.
C)   the real wage and the budget line intersects the indifference curve.
D)   minus the real wage and the budget line intersects the indifference curve.
E)   the real wage and on the highest possible indifference curve.

Question 12

A production function describes the

Accepted Answer

A)   technological possibilities for converting factor inputs into outputs.
B)   intellectual possibilities for converting factor inputs into outputs.
C)   amount of resources available to the representative firm.
D)   actual process of converting factor inputs into outputs.
E)   amount of labour available to produce outputs.

Question 13

An increase in real dividend income minus taxes represents

Accepted Answer

A)   a pure substitution effect.
B)   a pure income effect.
C)   a combination of income and substitution effects.
D)   neither a pure income effect nor a pure substitution effect.
E)   an income effect that is greater than the substitution effect.

Question 14

"More is always preferred to less" refers to

Accepted Answer

A)   choices between work and leisure.
B)   choices between happiness and utility.
C)   choices between consumption and work.
D)   choices between consumption and leisure.
E)   more consumption and less leisure.

Question 15

The representative consumer acts competitively

Accepted Answer

A)   when he or she can haggle for a lower price.
B)   when he or she is a price-taker.
C)   when he or she is a price-maker.
D)   if the consumer is large relative to the size of the market.
E)   when he or she has to make decisions regarding work and leisure.

Question 16

A utility function

Accepted Answer

A)   is a stand-in for a more complicated function.
B)   is useful only in microeconomics, not macroeconomics.
C)   captures the preferences of the representative household over consumption and leisure goods.
D)   captures the representative firm's ability to produce goods and services.
E)   captures the maximum satisfaction of consumers.

Question 17

An economy without monetary exchange is called

Accepted Answer

A)   a primitive economy.
B)   a barter economy.
C)   a socialist economy.
D)   an autarky economy.
E)   a perfectly competitive economy.

Question 18

Convexity of the indifference curve follows from

Accepted Answer

A)   the fact that more is preferred to less.
B)   the fact that consumption and leisure are normal goods.
C)   the fact that consumers are indifferent to consumption and leisure goods.
D)   the fact that consumers prefer diversity.
E)   the fact that income plays a significant role in consumption and leisure decisions.

Question 19

For macroeconomic purposes, it is assumed that all consumers in the economy

Accepted Answer

A)   are diverse.
B)   are not identical.
C)   are identical.
D)   exhibit differences.
E)   exhibit different preferences.

Question 20

The optimal consumption bundle is the point representing a consumption-leisure pair that is on the

Accepted Answer

A)   lowest possible indifference curve and is on or outside the consumer's budget constraint.
B)   lowest possible indifference curve and is on or inside the consumer's budget constraint.
C)   highest possible indifference curve and is on or outside the consumer's budget constraint.
D)   highest possible indifference curve and is on or inside the consumer's budget constraint.
E)   lowest possible indifference curve that maximizes total utility.

Exam 4: Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A production function describes the

Correct Answer
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The time constraint for the consumer is

Correct Answer
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A dynamic decision is one that

Correct Answer
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Of the following, which is the least likely example of an increase in total factor productivity?

Correct Answer
verified

A utility function

Correct Answer
verified

At the optimal consumption bundle, the marginal rate of substitution of leisure for consumption is equal to

Correct Answer
verified

For macroeconomic purposes, it is assumed that all consumers in the economy

Correct Answer
verified

When consumption and leisure are both normal goods, an increase in real dividend income minus taxation, the rational consumer

Correct Answer
verified

An economy without monetary exchange is called

Correct Answer
verified

Convexity of the indifference curve follows from

Correct Answer
verified

"More is always preferred to less" refers to

Correct Answer
verified

The optimal consumption bundle is the point representing a consumption-leisure pair that is on the

Correct Answer
verified

In the goal of consumer optimization, it is assumed that

Correct Answer
verified

Correct Answer
verified
There are many factors that contribute t...
View Answer

An increase in real dividend income minus taxes represents

Correct Answer
verified

We assume that the representative consumer's preferences exhibit the properties that

Correct Answer
verified

The representative consumer acts competitively

Correct Answer
verified

In a one-period economy

Correct Answer
verified

In macroeconomic analysis, the representative consumer

Correct Answer
verified

The Solow residual is a measure of

Correct Answer
verified

Exam 4: Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A production function describes the

Correct AnswerverifiedShow Answer

The time constraint for the consumer is

Correct AnswerverifiedShow Answer

A dynamic decision is one that

Correct AnswerverifiedShow Answer

Of the following, which is the least likely example of an increase in total factor productivity?

Correct AnswerverifiedShow Answer

A utility function

Correct AnswerverifiedShow Answer

At the optimal consumption bundle, the marginal rate of substitution of leisure for consumption is equal to

Correct AnswerverifiedShow Answer

For macroeconomic purposes, it is assumed that all consumers in the economy

Correct AnswerverifiedShow Answer

When consumption and leisure are both normal goods, an increase in real dividend income minus taxation, the rational consumer

Correct AnswerverifiedShow Answer

An economy without monetary exchange is called

Correct AnswerverifiedShow Answer

Convexity of the indifference curve follows from

Correct AnswerverifiedShow Answer

"More is always preferred to less" refers to

Correct AnswerverifiedShow Answer

The optimal consumption bundle is the point representing a consumption-leisure pair that is on the

Correct AnswerverifiedShow Answer

In the goal of consumer optimization, it is assumed that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThere are many factors that contribute t...View AnswerShow Answer

An increase in real dividend income minus taxes represents

Correct AnswerverifiedShow Answer

We assume that the representative consumer's preferences exhibit the properties that

Correct AnswerverifiedShow Answer

The representative consumer acts competitively

Correct AnswerverifiedShow Answer

In a one-period economy

Correct AnswerverifiedShow Answer

In macroeconomic analysis, the representative consumer

Correct AnswerverifiedShow Answer

The Solow residual is a measure of

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There are many factors that contribute t...
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