Question 1

Figure 21-5
(a) 
(b)   
-Refer to Figure 21-5. In graph (a) , if income is equal to $200, then the price of good Y is

Accepted Answer

A)  $3.
B)  $5.
C)  $7.
D)  $10.E) C) and D)
F) B) and C)

Question 2

Figure 21-7 
-Refer to Figure 21-7. Suppose a consumer has $200 in income, the price of a book is $5, and the price of a DVD is $10. What is the value of A?

Accepted Answer

A)  40
B)  20
C)  10
D)  2E) B) and D)
F) A) and B)

Question 3

Consumer will always consume more of a good if their income increases.

Accepted Answer

A) True 
 B)False

Question 4

The indifference curves for left shoes and right shoes are right angles.

Accepted Answer

A) True 
 B)False

Question 5

Figure 21-24 The figure shows three indifference curves and a budget constraint for a certain consumer named Steve. 
-Refer to Figure 21-24. If Steve's income is $12.60, then the price of a pound of apples is

Accepted Answer

A)  $4.50.
B)  $3.85.
C)  $3.00.
D)  $2.80.E) A) and B)
F) A) and C)

Question 6

Which of the following is a property of a typical indifference curve?

Accepted Answer

A)  upward sloping
B)  bowed away from the origin
C)  does not intersect another indifference curve
D)  a higher one is preferred to a lower oneE) B) and C)
F) A) and B)

Question 7

Suppose Dave always uses two lemon wedges with his glass of iced tea. Dave's indifference curves for lemon wedges and iced tea are

Accepted Answer

A)  bowed inward.
B)  bowed outward.
C)  straight lines.
D)  L shaped.E) A) and B)
F) A) and C)

Question 8

The theory of consumer choice illustrates the

Accepted Answer

A)  importance of property rights in creating efficient markets.
B)  ability of a single economic actor to have a substantial influence on market prices.
C)  the trade-offs that people face in their role as purchasers.
D)  All of the above are correct.E) A) and D)
F) B) and C)

Question 9

A consumer consumes two normal goods, popcorn and Pepsi. The price of Pepsi rises. The substitution effect, by itself, suggests that the consumer will consume

Accepted Answer

A)  more popcorn and more Pepsi.
B)  less popcorn and less Pepsi.
C)  more popcorn and less Pepsi.
D)  less popcorn and more Pepsi.E) A) and D)
F) B) and C)

Question 10

Assume that a college student purchases only Ramen noodles and textbooks. If Ramen noodles are an inferior good and textbooks are a normal good, then the substitution effect associated with a decrease in the price of Ramen noodles, by itself, will result in

Accepted Answer

A)  a decrease in the consumption of textbooks and a decrease in the consumption of Ramen noodles.
B)  a decrease in the consumption of textbooks and an increase in the consumption of Ramen noodles.
C)  an increase in the consumption of textbooks and an increase in the consumption of Ramen noodles.
D)  an increase in the consumption of textbooks and a decrease in the consumption of Ramen noodles.E) B) and D)
F) A) and B)

Question 11

A consumer's budget constraint for goods X and Y is determined by how much the consumer likes good X relative to good Y.

Accepted Answer

A) True 
 B)False

Question 12

Figure 21-11 
-Refer to Figure 21-11. What is the consumer's marginal rate of substitution?

Accepted Answer

A)  12
B)  4
C)  1
D)  We do not have enough information to answer the question because the MRS varies along the graph.E) All of the above
F) B) and C)

Question 13

​A decrease in the price of the good on the horizontal axis rotates the budget constraint counterclockwise.

Accepted Answer

A) True 
 B)False

Question 14

Figure 21-9 
-Refer to Figure 21-9. If the consumer has $600 in income, what is the price of good Y?

Accepted Answer

A)  $20
B)  $6
C)  $3
D)  $0.33E) B) and C)
F) None of the above

Question 15

Figure 21-29
The figure below illustrates the preferences of a representative consumer, Nathaniel. 
-Refer to Figure 21-29. A change in Nathaniel's optimum from point A to point B results from

Accepted Answer

A)  a change in Nathaniel's preferences.
B)  an increase in the income Nathaniel receives when he is young.
C)  an increase in the interest rate.
D)  a decrease in the interest rate.E) A) and D)
F) None of the above

Question 16

Giffen goods are

Accepted Answer

A)  normal goods for which the income effect dominates the substitution effect.
B)  normal goods for which the substitution effect dominates the income effect.
C)  inferior goods for which the income effect dominates the substitution effect.
D)  inferior goods for which the substitution effect dominates the income effect.E) A) and B)
F) A) and C)

Question 17

Jack and Diane each buy pizza and paperback novels. Pizza costs $3 per slice, and paperback novels cost $5 each. Jack has a budget of $30, and Diane has a budget of $15 to spend on pizza and paperback novels. Which consumer(s)  can afford to purchase 5 slices of pizza and 5 paperback novels?

Accepted Answer

A)  Jack only
B)  Diane only
C)  both Jack and Diane
D)  neither Jack nor DianeE) B) and C)
F) A) and B)

Question 18

Figure 21-7 
-Refer to Figure 21-7. Suppose the price of a book is $15, the price of a DVD is $10, the value of A is 5, and the value of B is 7.5. How much income does the consumer have?

Accepted Answer

A)  $150
B)  $100
C)  $75
D)  $37.50E) All of the above
F) A) and B)

Question 19

A good is an inferior good if the consumer buys less of it when

Accepted Answer

A)  his income rises.
B)  the price of the good rises.
C)  the price of a substitute good falls.
D)  his income falls.E) A) and B)
F) A) and C)

Question 20

Prince is currently consuming some of good X and some of good Y. If good Y is a normal good for Prince, then an increase in his income will definitely cause him to

Accepted Answer

A)  increase his consumption of X.
B)  increase his consumption of Y.
C)  decrease his consumption of X.
D)  decrease his consumption of Y.E) All of the above
F) B) and C)

Exam 21: The Theory of Consumer Choice

Figure 21-9 -Refer to Figure 21-9. If the consumer has $600 in income, what is the price of good Y?

Correct AnswerverifiedShow Answer

Figure 21-11 -Refer to Figure 21-11. What is the consumer's marginal rate of substitution?

Correct AnswerverifiedShow Answer

Assume that a college student purchases only Ramen noodles and textbooks. If Ramen noodles are an inferior good and textbooks are a normal good, then the substitution effect associated with a decrease in the price of Ramen noodles, by itself, will result in

Correct AnswerverifiedShow Answer

A consumer's budget constraint for goods X and Y is determined by how much the consumer likes good X relative to good Y.

Correct AnswerverifiedShow Answer

Jack and Diane each buy pizza and paperback novels. Pizza costs $3 per slice, and paperback novels cost $5 each. Jack has a budget of $30, and Diane has a budget of $15 to spend on pizza and paperback novels. Which consumer(s) can afford to purchase 5 slices of pizza and 5 paperback novels?

Correct AnswerverifiedShow Answer

Figure 21-29 The figure below illustrates the preferences of a representative consumer, Nathaniel. -Refer to Figure 21-29. A change in Nathaniel's optimum from point A to point B results from

Correct AnswerverifiedShow Answer

Figure 21-7 -Refer to Figure 21-7. Suppose the price of a book is $15, the price of a DVD is $10, the value of A is 5, and the value of B is 7.5. How much income does the consumer have?

Correct AnswerverifiedShow Answer

Figure 21-7 -Refer to Figure 21-7. Suppose a consumer has $200 in income, the price of a book is $5, and the price of a DVD is $10. What is the value of A?

Correct AnswerverifiedShow Answer

Suppose Dave always uses two lemon wedges with his glass of iced tea. Dave's indifference curves for lemon wedges and iced tea are

Correct AnswerverifiedShow Answer

The theory of consumer choice illustrates the

Correct AnswerverifiedShow Answer

​A decrease in the price of the good on the horizontal axis rotates the budget constraint counterclockwise.

Correct AnswerverifiedShow Answer

The indifference curves for left shoes and right shoes are right angles.

Correct AnswerverifiedShow Answer

Giffen goods are

Correct AnswerverifiedShow Answer

Figure 21-24 The figure shows three indifference curves and a budget constraint for a certain consumer named Steve. -Refer to Figure 21-24. If Steve's income is $12.60, then the price of a pound of apples is

Correct AnswerverifiedShow Answer

A good is an inferior good if the consumer buys less of it when

Correct AnswerverifiedShow Answer

A consumer consumes two normal goods, popcorn and Pepsi. The price of Pepsi rises. The substitution effect, by itself, suggests that the consumer will consume

Correct AnswerverifiedShow Answer

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a) , if income is equal to $200, then the price of good Y is

Correct AnswerverifiedShow Answer

Prince is currently consuming some of good X and some of good Y. If good Y is a normal good for Prince, then an increase in his income will definitely cause him to

Correct AnswerverifiedShow Answer

Which of the following is a property of a typical indifference curve?

Correct AnswerverifiedShow Answer

Consumer will always consume more of a good if their income increases.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A decrease in the price of the good on the horizontal axis rotates the budget constraint counterclockwise.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified