Question 1

The marginal rate of substitution indicates

Accepted Answer

A)   how much of one good a consumer is willing to give up to get one more unit of another good while remaining equally satisfied
B)   how much of a good a consumer can receive for $1 while remaining equally satisfied
C)   the tendency of a consumer to substitute lower-priced goods for a good whose price has increased
D)   the limits of utility analysis
E)   the basis of consumer surplusF) A) and C)
G) None of the above

Question 2

Exhibit 6-31 
-Assume that a consumer is initially in equilibrium at point a in Exhibit 6-31. Then the price of good B falls. The movement from point c to point b represents

Accepted Answer

A)   the substitution effect
B)   the income effect
C)   the substitution effect minus the income effect
D)   the sum of the substitution and income effects
E)   the income effect minus the substitution effectF) All of the above
G) B) and C)

Question 3

If two goods have the same price, a consumer will buy equal quantities of those two goods.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 6-28 
-The rotation of the budget line in Exhibit 6-28 from AC to AB represents a(n)

Accepted Answer

A)   increase in the price of clams
B)   increase in the price of mussels
C)   decrease in the price of clams
D)   decrease in the price of mussels
E)   increase in the amount the consumer can spendF) A) and B)
G) B) and E)

Question 5

What would happen to the budget line if the price of orange juice increased and orange juice is measured on the vertical axis?

Accepted Answer

A)   It would shift to the right.
B)   It would rotate outward along the horizontal axis.
C)   It would rotate inward along the horizontal axis.
D)   It would rotate outward along the vertical axis.
E)   It would rotate inward along the vertical axis.F) B) and E)
G) C) and E)

Question 6

Within the framework of indifference curve analysis, what prevents the individual from purchasing more of all goods?

Accepted Answer

A)   Legal prohibitions
B)   Budget constraint
C)   The slope of the indifference curve
D)   Psychological considerations
E)   Diminishing marginal utilityF) C) and D)
G) A) and E)

Question 7

Exhibit 6-26 2 reflects the same income and price for DVDs as budget line B1 but a higher price for books. B)  Budget line B3 reflects a higher income but the same price for both books and DVDs as budget line B2. C)  Budget line B3 reflects higher income and the same prices for both books and DVDs as budget line B1. D)  Budget line B1 reflects lower income than budget line B2. E)  Budget line B3 reflects a lower price ration than budget line B3." class="answers-bank-image d-inline" rel="preload" >
-Consider Exhibit 6-26. Three budget lines are shown. Which of the following statements is true about the budget lines?

Accepted Answer

A)   Budget line B2 reflects the same income and price for DVDs as budget line B1 but a higher price for books.
B)   Budget line B3 reflects a higher income but the same price for both books and DVDs as budget line B2.
C)   Budget line B3 reflects higher income and the same prices for both books and DVDs as budget line B1.
D)   Budget line B1 reflects lower income than budget line B2.
E)   Budget line B3 reflects a lower price ration than budget line B3.F) A) and E)
G) C) and D)

Question 8

Exhibit 6-29 
-Which graph in Exhibit 6-29 shows the effect of an increase in the price of clothing and a decrease in the price of food?

Accepted Answer

A)   Graph a
B)   Graph b
C)   Graph c
D)   Graph d
E)   none of theseF) A) and B)
G) A) and E)

Exam 6: Appendix: Indifference Curves and Utility Maximization

Exhibit 6-28 -The rotation of the budget line in Exhibit 6-28 from AC to AB represents a(n)

Correct Answer
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Exhibit 6-29 -Which graph in Exhibit 6-29 shows the effect of an increase in the price of clothing and a decrease in the price of food?

Correct Answer
verified

Within the framework of indifference curve analysis, what prevents the individual from purchasing more of all goods?

Correct Answer
verified

Exhibit 6-31 -Assume that a consumer is initially in equilibrium at point a in Exhibit 6-31. Then the price of good B falls. The movement from point c to point b represents

Correct Answer
verified

If two goods have the same price, a consumer will buy equal quantities of those two goods.

Correct Answer
verified

The marginal rate of substitution indicates

Correct Answer
verified

What would happen to the budget line if the price of orange juice increased and orange juice is measured on the vertical axis?

Correct Answer
verified

Exhibit 6-26 -Consider Exhibit 6-26. Three budget lines are shown. Which of the following statements is true about the budget lines?

Correct Answer
verified

Exam 6: Appendix: Indifference Curves and Utility Maximization

Exhibit 6-28 -The rotation of the budget line in Exhibit 6-28 from AC to AB represents a(n)

Correct AnswerverifiedShow Answer

Exhibit 6-29 -Which graph in Exhibit 6-29 shows the effect of an increase in the price of clothing and a decrease in the price of food?

Correct AnswerverifiedShow Answer

Within the framework of indifference curve analysis, what prevents the individual from purchasing more of all goods?

Correct AnswerverifiedShow Answer

Exhibit 6-31 -Assume that a consumer is initially in equilibrium at point a in Exhibit 6-31. Then the price of good B falls. The movement from point c to point b represents

Correct AnswerverifiedShow Answer

If two goods have the same price, a consumer will buy equal quantities of those two goods.

Correct AnswerverifiedShow Answer

The marginal rate of substitution indicates

Correct AnswerverifiedShow Answer

What would happen to the budget line if the price of orange juice increased and orange juice is measured on the vertical axis?

Correct AnswerverifiedShow Answer

Exhibit 6-26 -Consider Exhibit 6-26. Three budget lines are shown. Which of the following statements is true about the budget lines?

Correct AnswerverifiedShow Answer

Correct Answer
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