To Purchase
this Complete Test Bank with Answers Click the link Below
https://tbzuiqe.com/product/microeconomics-and-behavior-robert-h-frank-9th-edition-test-bank/
If face any problem or
Further information contact us At tbzuiqe@gmail.com
Sample Test
Chapter 03
Rational Consumer Choice
Multiple Choice Questions
|
1.
|
If the consumer’s budget constraint is
given by 10F + 5S = 100 where F is food and S is shelter, how much food can
he buy if he purchases 2 units of shelter?
|
|
2.
|
If the consumer’s budget constraint is
given by 10F + 5S = 100 where F is food and S is shelter, what is the
opportunity cost of food in terms of shelter?
|
|
3.
|
If the consumer’s budget constraint is
given by 4P + 2B = 50 where P is pizza and B is burgers, the following
bundles of pizza and burger would be on the budget constraint:
|
|
4.
|
An increase in the price of one good
will cause
|
A.
|
an inward rotation of the budget curve.
|
|
B.
|
an outward rotation of the budget curve.
|
|
C.
|
a parallel shift in the budget curve.
|
|
D.
|
an inside shift of the budget curve.
|
|
|
5.
|
An increase in income with no changes
in the price of either good will cause
|
A.
|
an inward shift of the budget curve.
|
|
B.
|
an outward shift of the budget curve.
|
|
C.
|
no change in the budget curve.
|
|
D.
|
an inward rotation of the budget curve.
|
|
|
6.
|
Suppose you are choosing between milk
and cookies. If the opportunity cost of cookies in terms of milk increases,
then the budget curve will
|
|
7.
|
The “composite good” refers to
|
A.
|
large purchases that cannot be incrementally divided.
|
|
B.
|
an abstraction requiring more than a three dimensional
graph.
|
|
C.
|
income not spent on good X in a two-dimensional
graphical presentation.
|
|
D.
|
the notion that consumer pleasure cannot be modeled
graphically.
|
|
|
8.
|
If the price of a good shown on the
vertical axis of a budget graph is cut in half and the price of the good on
the horizontal axis is cut by 75%, then the budget constraint shifts
|
A.
|
left and becomes steeper.
|
|
B.
|
right and becomes steeper.
|
|
C.
|
left and becomes flatter.
|
|
D.
|
right and becomes flatter.
|
|
|
9.
|
Which of the following are most likely
to have indifference curves that are L-shaped?
|
A.
|
Ice cream and frozen yogurt
|
|
B.
|
Your textbook and its study guide
|
|
D.
|
A white shirt and a blue shirt
|
|
|
10.
|
Your college has three meal plans. One
is for 21 meals a week, another for 14 and a third offers only 7. You don’t
know the price yet but you are certain the 21 would be best. However, your
second choice would be to take only the 7 meal plan and if you had to pick a
third choice it would be the 14 meal plan. This preference pattern doesn’t
fit the indifference curve assumption of
|
D.
|
none of these because it does not violate any of the
assumptions.
|
|
|
11.
|
I prefer 10 apples and 6 oranges to 9
apples and 3 oranges. This is an example of
|
|
12.
|
The budget constraint shown below is
consistent with a pricing strategy that involves a
|
A.
|
price reduction of X for large quantities purchased.
|
|
B.
|
price increase of X for large quantities.
|
|
C.
|
constant price of X for all quantities purchased.
|
|
D.
|
price change of X and a nominal income increase for the
consumer.
|
|
|
13.
|
Which is true of the two budget lines
drawn below?
|
A.
|
Line a has a higher nominal income than line b.
|
|
B.
|
Line b and line a have the same nominal income.
|
|
C.
|
The absolute price of good Y is greater with budget line
a than with budget line b.
|
|
D.
|
The price of good X is larger with budget line a.
|
|
|
14.
|
Bundles that lie above the indifference
curve are preferred to bundles that lie below. This is an example of
|
|
15.
|
What assumptions are necessary to
prevent indifference curves from crossing?
|
D.
|
Transitivity and more is better
|
|
|
16.
|
The marginal rate of substitution is
the
|
A.
|
absolute value of the indifference curve.
|
|
B.
|
tradeoff rate between the two goods under consideration
at any particular point.
|
|
C.
|
total utility derived at any point.
|
|
D.
|
rate at which the consumer increases utility.
|
|
|
17.
|
A diminishing marginal rate of
substitution implies that indifference curves are
|
|
18.
|
Diminishing marginal rate of
substitution implies that the marginal rate of substitution
|
A.
|
falls as one travels down (eastward) on an indifference
curve.
|
|
B.
|
rises as one travels down (eastward) on an indifference
curve.
|
|
C.
|
stays the same as one travels down (eastward) on a
typical indifference curve.
|
|
D.
|
falls as one move to higher (northeast) in the
indifference curve map.
|
|
|
19.
|
Perfect substitutes will have
indifference curves which are
|
C.
|
linear (a straight line).
|
|
|
20.
|
On a typical budget constraint, the
opportunity cost of food in terms of shelter is
|
C.
|
the inverse of the opportunity cost of shelter in terms
of food.
|
|
|
21.
|
Excluding corner solutions, in consumer
equilibrium, which of the following is true?
|
A.
|
The marginal rate of substitution equals the slope of
the budget constraint.
|
|
B.
|
The indifference curve is steeper than the budget
constraint.
|
|
C.
|
The consumer is minimizing utility given the
constraints.
|
|
D.
|
The consumer can improve his/her situation by consuming
more of both goods.
|
|
|
22.
|
The graph of the budget line below has
dollars on the vertical axis and food on the horizontal axis. Which statement
is false?
|
A.
|
The vertical intercept represents all money available
for purchasing.
|
|
B.
|
The distance OA shows the amount of money spent on OD
amount of food.
|
|
C.
|
If the amount of money available is known in this graph,
then the absolute and relative price of food is known also.
|
|
D.
|
The horizontal intercept represents all the food the
consumer could purchase with the budget available.
|
|
|
23.
|
If a corner solution exists,
|
A.
|
marginal rate of substitution will always be equal to
the slope of the budget constraint.
|
|
B.
|
marginal rate of substitution will always be less than
the slope of the budget constraint.
|
|
C.
|
marginal rate of substitution will always be greater
than the slope of the budget constraint.
|
|
D.
|
none of the answer choices is correct.
|
|
|
24.
|
According to the rational choice model,
cash grants are preferred to food stamps because
|
A.
|
they enhance consumer choice.
|
|
B.
|
cash grants allow consumers to reach lower indifference
curves.
|
|
C.
|
food is the most essential commodity.
|
|
D.
|
food would be cheaper to buy with cash.
|
|
|
25.
|
If food is on the vertical axis and
shelter on the horizontal axis, the slope of the budget line is given by
|
|
26.
|
If food is on the vertical axis and
shelter on the horizontal axis, then the equation for the budget line can be
expressed as
|
|
27.
|
If food is on the vertical axis and shelter
on the horizontal axis, then the equation for the budget line can be
expressed as
|
|
28.
|
If all consumers are perfectly rational
according to microeconomic models they should
|
A.
|
all have the same marginal rate of substitution.
|
|
B.
|
always buy more of the least expensive good.
|
|
C.
|
all end up with the same bundle of goods.
|
|
D.
|
all have the same level of satisfaction.
|
|
|
29.
|
According to the text, gift giving in
kind
|
A.
|
should happen more often if people were rational.
|
|
B.
|
cannot be easily explained by the rational choice model.
|
|
C.
|
happens only because people expect to get gifts in
return.
|
|
D.
|
always increase consumer welfare.
|
|
|
30.
|
According to the rational choice model
developed in this chapter, which statement below is false?
|
A.
|
People would be less happy if they exchanged money
rather than things at Christmas.
|
|
B.
|
Individual preference patterns do not change because
prices change.
|
|
C.
|
Consumers behave as if they did cost-benefit analysis on
every purchase.
|
|
D.
|
Cash grants are always better than in-kind gifts.
|
|
|
31.
|
If the consumer is willing to give up 3
units of food (vertical axis) in exchange for one unit of shelter (horizontal
axis) and food is priced at 10 and shelter at 20, then the consumer is
purchasing
|
A.
|
too much food for utility maximization.
|
|
B.
|
too much shelter for utility maximization.
|
|
C.
|
just the right amount of each good for utility
maximization.
|
|
D.
|
less than the budget would allow.
|
|
|
32.
|
Which statement is true within the
framework of rational choice economics?
|
A.
|
When the relative prices change a rational consumer’s
preference pattern will be altered.
|
|
B.
|
The budget line and the indifference curves are
interdependent in the maximizing models.
|
|
C.
|
Indifference curves are empirically determined functions
that are identical for all persons who are truly rational choice operators.
|
|
D.
|
When the relative prices change a rational consumer’s
preference will not be altered.
|
|
|
33.
|
Economists usually do not favor
subsidies on specific products or in-kind payments to help low income people.
This is because
|
A.
|
a subsidy means that the recipient does not face a
budget line anymore and therefore can not maximize his welfare efficiently.
|
|
B.
|
economists are individualists who believe that helping
the needy makes them dependent.
|
|
C.
|
the poor person could have increased utility if the same
money used to subsidize a product would be given to them to use as they
choose.
|
|
D.
|
in-kind payments suggest that the poor person does not
have an indifference curve pattern from which to make choices.
|
|
|
34.
|
Which statement is true?
|
A.
|
The further down a food and shelter budget line a
consumer moves, the more of his budget he is spending.
|
|
B.
|
When the price of good X (on the horizontal axis) falls
and the price of good Y rises, the budget line gets steeper.
|
|
C.
|
When Pete adopts a corner solution he is definitely not
maximizing utility.
|
|
D.
|
The “composite good” shows the amount of money the
consumer has spent on good X in the two good optimizing model.
|
|
|
35.
|
Suppose the budget constraint is given
by 200P + 50S = 400, where P is pizza and S is spinach. If the prices of S
and P increase by 10% each then the budget curve will shift to the
|
A.
|
right with the same slope.
|
|
B.
|
left with the same slope.
|
|
C.
|
right but the slope will be different than before.
|
|
D.
|
left but the slope will be different than before.
|
|
|
36.
|
Say Anna chooses between partying and
studying. Supposed her indifference curves satisfied all the assumptions
about consumer theory, but she also liked studying a lot more than partying.
If the price of studying increased, then Anna would consume
|
A.
|
more studying and less partying.
|
|
B.
|
less studying and more partying.
|
|
D.
|
no partying at all, in order to consumer more studying.
|
|
|
37.
|
The indifference curves for nickels and
dimes will be
|
B.
|
a straight line with positive slope.
|
|
C.
|
a straight line with negative slope.
|
|
|
38.
|
Say a consumer considered soy milk and
skim milk perfect substitutes of each other at a ratio of 1:1. If the skim
milk is cheaper than soy milk this consumer would buy
|
A.
|
some of both goods, but more skim milk.
|
|
C.
|
some of both goods but more soy milk.
|
|
D.
|
we can’t really say with the information given.
|
|
|
39.
|
The indifference curves for right shoes
and left shoes will be:
|
B.
|
a straight line with positive slope.
|
|
C.
|
a straight line with negative slope.
|
|
|
40.
|
Say a consumer always consumed peanut
butter and jelly in fixed proportions (for a perfect peanut and jelly
sandwich). Then the indifference curves for peanut butter and jelly for this
consumer would be
|
B.
|
a straight line with positive slope.
|
|
C.
|
a straight line with negative slope.
|
|
|
41.
|
Say a consumer is choosing between wine
and cheese. The price of wine is 10 and the price of cheese is 5. If the
marginal rate of substitution is 4, and if wine is on the horizontal axis and
cheese is on the vertical axis then the consumer is purchasing
|
C.
|
just the right amount of both goods.
|
|
D.
|
purchasing more than what her income would allow.
|
|
|
42.
|
Say a consumer is choosing between red
wine and white wine. The price of red wine is 20 and the price of white wine
is 10. If the marginal rate of substitution is 1, and if red wine is on the
horizontal axis then the consumer is purchasing:
|
C.
|
Just the right amount of both goods
|
|
D.
|
Purchasing more than what her income would allow
|
|
|
43.
|
Suppose your parents are thinking of
buying you a brand new car as a graduation present. Economists would argue
that it would be better if:
|
A.
|
They gave you a cash gift equal to the value of the car
regardless of how much you need a car right now
|
|
B.
|
They gave you a cash gift equal to the value of the car
long as you really don’t have much use for a car right now
|
|
C.
|
You sell the car to someone else right away in exchange
for the cash
|
|
D.
|
They ask you for what kind of car you want first and
then buy it for you
|
|
Essay Questions
|
44.
|
Draw a graph with food on the
horizontal axis and shelter on the vertical axis.
A. Now sketch in a budget line such that the relative price of
food to shelter is 2, the absolute price of shelter is 10, and the nominal
income level is $100. Label the budget line A.
B. Next, the nominal income stays the same, the absolute price of shelter is
cut in half, and the absolute price of food is unchanged. Sketch in the new
budget line and label it B.
C. Next, the absolute prices are where they were when the problem started and
the nominal income increases to 150. Draw a new budget line for this data and
label it C.
D. Next, the nominal income is again $100, the relative prices are as they
were at the beginning and the absolute prices are cut in half. Draw a new
budget line on the graph and label it D.
E. Next, the absolute price of shelter falls to $5 and the absolute price of
food and the income stay where it was at the beginning. The relative price of
food to shelter also stays at 2. Explain why this is a logical contradiction.
|
|
45.
|
Given the following budget line, (M =
PfF + PsS) show the following by reformulating the equation. Assume F (food)
is on the horizontal axis and S (shelter) is on the vertical axis.
A. The vertical intercept is _________.
B. The horizontal intercept is _________.
C. The slope of the budget line is __________.
|
|
46.
|
If the price of train rides is 1 and
the price of food is 10, and the MRS of food for train rides expressed by
Karl is 5, is Karl a utility maximizer? How do you know? If Karl is not
maximizing, what should he do to improve his situation?
|
|
47.
|
You go to a carnival in town intending
to purchase rides for your children. When you get there they have an offer
where everyone’s first two rides are free. They obviously hope that the free
rides will end up making them more money in the long run than if they charged
for all rides. First, show on an indifference curve and budget line graph a
solution that would make the free rides a bad idea for the company. Then, on
a second graph, show a possible situation that would make the giveaway a
success that should be repeated.
|
|
48.
|
A student buys only two goods, pizza
and books. The price of pizza is $5 and the price of books is $10. At the
student’s present level of consumption, her marginal utility of pizza is 4
and her marginal utility of books is 2. Currently, the student is spending
all her income.
A. Is this student currently in consumer equilibrium
(maximizing utility)? Explain using a graph.
B. What would this student have to do in order to increase her utility? Use
the diagram from part (a) to explain your answer.
|
|
49.
|
Carl is stranded in the forest and must
survive on coconuts and quail. His utility function for those items is U =
f(C,Q) = 10C – C2 + 4Q – Q2.
A. If Carl maximizes his utility and has no constraints on how
many he can get, what will he do?
B. If Carl is able to get only some combination of 5 coconuts and quail, how
many will he get of each if he is doing the best he can?
|
Chapter 03 Rational Consumer Choice Answer Key
Multiple Choice Questions
|
1.
|
If the consumer’s budget constraint is
given by 10F + 5S = 100 where F is food and S is shelter, how much food can
he buy if he purchases 2 units of shelter?
|
|
AACSB: Analytic
Accessibility: Keyboard
Navigation
Blooms: Apply
Difficulty: 1 Easy
Learning Objective:
03-01 Describe the consumer’s budget constraint; the set of all combinations
of goods that can be purchased with given income and prices.
Topic: The Opportunity
Set or Budget Constraint
|
|
2.
|
If the consumer’s budget constraint is
given by 10F + 5S = 100 where F is food and S is shelter, what is the
opportunity cost of food in terms of shelter?
|
|
AACSB: Analytic
Accessibility: Keyboard
Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective:
03-01 Describe the consumer’s budget constraint; the set of all combinations
of goods that can be purchased with given income and prices.
Topic: The Opportunity
Set or Budget Constraint
|
|
3.
|
If the consumer’s budget constraint is
given by 4P + 2B = 50 where P is pizza and B is burgers, the following
bundles of pizza and burger would be on the budget constraint:
|
|
AACSB: Analytic
Accessibility: Keyboard
Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective:
03-01 Describe the consumer’s budget constraint; the set of all combinations
of goods that can be purchased with given income and prices.
Topic: The Opportunity
Set or Budget Constraint
|
|
4.
|
An increase in the price of one good
will cause
|
A.
|
an inward rotation of the budget curve.
|
|
B.
|
an outward rotation of the budget curve.
|
|
C.
|
a parallel shift in the budget curve.
|
|
D.
|
an inside shift of the budget curve.
|
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-02 Show how the budget constraint changes when income and prices change.
Topic: Budget Shifts Due
to Price or Income Changes
|
|
5.
|
An increase in income with no changes
in the price of either good will cause
|
A.
|
an inward shift of the budget curve.
|
|
B.
|
an outward shift of the budget curve.
|
|
C.
|
no change in the budget curve.
|
|
D.
|
an inward rotation of the budget curve.
|
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-02 Show how the budget constraint changes when income and prices change.
Topic: Budget Shifts Due
to Price or Income Changes
|
|
6.
|
Suppose you are choosing between milk
and cookies. If the opportunity cost of cookies in terms of milk increases,
then the budget curve will
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-02 Show how the budget constraint changes when income and prices change.
Topic: Budget Shifts Due
to Price or Income Changes
|
|
7.
|
The “composite good” refers to
|
A.
|
large purchases that cannot be incrementally divided.
|
|
B.
|
an abstraction requiring more than a three dimensional
graph.
|
|
C.
|
income not spent on good X in a two-dimensional
graphical presentation.
|
|
D.
|
the notion that consumer pleasure cannot be modeled
graphically.
|
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective:
03-01 Describe the consumer’s budget constraint; the set of all combinations
of goods that can be purchased with given income and prices.
Topic: The Opportunity
Set or Budget Constraint
|
|
8.
|
If the price of a good shown on the
vertical axis of a budget graph is cut in half and the price of the good on
the horizontal axis is cut by 75%, then the budget constraint shifts
|
A.
|
left and becomes steeper.
|
|
B.
|
right and becomes steeper.
|
|
C.
|
left and becomes flatter.
|
|
D.
|
right and becomes flatter.
|
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-02 Show how the budget constraint changes when income and prices change.
Topic: Budget Shifts Due
to Price or Income Changes
|
|
9.
|
Which of the following are most likely
to have indifference curves that are L-shaped?
|
A.
|
Ice cream and frozen yogurt
|
|
B.
|
Your textbook and its study guide
|
|
D.
|
A white shirt and a blue shirt
|
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-01 Describe the consumer’s budget constraint; the set of all combinations
of goods that can be purchased with given income and prices.
Topic: The Opportunity
Set or Budget Constraint
|
|
10.
|
Your college has three meal plans. One
is for 21 meals a week, another for 14 and a third offers only 7. You don’t
know the price yet but you are certain the 21 would be best. However, your
second choice would be to take only the 7 meal plan and if you had to pick a
third choice it would be the 14 meal plan. This preference pattern doesn’t
fit the indifference curve assumption of
|
D.
|
none of these because it does not violate any of the assumptions.
|
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective:
03-03 Describe the consumer’s preference using an indifference map.
Topic: Consumer
Preferences
|
|
11.
|
I prefer 10 apples and 6 oranges to 9
apples and 3 oranges. This is an example of
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective:
03-03 Describe the consumer’s preference using an indifference map.
Topic: Consumer
Preferences
|
|
12.
|
The budget constraint shown below is
consistent with a pricing strategy that involves a
|
A.
|
price reduction of X for large quantities purchased.
|
|
B.
|
price increase of X for large quantities.
|
|
C.
|
constant price of X for all quantities purchased.
|
|
D.
|
price change of X and a nominal income increase for the
consumer.
|
|
|
AACSB: Reflective Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-02 Show how the budget constraint changes when income and prices change.
Topic: Budget Shifts Due
to Price or Income Changes
|
|
13.
|
Which is true of the two budget lines
drawn below?
|
A.
|
Line a has a higher nominal income than line b.
|
|
B.
|
Line b and line a have the same nominal income.
|
|
C.
|
The absolute price of good Y is greater with budget line
a than with budget line b.
|
|
D.
|
The price of good X is larger with budget line a.
|
|
|
AACSB: Reflective Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-02 Show how the budget constraint changes when income and prices change.
Topic: Budget Shifts Due
to Price or Income Changes
|
|
14.
|
Bundles that lie above the indifference
curve are preferred to bundles that lie below. This is an example of
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-03 Describe the consumer’s preference using an indifference map.
Topic: Consumer
Preferences
|
|
15.
|
What assumptions are necessary to
prevent indifference curves from crossing?
|
D.
|
Transitivity and more is better
|
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-03 Describe the consumer’s preference using an indifference map.
Topic: Consumer
Preferences
|
|
16.
|
The marginal rate of substitution is
the
|
A.
|
absolute value of the indifference curve.
|
|
B.
|
tradeoff rate between the two goods under consideration
at any particular point.
|
|
C.
|
total utility derived at any point.
|
|
D.
|
rate at which the consumer increases utility.
|
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective:
03-03 Describe the consumer’s preference using an indifference map.
Topic: Consumer
Preferences
|
|
17.
|
A diminishing marginal rate of
substitution implies that indifference curves are
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-03 Describe the consumer’s preference using an indifference map.
Topic: Consumer
Preferences
|
|
18.
|
Diminishing marginal rate of
substitution implies that the marginal rate of substitution
|
A.
|
falls as one travels down (eastward) on an indifference
curve.
|
|
B.
|
rises as one travels down (eastward) on an indifference
curve.
|
|
C.
|
stays the same as one travels down (eastward) on a
typical indifference curve.
|
|
D.
|
falls as one move to higher (northeast) in the
indifference curve map.
|
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective:
03-03 Describe the consumer’s preference using an indifference map.
Topic: Consumer
Preferences
|
|
19.
|
Perfect substitutes will have
indifference curves which are
|
C.
|
linear (a straight line).
|
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-03 Describe the consumer’s preference using an indifference map.
Topic: Consumer
Preferences
|
|
20.
|
On a typical budget constraint, the opportunity
cost of food in terms of shelter is
|
C.
|
the inverse of the opportunity cost of shelter in terms
of food.
|
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective:
03-03 Describe the consumer’s preference using an indifference map.
Topic: Consumer
Preferences
|
|
21.
|
Excluding corner solutions, in consumer
equilibrium, which of the following is true?
|
A.
|
The marginal rate of substitution equals the slope of
the budget constraint.
|
|
B.
|
The indifference curve is steeper than the budget
constraint.
|
|
C.
|
The consumer is minimizing utility given the
constraints.
|
|
D.
|
The consumer can improve his/her situation by consuming
more of both goods.
|
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective:
03-04 Show how the consumer’s budget constraint and indifference map interact
to determine the optimal combination of goods to purchase.
Topic: The Best Feasible
Bundle
|
|
22.
|
The graph of the budget line below has
dollars on the vertical axis and food on the horizontal axis. Which statement
is false?
|
A.
|
The vertical intercept represents all money available
for purchasing.
|
|
B.
|
The distance OA shows the amount of money spent on OD
amount of food.
|
|
C.
|
If the amount of money available is known in this graph,
then the absolute and relative price of food is known also.
|
|
D.
|
The horizontal intercept represents all the food the
consumer could purchase with the budget available.
|
|
|
AACSB: Reflective Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-01 Describe the consumer’s budget constraint; the set of all combinations
of goods that can be purchased with given income and prices.
Topic: The Opportunity
Set or Budget Constraint
|
|
23.
|
If a corner solution exists,
|
A.
|
marginal rate of substitution will always be equal to
the slope of the budget constraint.
|
|
B.
|
marginal rate of substitution will always be less than
the slope of the budget constraint.
|
|
C.
|
marginal rate of substitution will always be greater
than the slope of the budget constraint.
|
|
D.
|
none of the answer choices is correct.
|
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-04 Show how the consumer’s budget constraint and indifference map interact
to determine the optimal combination of goods to purchase.
Topic: The Best Feasible
Bundle
|
|
24.
|
According to the rational choice model,
cash grants are preferred to food stamps because
|
A.
|
they enhance consumer choice.
|
|
B.
|
cash grants allow consumers to reach lower indifference
curves.
|
|
C.
|
food is the most essential commodity.
|
|
D.
|
food would be cheaper to buy with cash.
|
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-04 Show how the consumer’s budget constraint and indifference map interact
to determine the optimal combination of goods to purchase.
Topic: The Best Feasible
Bundle
|
|
25.
|
If food is on the vertical axis and
shelter on the horizontal axis, the slope of the budget line is given by
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective:
03-01 Describe the consumer’s budget constraint; the set of all combinations
of goods that can be purchased with given income and prices.
Topic: The Opportunity
Set or Budget Constraint
|
|
26.
|
If food is on the vertical axis and
shelter on the horizontal axis, then the equation for the budget line can be
expressed as
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-01 Describe the consumer’s budget constraint; the set of all combinations
of goods that can be purchased with given income and prices.
Topic: The Opportunity
Set or Budget Constraint
|
|
27.
|
If food is on the vertical axis and
shelter on the horizontal axis, then the equation for the budget line can be
expressed as
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective:
03-01 Describe the consumer’s budget constraint; the set of all combinations
of goods that can be purchased with given income and prices.
Topic: The Opportunity
Set or Budget Constraint
|
|
28.
|
If all consumers are perfectly rational
according to microeconomic models they should
|
A.
|
all have the same marginal rate of substitution.
|
|
B.
|
always buy more of the least expensive good.
|
|
C.
|
all end up with the same bundle of goods.
|
|
D.
|
all have the same level of satisfaction.
|
|
|
AACSB: Analytic
Accessibility: Keyboard
Navigation
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective:
03-04 Show how the consumer’s budget constraint and indifference map interact
to determine the optimal combination of goods to purchase.
Topic: The Best Feasible
Bundle
|
|
29.
|
According to the text, gift giving in
kind
|
A.
|
should happen more often if people were rational.
|
|
B.
|
cannot be easily explained by the rational choice model.
|
|
C.
|
happens only because people expect to get gifts in return.
|
|
D.
|
always increase consumer welfare.
|
|
|
AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective:
03-04 Show how the consumer’s budget constraint and indifference map interact
to determine the optimal combination of goods to purchase.
Topic: The Best Feasible
Bundle
|
Comments
Post a Comment