Question 1

Which of the following is an example of a Giffen good?

Accepted Answer

A)   fish in Japan
B)   rice in the Chinese province of Hunan
C)   pork in India
D)   Both a and b are correct.E) B) and D)
F) None of the above

Question 2

Figure 21-15
 
-Refer to Figure 21-15.The price of X is $25,the price of Y is $25,and the consumer's income is $100.Which point represents the consumer's optimal choice?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) All of the above
F) A) and B)

Question 3

Scenario 21-3
Zach knows that he will ultimately face retirement. Assume that Zach will experience two periods in his life, one in which he works and earns income, and one in which he is retired and earns no income. Zach can earn $250,000 during his working period and nothing in his retirement period. He must both save and consume in his work period with an interest rate of 10 percent on savings.
-Refer to Scenario 21-3.If the interest rate on savings increases,it is possible that

Accepted Answer

A)   Zach will decrease his savings in the work period.
B)   Zach will increase his savings in the work period.
C)   Zach will not change his consumption in the work period.
D)   All of the above are possible.E) A) and D)
F) None of the above

Question 4

When indifference curves are bowed inward,the marginal rate of substitution is

Accepted Answer

A)   the same at all points along an indifference curve.
B)   increasing as the consumer moves to the right along an indifference curve.
C)   decreasing as the consumer moves to the right along an indifference curve.
D)   constant.E) C) and D)
F) A) and C)

Question 5

Figure 21-19
The following graph illustrates a representative consumer's preferences for marshmallows and chocolate chip cookies:
 
-Refer to Figure 21-19.Assume that the consumer has an income of $40.Based on the information available in the graph,which of the following price-quantity combinations would be on her demand curve for marshmallows if the price of chocolate chips were $4?

Accepted Answer

A)   P=$2, Q=3
B)   P=$2, Q=9
C)   P=$4, Q=3
D)   P=$4, Q=9E) A) and B)
F) B) and D)

Question 6

The consumer's optimum choice is represented by

Accepted Answer

A)   MUx/MUy = Px/Py.
B)   MUx/Px = MUy/Py.
C)   MRSxy = Px/Py.
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 7

A Giffen good is a good for which

Accepted Answer

A)   a decrease in the price decreases the quantity demanded.
B)   the substitution effect outweighs the income effect.
C)   an increase in the price decreases the quantity demanded.
D)   Both a)  and b)  are correct.E) A) and B)
F) A) and C)

Question 8

Suppose a consumer spends his income on CDs and DVDs.If his income decreases,the budget constraint for CDs and DVDs will

Accepted Answer

A)   shift outward, parallel to the original budget constraint.
B)   shift inward, parallel to the original budget constraint.
C)   rotate outward along the CD axis because he can afford more CDs.
D)   rotate outward along the DVD axis because he can afford more DVDs.E) None of the above
F) B) and C)

Question 9

Figure 21-5

-Refer to Figure 21-5.In graph (a) ,what is the price of good Y relative to good X (i.e.,Pᵧ/Pₓ) ?

Accepted Answer

A)   1/4
B)   1/3
C)   3
D)   4E) B) and C)
F) None of the above

Question 10

Figure 21-11
 
-Refer to Figure 21-11.The graph illustrates

Accepted Answer

A)   a typical budget constraint.
B)   a typical indifference curve.
C)   an indifference curve where goods X and Y are perfect complements.
D)   an indifference curve where goods X and Y are perfect substitutes.E) A) and B)
F) A) and C)

Question 11

When Matt has an income of $2,000,he consumes 30 units of good A and 50 units of good B.After Matt's income increases to $3,000,he consumes 25 units of good A and 95 units of good B.Which of the following statements is correct?

Accepted Answer

A)   Both goods A and B are normal goods.
B)   Both goods A and B are inferior goods.
C)   Good A is a normal good, and good B is an inferior good.
D)   Good A is an inferior good, and good B is a normal good.E) A) and B)
F) All of the above

Question 12

When Ryan has an income of $2,000,he consumes 30 units of good A and 50 units of good B.After Ryan's income decreases to $1,500,he consumes 23 units of good A and 55 units of good B.Which of the following statements is correct?

Accepted Answer

A)   Both goods A and B are normal goods.
B)   Both goods A and B are inferior goods.
C)   Good A is a normal good, and good B is an inferior good.
D)   Good A is an inferior good, and good B is a normal good.E) None of the above
F) A) and C)

Question 13

Given a consumer's indifference map,the demand curve for a good can

Accepted Answer

A)   be derived by moving a consumer's budget constraint as her income falls.
B)   be derived by moving a consumer's budget constraint as her income rises.
C)   be derived by moving a consumer's budget constraint as the market price of one good changes.
D)   not be derived from consumer theory.E) A) and B)
F) A) and D)

Question 14

Monica consumes two goods,iced tea and spaghetti.The price of iced tea is $2 per bottle.Her income is $500 per month.She spends all her income each month.She purchases 50 bottles of iced tea and 100 servings of spaghetti.What is the price of a serving of spaghetti?

Accepted Answer

A)   $10
B)   $5
C)   $4
D)   $2E) None of the above
F) A) and B)

Question 15

An increase in income will cause a consumer's budget constraint to

Accepted Answer

A)   shift outward, parallel to its initial position.
B)   shift inward, parallel to its initial position.
C)   pivot along the horizontal axis.
D)   pivot along the vertical axis.E) A) and D)
F) A) and C)

Question 16

When indifference curves are bowed in toward the origin,

Accepted Answer

A)   consumers are less inclined to trade away goods they are lacking.
B)   consumers' willingness to trade away goods they have in abundance diminishes.
C)   an increase in income will shift the indifference curve away from the origin.
D)   a decrease in income will shift the indifference curve toward the origin.E) None of the above
F) A) and B)

Question 17

Figure 21-19
The following graph illustrates a representative consumer's preferences for marshmallows and chocolate chip cookies:
 
-Refer to Figure 21-19.Assume that the consumer depicted the figure has an income of $50.Based on the information available in the graph,which of the following price-quantity combinations would be on her demand curve for chocolate chips if the price of marshmallows is $2.50?

Accepted Answer

A)   P=$2.50, Q=6
B)   P=$2.50, Q=10
C)   P=$5.00, Q=3
D)   P=$5.00, Q=5E) A) and B)
F) B) and D)

Question 18

Figure 21-9
 
-Refer to Figure 21-9.If the price of good Y is $5,what is the price of good X?

Accepted Answer

A)   $500
B)   $150
C)   $16.67
D)   $1.50E) C) and D)
F) All of the above

Question 19

Which of the following is not correct?

Accepted Answer

A)   An increase in income shifts a consumer's budget constraint outward.
B)   An increase in the price of good X causes a consumer's budget constraint to rotate inward along the X axis.
C)   A decrease in the price of good Y causes a consumer's budget constraint to rotate outward along the Y axis.
D)   Changes in income affect the slope of the budget constraint as well as its location on a graph.E) A) and B)
F) B) and D)

Question 20

Figure 21-5

-Refer to Figure 21-5.In graph (a) ,if income is equal to $120,the price of good Y is

Accepted Answer

A)   $3.
B)   $4.
C)   $10.
D)   $12.E) All of the above
F) B) and C)

Exam 21: The Theory of Consumer Choice.

Which of the following is an example of a Giffen good?

Correct Answer
verified

A Giffen good is a good for which

Correct Answer
verified

Correct Answer
verified

Figure 21-5 -Refer to Figure 21-5.In graph (a) ,if income is equal to $120,the price of good Y is

Correct Answer
verified

Monica consumes two goods,iced tea and spaghetti.The price of iced tea is $2 per bottle.Her income is $500 per month.She spends all her income each month.She purchases 50 bottles of iced tea and 100 servings of spaghetti.What is the price of a serving of spaghetti?

Correct Answer
verified

When indifference curves are bowed inward,the marginal rate of substitution is

Correct Answer
verified

Figure 21-9 -Refer to Figure 21-9.If the price of good Y is $5,what is the price of good X?

Correct Answer
verified

When Ryan has an income of $2,000,he consumes 30 units of good A and 50 units of good B.After Ryan's income decreases to $1,500,he consumes 23 units of good A and 55 units of good B.Which of the following statements is correct?

Correct Answer
verified

Figure 21-5 -Refer to Figure 21-5.In graph (a) ,what is the price of good Y relative to good X (i.e.,Pᵧ/Pₓ) ?

Correct Answer
verified

Given a consumer's indifference map,the demand curve for a good can

Correct Answer
verified

Which of the following is not correct?

Correct Answer
verified

Figure 21-11 -Refer to Figure 21-11.The graph illustrates

Correct Answer
verified

When indifference curves are bowed in toward the origin,

Correct Answer
verified

Suppose a consumer spends his income on CDs and DVDs.If his income decreases,the budget constraint for CDs and DVDs will

Correct Answer
verified

Correct Answer
verified

An increase in income will cause a consumer's budget constraint to

Correct Answer
verified

The consumer's optimum choice is represented by

Correct Answer
verified

When Matt has an income of $2,000,he consumes 30 units of good A and 50 units of good B.After Matt's income increases to $3,000,he consumes 25 units of good A and 95 units of good B.Which of the following statements is correct?

Correct Answer
verified

Correct Answer
verified

Figure 21-15 -Refer to Figure 21-15.The price of X is $25,the price of Y is $25,and the consumer's income is $100.Which point represents the consumer's optimal choice?

Correct Answer
verified

Exam 21: The Theory of Consumer Choice.

Which of the following is an example of a Giffen good?

Correct AnswerverifiedShow Answer

A Giffen good is a good for which

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 21-5 -Refer to Figure 21-5.In graph (a) ,if income is equal to $120,the price of good Y is

Correct AnswerverifiedShow Answer

Monica consumes two goods,iced tea and spaghetti.The price of iced tea is $2 per bottle.Her income is $500 per month.She spends all her income each month.She purchases 50 bottles of iced tea and 100 servings of spaghetti.What is the price of a serving of spaghetti?

Correct AnswerverifiedShow Answer

When indifference curves are bowed inward,the marginal rate of substitution is

Correct AnswerverifiedShow Answer

Figure 21-9 -Refer to Figure 21-9.If the price of good Y is $5,what is the price of good X?

Correct AnswerverifiedShow Answer

When Ryan has an income of $2,000,he consumes 30 units of good A and 50 units of good B.After Ryan's income decreases to $1,500,he consumes 23 units of good A and 55 units of good B.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Figure 21-5 -Refer to Figure 21-5.In graph (a) ,what is the price of good Y relative to good X (i.e.,Pᵧ/Pₓ) ?

Correct AnswerverifiedShow Answer

Given a consumer's indifference map,the demand curve for a good can

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Figure 21-11 -Refer to Figure 21-11.The graph illustrates

Correct AnswerverifiedShow Answer

When indifference curves are bowed in toward the origin,

Correct AnswerverifiedShow Answer

Suppose a consumer spends his income on CDs and DVDs.If his income decreases,the budget constraint for CDs and DVDs will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An increase in income will cause a consumer's budget constraint to

Correct AnswerverifiedShow Answer

The consumer's optimum choice is represented by

Correct AnswerverifiedShow Answer

When Matt has an income of $2,000,he consumes 30 units of good A and 50 units of good B.After Matt's income increases to $3,000,he consumes 25 units of good A and 95 units of good B.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 21-15 -Refer to Figure 21-15.The price of X is $25,the price of Y is $25,and the consumer's income is $100.Which point represents the consumer's optimal choice?

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

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