Question 1

Carlos goes to the movies every Sunday afternoon.The movie theater offers 4 combinations of popcorn and beverages: the "mini-combo" costs $5 and includes a small popcorn and a small drink,the "medium-combo" costs $7 and includes a medium popcorn and a medium drink,the "value-combo" also costs $7 and includes a small popcorn and a large drink,and the "large-combo" costs $9 and includes a large popcorn and a large drink.Carlos always purchases the "value-combo." We can conclude that

Accepted Answer

A)   Carlos cannot afford the "large-combo."
B)   Carlos cannot afford the "medium-combo."
C)   Carlos prefers a combo with a larger popcorn-to-beverage ratio.
D)   Carlos prefers a combo with a smaller popcorn-to-beverage ratio.E) B) and D)
F) A) and B)

Question 2

A rational consumer maximizes her

Accepted Answer

A)   preferences.
B)   marginal rate of substitution.
C)   utility.
D)   budget constraint.E) C) and D)
F) B) and C)

Question 3

Scenario 21-1
Suppose the price of hot wings is $10,the price of beer is $1,and the consumer's income is $50.In addition,suppose the consumer's budget constraint illustrates hot wings on the horizontal axis and beer on the vertical axis.
-Refer to Scenario 21-1.If the price of beer doubles to $2,then the

Accepted Answer

A)   budget constraint intersects the vertical axis at 25 beers.
B)   slope of the budget constraint rises to -2.
C)   budget constraint intersects the vertical axis at 100 beers.
D)   budget constraint shifts inward in a parallel fashion.E) A) and B)
F) B) and D)

Question 4

An inferior good is one in which

Accepted Answer

A)   the average consumer chooses not to consume.
B)   the good is not equally valued by all consumers.
C)   an increase in income increases consumption of the good.
D)   an increase in income decreases consumption of the good.E) A) and B)
F) B) and C)

Question 5

A consumer

Accepted Answer

A)   is equally satisfied with any indifference curve.
B)   prefers indifference curves with positive slopes.
C)   prefers higher indifference curves to lower indifference curves.
D)   prefers indifference curves that are straight lines to indifference curves that are right angles..E) B) and D)
F) All of the above

Question 6

Figure 21-4 
-Refer to Figure 21-4.In graph (a) ,if income is equal to $120,the price of good Y is

Accepted Answer

A)   $1
B)   $2
C)   $3
D)   $4E) B) and C)
F) None of the above

Question 7

An optimizing consumer will select a consumption bundle in which

Accepted Answer

A)   income is maximized,and prices are minimized.
B)   utility is maximized,and prices are minimized.
C)   utility is maximized,subject to budget constraints.
D)   utility is maximized,and indifference curves are linear.E) None of the above
F) A) and C)

Question 8

The two "goods" used when economists analyze labor supply are

Accepted Answer

A)   work and leisure.
B)   work and consumption.
C)   saving and consumption.
D)   leisure and consumption.E) A) and D)
F) None of the above

Question 9

The opportunity cost of current household consumption is the

Accepted Answer

A)   wage rate.
B)   market interest rate.
C)   price of the goods consumed.
D)   explicit cost of consumption.E) All of the above
F) A) and B)

Question 10

Suppose the price of good X falls.As a result,the quantity demanded for good X increases for a particular consumer.For this consumer,the substitution effect induced the consumer to purchase more X while the income effect induced the consumer to purchase less X.We can infer that X is a(n)

Accepted Answer

A)   normal good.
B)   inferior good.
C)   Giffen good.
D)   luxury good.E) A) and B)
F) None of the above

Question 11

Ken consumes two goods,Sprite and potato chips.Sprite costs $2 per can,and he consumes it to the point where the marginal utility he receives from his last Sprite is 4.Potato chips cost $3 per bag,and the relationship between the marginal utility he gets from eating a bag of potato chips and the number of bags he eats per month is as follows:

If Ken is maximizing his utility,how many bags of potato chips does he buy each month?

Accepted Answer

A)   2
B)   3
C)   4
D)   5E) B) and C)
F) A) and D)

Question 12

A consumer's preferences for right shoes and left shoes can be represented by indifference curves that are

Accepted Answer

A)   bowed out from the origin
B)   bowed in toward the origin
C)   straight lines
D)   right anglesE) B) and D)
F) C) and D)

Question 13

Figure 21-7 
-Refer to Figure 21-7.Which of the following statements is correct?

Accepted Answer

A)   If a consumer moves from bundle C to bundle A,her loss of cake cannot be compensated for by an increase in donuts.
B)   Bundle E is preferred to all other points identified in the figure.
C)   Since more is preferred to less,bundle C may be preferred to bundle E in some circumstances for this consumer.
D)   Even though bundle E has more of both goods than bundle B,we could draw a different set of indifference curves in which bundle B is preferred to bundle E.E) C) and D)
F) All of the above

Question 14

If Walter has one hour of leisure time in which to watch a sporting event on television,his preferences are as follows: Walter prefers watching football to watching baseball,but he prefers watching baseball to watching basketball.He is indifferent between watching baseball and watching hockey.Bundle A contains one hour of football and zero hours of all other sports.Bundle B contains one hour of baseball and zero hours of all other sports.Bundle C contains one hour of basketball and zero hours of all other sports.Bundle D contains one hour of hockey and zero hours of all other sports.If we were to graph Walter's preferences using indifference curves,which of the following bundles would be on the same indifference curve?

Accepted Answer

A)   A,B,and C only
B)   B and D only
C)   A and D only
D)   There is no combination of the sports that could be drawn on the same indifference curve.E) None of the above
F) C) and D)

Exam 21: The Theory of Consumer Choice

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The two "goods" used when economists analyze labor supply are

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Figure 21-7 -Refer to Figure 21-7.Which of the following statements is correct?

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A consumer

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Suppose the price of good X falls.As a result,the quantity demanded for good X increases for a particular consumer.For this consumer,the substitution effect induced the consumer to purchase more X while the income effect induced the consumer to purchase less X.We can infer that X is a(n)

Correct Answer
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An optimizing consumer will select a consumption bundle in which

Correct Answer
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A consumer's preferences for right shoes and left shoes can be represented by indifference curves that are

Correct Answer
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An inferior good is one in which

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The opportunity cost of current household consumption is the

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A rational consumer maximizes her

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Figure 21-4 -Refer to Figure 21-4.In graph (a) ,if income is equal to $120,the price of good Y is

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Exam 21: The Theory of Consumer Choice

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The two "goods" used when economists analyze labor supply are

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Figure 21-7 -Refer to Figure 21-7.Which of the following statements is correct?

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A consumer

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Suppose the price of good X falls.As a result,the quantity demanded for good X increases for a particular consumer.For this consumer,the substitution effect induced the consumer to purchase more X while the income effect induced the consumer to purchase less X.We can infer that X is a(n)

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An optimizing consumer will select a consumption bundle in which

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A consumer's preferences for right shoes and left shoes can be represented by indifference curves that are

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An inferior good is one in which

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The opportunity cost of current household consumption is the

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A rational consumer maximizes her

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Figure 21-4 -Refer to Figure 21-4.In graph (a) ,if income is equal to $120,the price of good Y is

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