Econ 321 Chapter 4
A) (5 Beer, 5 Pizza)
Assume the price of beer is $4, the price of pizza is $10 and the consumer's income is $250 and that the consumer doesn't save. Which consumption bundle will NOT be the consumer's choice? A) (5 Beer, 5 Pizza) B) (0 Beer, 25 Pizza) C) (25 Beer, 15 Pizza) D) None of the bundle will be chosen.
C) Both A and B above.
A consumer's willingness to trade one good for another can be expressed by the consumer's A) indifference curve. B) marginal rate of substitution. C) Both A and B above. D) None of the above.
views as equally desirable.
An indifference curve represents bundles of goods that a consumer A) views as equally desirable. B) ranks from most preferred to least preferred. C) refers to any other bundle of goods. D) All of the above.
C) gives the highest level of satisfaction among all the affordable combinations of the goods
Economists assume consumers select a bundle of goods that A) gives the highest level of satisfaction among all the combinations of the goods. B) costs the least. C) gives the highest level of satisfaction among all the affordable combinations of the goods D) all of the above.
B) b
Max has allocated $100 toward meats for his barbecue. He consumes two types of meat: chicken and burger. His budget line and an indifference map are shown in the above figure. Which bundle will maximize utility/satisfaction? A) a B) b C) c D) d
D) $5/lb
Max has allocated $100 toward meats for his barbecue. His budget line and an indifference map are shown in the above figure. What is the price of chicken? A) $0.80/lb B) $1.25/lb C) $4/lb D) $5/lb
B) b, d, e
Max has allocated $100 toward meats for his barbecue. His budget line and an indifference map are shown in the above figure. Which of the following bundles are in Max's affordable set? A) a, b, c B) b, d, e C) a, b, d D) None of the above.
C) is not maximizing his utility/satisfaction.
Max has allocated $100 toward meats for his barbecue. His budget line and indifference map are shown in the above figure. If Max is currently at point e A) he is not using all of $100. B) he needs to borrow some money. C) is not maximizing his utility/satisfaction. D) All of the above.
D) All of the above.
The principle that "More is better" results in indifference curves A) sloping down. B) not thick. C) reflecting greater preferences the further they are from the origin. D) All of the above.
B) 200 units
Joe's budget constraint equals 500 = 2F + 100S, where $500 is Joe's income, $2 is the price of food (F) and $100 is the price of shelter (S). How much food can Joe buy if he buys one unit of shelter? A) 2 units B) 200 units C) 250 units D) 400 units
B) 500 = 2F + 100S
Joe's income is $500, the price of food (F) is $2 per unit, and the price of shelter (S) is $100. Which of the following represents his budget constraint? A) 500 = 100F + 2S B) 500 = 2F + 100S C) S = 500 - 2F D) All of the above.
D) All of the above.
Joe's income is $500, the price of food (F) is $2 per unit, and the price of shelter (S) is $100. Which of the following represents his budget constraint? A) 500 = 2F + 100S B) F = 250 - 50S C) S = 5 - .02F D) All of the above.
C) 100 units of food, 1 unit of shelter
Joe's income is $500, the price of food (F) is $2, and the price of shelter (S) is $100. Which of the following bundles can he afford? A) 50 units of food, 5 units of shelter B) 200 units of food, 2 units of shelter C) 100 units of food, 1 unit of shelter D) 150 units of food, 3 units of shelter
C) 10/15.
John has an income of $1000 which he spends on two products - food and clothing. The price of food is $10 per unit and the price of clothing is $15 per unit. What is the slope of the budget constraint John faces? A) 1000/10. B) 15/1000. C) 10/15. D) 5/20.
B) give up more "y" to get an extra "x" the less "x" they have.
The law of diminishing MRS implies that you A) give up more "y" to get an extra "x" the more "x" they have. B) give up more "y" to get an extra "x" the less "x" they have. C) settle for less of both "x" and "y". D) acquire more "x" only if they do not have to give up any "y".
