Economics fr Managers Ch 5 Quiz

Based on the following graph, at point C, picture The consumer's income is $600. A. MRS is greater than 1.25. B. MRS is less than 0.4. C. MRS is greater than 2. D. MRS is less than 2.5

A

If Ferdinand prefers a Big Mac to a Whopper and a Whopper to a hotdog, but is indifferent between a Big Mac and a Quarter Pounder he must A. prefer a Quarter Pounder to a hotdog B. prefer a Whopper to a Quarter Pounder C. be indifferent between a Quarter Pounder and a Whopper D. be indifferent between a Whopper and a hotdog

A

If Mary prefers bananas to plums and plums to peaches, but is indifferent between bananas and oranges, she A. prefers oranges to peaches B. prefers plums to oranges C. is indifferent between oranges and plums D. is indifferent between oranges and peaches.

A

picture The price of Y is $10. According to the above figure, if the price of X is $5, what combination of X and Y will a utility-maximizing consumer choose? A. 80X, 20Y B. 120X, 620Y C. 120X, 250Y D. 200X, 620Y E. none of the above

A

According to the following figure, what could have caused a consumer's budget line to shift from ML to MN? picture A. an increase in the price of X B. a decrease in the price of X C. an increase in the price of Y D. a decrease in the price of Y E. cannot determine without more information

B

According to the following graph, if U2 is the maximum attainable utility, the price of X is picture The price of Y is $50. A. $10 B. $15 C. $20 D. $25 E. none of the above

B

Assume that an individual consumes two goods, X and Y. The total utility (assumed measurable) of each good is independent of the rate of consumption of other goods. The prices of X and Y are, respectively, $5 and $10. picture Given the above, if the consumer has $110 to spend on X and Y, which combination will the consumer choose? A. 5X and 4Y B. 6X and 8Y C. 7X and 6Y D. 8X and 7Y E. 7X and 7Y

B

The ratio of the prices of two goods measures A. the rate at which a consumer is willing to substitute one good for another in the market B. the rate at which a consumer is able to substitute one good for another in the market C. the marginal rate of substitution of X for Y D. both a and c E. both b and c

B

Which of the following assumptions is (are) NOT made in consumer behavior theory? A. Consumers can rank all bundles of goods B. Consumers can measure the utility they get from all bundles of goods C. Consumers have complete information D. both a and b E. None of the above are assumptions made in consumer behavior theory

B

picture The consumer's income is $800. According to the above figure, what are the prices of goods X and Y? a. A. PX = $10, PY = $8 B. PX = $8, PY = $10 C. PX = $100, PY = $80 D. PX = $20, PY = $60 E. PX = $60, PY = $20

B

A utility function A. shows the relation between prices and a consumer's utility B. shows the relation between income and a consumer's utility C. shows the relation between the amount of goods consumed and a consumer's utility D. all of the above E. none of the above

C

If the marginal rate of substitution of X for Y is 2, the price of X is $3, and the price of Y is $1, a utility-maximizing consumer should A. be indifferent between 1X and 2Y B. prefer 3Y to 1X C. choose less X and more Y D. choose more X and less Y.

C

Suppose that utility-maximizing consumers in San Francisco pay three times as much for apples as for peaches. What is the ratio of the marginal utility of apples to the marginal utility of peaches? A. 1/3 B. 2/3 C. 3 D. none of the above E. cannot determine without further information

C

The price of X is $20 and the price of Y is $40. picture Based on the above graph, at point B, A. if the consumer obtains one more unit of Y, ½ unit of X must be foregone in order to keep utility unchanged B. if the consumer obtains one more unit of X, two units of Y must be foregone in order to keep utility unchanged C. the marginal rate of substitution is ½ D. both a and c E. all of the above

C

Assume James purchases only two goods, steak and chicken, with his weekly income of $60. The price of steak is $10 and the price of chicken is $5. The following table shows the marginal utility James gets from each additional pound of steak and chicken: picture Given the above information, if the price of steak falls to $8, what quantities of steak and chicken should James purchase to maximize his utility? A. 6 steak, 2 chicken B. 5 steak, 3 chicken C. 4 steak, 4 chicken D. 5 steak, 4 chicken E. 3 steak, 6 chicken

D

Suppose that 25 units of X and 16 units of Y give a consumer the same satisfaction as 15 units of X and 18 units of Y. Then A. the consumer can exchange five units of X for one unit of Y and keep utility unchanged B. the consumer can exchange one unit of X for 1/5 unit of Y and keep utility unchanged C. the market rate of exchange of X for Y is 1/5 D. both a and b E. all of the above

D

The consumer chooses the bundle of goods that maximizes his utility and spends all his income. Which of the following statements is correct? A. The marginal utilities of all goods are equal B. Expenditures on all goods are equal C. The addition to utility of the last unit of the good is equal across all goods D. The addition to utility of the last unit of the good per dollar is equal across all goods.

D

The rate at which a consumer is WILLING to substitute one good for another is measured by A. the corner solution on the Y axis B. the slope of the budget line C. the consumer's real income D. the slope of the tangent to the indifference curve

D

The slope of an indifference curve A. shows the change in utility from an additional unit of the good. B. shows the rate at which the consumer is able to substitute goods in the market. C. is equal to the price ratio at all points D. is the rate at which the consumer is willing to exchange one good for another, utility held constant E. all of the above

D

picture The consumer's income is $800. According to the above figure, why doesn't the consumer choose the combination at point B? A. The consumer is willing to give up more X for additional units of Y than the rate in the market B. The marginal utility of Y exceeds the marginal utility of X C. The marginal utility per dollar spent on Y exceeds the marginal utility per dollar spent on X D. both a and c E. both b and c

D