ECON Exam 1

Your employer has asked you to start working overtime and has offered to pay $18 per hour for every hour you work beyond forty hours a week. The wage rate for each of the first forty hours will continue to be the usual $15 per hour. In terms of dollars, what is the marginal benefit of working each hour of overtime? $18.00 $3.00 zero $15.00

$18.00

Suppose that your tuition to attend college is $24,000 per year and you spend $8,000 per year on room and board. If you were working full time, you could earn $30,000 per year. What is your opportunity cost of attending college for one year? $32,000 $38,000 $54,000 $62,000

$54,000

Kiara makes $100 per week as a DJ. She spends all this income to buy pizza and hair gel. The price of a pizza is $10 and the price of a bottle of hair gel is $4. If Kiara buys 5 bottles of hair gel, then she buys ________ pizzas. 20 4 10 8 None of the above answers is correct.

8

Which of the following will lead to a change in the opportunity cost of buying a pen and a pencil? A decrease in the consumer's income A twofold increase in the prices of both pens and pencils An increase in the consumer's income A twofold increase in the price of pens and a threefold increase in the price of pencils

A twofold increase in the price of pens and a threefold increase in the price of pencils

Consider the following statements: a. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area. b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. c. Firms produce more of a particular DVD when its selling price rises. Which of the above statements demonstrates that economic agents respond to incentives?

A, B and C.

Which of the following are assumptions of economics? A. Scarcity. B. Tradeoffs. C. Opportunity costs. D. All of the above. E. A and B above.

A. Scarcity.

The steps needed to evaluate the best way to organize an economy include: A. Determining what will be produced, how it will be produced, and who gets it, and then evaluating these outcomes. B. Determining whether an economy provides free choice, and an appropriate role for government. C. Determining what will be produced, how it will be produced and who gets it, and then limiting the role of government. D. Limiting central power and making the maximum use of markets. E. C and D above.

A. Determining what will be produced, how it will be produced, and who gets it, and then evaluating these outcomes.

When buyers and sellers operate in a competitive market, it is because: A. the value to consumers is at least as great as the cost to produce. B. They want the economy to operate efficiently. C. they are trying to ensure that markets work. D. they are trying to take advantage of the other person. E. A and C above.

A. the value to consumers is at least as great as the cost to produce.

When trying to assess your economic well-being you should: a. Compare your situation to that of most of the people alive today. b. Compare yourself to Bill Gates. c. Compare yourself to your neighbors. D. Compare yourself to your parents. E. Not compare yourself to others because that is foolish.

A. Compare your situation to that of most of the people alive today.

Which of the following statements is true? A. Every individual, no matter how rich or poor, is faced with situations that require trade-offs. B. Economics is a social science that studies the trade-offs we are forced to make because resources are unlimited. C. Trade-offs do not apply when the consumers purchase a product for which there is excess supply, such as with a stock clearance sale. D. Any time you have to decide which action to take you are experiencing economic equity.

A. Every individual, no matter how rich or poor, is faced with situations that require trade-offs.

Which of the following is a normative economic statement? A. Farmers should not be allowed to grow and sell genetically-modified crops. B. The federal government is considering increasing regulations on the use of fossil fuels to promote the use of wind power. C. Rising corn prices have increased the price of corn-based ethanol. D. With rising home prices and falling mortgage interest rates, the amount of home foreclosures has decreased.

A. Farmers should not be allowed to grow and sell genetically-modified crops.

Which of the following statements is TRUE? A. No economic model captures every detail that affects a problem. B. Economic models use economists' opinions with no use of data. C. Economic models always make accurate predictions about behaviors. D. Economic models must fully reflect reality.

A. No economic model captures every detail that affects a problem.

Which of the following is a normative economic statement? A. The price of gasoline is too high. B. When the price of gasoline rises, the quantity of gasoline purchased falls. C. When the price of gasoline rises, transportation costs rise. D. The current high price of gasoline is the result of strong worldwide demand

A. The price of gasoline is too high.

A major question that faced societies 250 years ago was: A. What would happen if you organized more of the economy with guilds. B. What would happen if you organized more of the economy with markets. C. What would happen if you organized more of the economy with government. D. Was there enough BlueBell? E. All of the above.

A. What would happen if you organized more of the economy with markets.

A model refers to: A. a simplified description, or representation, of reality. B. a set of facts established by observation and measurement. C. a perfect replica of reality. D. facts, measurements, or statistics that describe the world.

A. a simplified description, or representation, of reality.

Trinh quits his $80,000-a-year job to become a full-time volunteer at a museum. What is the opportunity cost of his decision? A. at least $80,000 B. 0 since he will no longer be earning a salary C. the value he attributes to the joy of working at a museum D. depends on the "going rate" of museum employees

A. at least $80,000

John has two hours of free time this evening. He ranked his alternatives, first go to a concert, second go to a movie, third study for an economics exam, and fourth answer his e-mail. What is the opportunity cost of attending the concert for John? A. attending a movie B. answering his e-mail C. studying for an economics exam D. attending a movie, studying for an economics exam, and answering his e-mail

A. attending a movie

You have the option of consuming one can of soda or two cookies or three oranges. You picked the can of soda. Therefore the opportunity cost of this can of soda is A. either the cookies or the oranges, whichever you like more. B. the price of the can of soda. C. the difference in the prices of these three products. D. the price of the cookies as they are not usually consumed with soda.

A. either the cookies or the oranges, whichever you like more.

The opportunity cost of going to an outdoor music festival is A. equal to the highest value of an alternative use of the time and money spent on the festival. B. the enjoyment you receive from going to the festival. C. the cost of the festival ticket only. D. zero because there are no overhead costs for an outdoor festival. E. the value of the time spent at the festival.

A. equal to the highest value of an alternative use of the time and money spent on the festival.

Economists assume that the goal of consumers is to A. make themselves as well off as possible. B. spend all their income. C. consume as much as possible. D. do as little work as possible to survive.

A. make themselves as well off as possible.

Suppose that some investors have decided that economic and financial uncertainty have made the prospect of investing in domestic stock markets more risky than investing in foreign stock markets, and therefore choose to invest in foreign markets. By using all available information as they act to achieve their goals, these investors are exemplifying the economic idea that A. people are rational. B. people respond to economic incentives. C. optimal decisions are made at the margin. D. equity is more important than efficiency.

A. people are rational.

In economics, another term for satisfaction is A. utility. B. return. C. scarcity. D. need.

A. utility.

Which of the following statements is an example of positive economic analysis? A. Universities should offer a wider variety of extracurricular activities to broaden the horizons of their student bodies. B. As tuition rates increase, fewer students are enrolling in college. C. Living in a dorm is too expensive and colleges should subsidize the cost of housing for their students. D. To ensure the highest graduation rates, colleges should limit enrollment.

B. As tuition rates increase, fewer students are enrolling in college.

Which of the following statements is true of the scientific method? A. The larger the size of the data set, the greater the scope of inaccuracy in an analysis. B. Empirical arguments are more credible when they are based on a large data set. C. When a researcher looks at a large data set, she is more likely to jump to the wrong conclusions. D. Arguments based on a few anecdotes are mostly true.

B. Empirical arguments are more credible when they are based on a large data set.

What does it mean for a prediction to be "testable"? A. The model making the prediction relies on data. B. It's possible to show that the model making the prediction is wrong. C. The model is flexible enough to predict any outcome. D. The model is not oversimplified.

B. It's possible to show that the model making the prediction is wrong.

Which of the following is a normative economic statement? A. Rising global demand for coal has led to increases in the price of coal. B. Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable. C. The state of Texas is considering increasing funds for light-rail development to promote the use of public transportation. D. With rising mortgage rates and rising unemployment rates, the number of unsold homes has increased.

B. Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.

Central control of economies A. Emerged with governments. B. Regulated resources like land and water. C. Was first proposed by Greek philosopher Leonidas. D. Was absent when society consisted of just prehistoric clans. E. None of the above.

B. Regulated resources like land and water.

Which of the following statements is true? A. Models help economists to explain the past, but do not help in predicting the future. B. Testing with data enables economists to distinguish between good models and bad models. C. Models that economists use are perfect replicas of reality. D. The scientific method used by economists is based on idealism and not empiricism.

B. Testing with data enables economists to distinguish between good models and bad models.

Which of the following statements is a positive economic statement? A. The Congress should pass the president's tax package. B. The President's budget included an increase in unemployment insurance payments. C. The U.S. tax system always gives too much favor to rich people. D. none of the above

B. The President's budget included an increase in unemployment insurance payments.

Which of the following statements about positive economic analysis is false? A. Unlike normative economic analysis, positive economic analysis can be tested. B. There is much more disagreement among economists over positive economic analysis than over normative economic analysis. C. Positive analysis uses an economic model to estimate the costs and benefits of different course of actions. D. There is much more disagreement among economists over normative economic analysis than over positive economic analysis.

B. There is much more disagreement among economists over positive economic analysis than over normative economic analysis.

Instead of studying for an additional two hours for the economics final, Leann decides to watch a movie. Leann is making A. a rational decision if her marginal cost from the movie is greater than her marginal benefit. B. a rational decision if her marginal benefit from the movie is greater than her marginal cost. C. an irrational decision because studying is more important than watching a movie. D. a decision that is not on the margin because she will see the entire movie. E. a decision that does not involve an opportunity cost.

B. a rational decision if her marginal benefit from the movie is greater than her marginal cost.

If the marginal benefit of the next slice of pizza exceeds the marginal cost, you will A. eat half the slice. B. eat the slice of pizza. C. not eat the slice of pizza. D. be unable to choose between eating or not eating. E. More information is needed about how much the marginal benefit exceeds the marginal cost to determine if you will or will not eat the slice.

B. eat the slice of pizza.

When economists use the term "correlation," they are referring to A. economic policy. B. how two variables move together in a predictable way. C. positive economics. D.normative economics. E. cause and effect relationships between variables.

B. how two variables move together in a predictable way.

Suppose the U.S. government encouraged consumers to trade in their old automobiles for more efficient, new models by paying up to $5,000 for the old automobiles. These consumers who did trade in their old automobiles to take advantage of the government offer would be exemplifying the economic idea that A. people are rational. B. people respond to economic incentives. C.optimal decisions are made at the margin. D. equity is more important than efficiency.

B. people respond to economic incentives.

Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that A. people with health insurance are equally likely to be overweight as people without health insurance. B. people with health insurance are more likely to be overweight than people without health insurance. C. there is no correlation between having health insurance and being overweight. D. people with health insurance are less likely to be overweight than people without health insurance.

B. people with health insurance are more likely to be overweight than people without health insurance.

Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________, meaning they make the best decisions given their knowledge of the costs and benefits. A. emotionally B. rationally C. equitably D. selfishly

B. rationally

When referring to "marginal" changes, the economic focus is on A. large changes on the low end. B.small or incremental changes. C. graduated changes on the high end. D.changes that affect only a few people or products.

B. small or incremental changes.

When people make rational choices, they A. behave selfishly. B. weigh the costs and benefits of their options and act to satisfy their wants. C. necessarily make a decision in the social interest. D. are necessarily making the best decision. E. do not consider their emotions.

B. weigh the costs and benefits of their options and act to satisfy their wants.

Scarcity in an economy emerges from A. Poor governmental decisions. B. Too many monopolies and high prices. C. Limited resources and infinite wants. D. All of the above. E. A and C above.

C. Limited resources and infinite wants.

When sellers sell goods in a market they are doing so because: A. They are trying to get to the efficient market solution. B. They want the economy to function well, so they can contribute to social welfare. C. The price is at least as much as the cost to produce. D. A and B above. E. All of the above.

C. The price is at least as much as the cost to produce.

When buyers buy goods in a market they are doing so because: A. They choose the efficient allocation. B. They do not like the other good C. They value those goods at least as much as the price charged. D. A and B above. E. All of the above.

C. They value those goods at least as much as the price charged.

Which of the following is a positive economic statement? A. The U.S. government should increase regulations on the banking industry. B. The government should implement a national consumption tax. C. If the price of beef falls, a larger quantity of it will be bought. D. The standard of living in the United States is too low.

C. If the price of beef falls, a larger quantity of it will be bought.

________ occurs when the direction of cause and effect is mixed up in a study. A. Limited information bias B. Adverse causality C. Reverse causality D. Omitted variable bias

C. Reverse causality

The three fundamental questions that must be answered by any economy include: A. What to produce, why goods are produced, and who gets the goods. B. Why to produce particular goods, how to produce them, and who gets them. C. What to produce, how to produce goods, and who gets the goods. D. How to produce goods, why to produce them, and who gets them. E. Why to produce goods, how to produce them, and who gets them.

C. What to produce, how to produce goods, and who gets the goods.

The revenue received from the sale of ________ of a product is a marginal benefit to the firm. A. no units B. only profitable units C. an additional unit D. the total number of units

C. an additional unit

Causation occurs when: A. two variables tend to move in opposite directions. B. change in one variable does not cause any change in another variable. C. change in one variable is the reason for the change in another variable. D. two variables tend to move in the same direction.

C. change in one variable is the reason for the change in another variable.

Economists assume that rational behavior is useful in explaining choices people make A. even though people rarely, if ever, behave in a rational manner. B. because irrational people do not make economic choices. C. even though people may not behave rationally all the time. D. because individuals act rationally all the time in all circumstances

C. even though people may not behave rationally all the time.

Economists assume that people are motivated by A. a desire to please others. B. the interests of the community at large. C. self-interest. D. morally correct behavior.

C. self-interest.

By definition, economics is the study of A. supply and demand. B. how to make money in a market economy. C. the choices people make to attain their goals, given their scarce resources. D. how to make money in the stock market.

C. the choices people make to attain their goals, given their scarce resources.

The principle of opportunity cost is that A. in a market economy, taking advantage of profitable opportunities involves some money cost. B. the cost of production varies depending on the opportunity for technological application. C. the economic cost of using a factor of production is the alternative use of that factor that is given up. D. taking advantage of investment opportunities involves costs.

C. the economic cost of using a factor of production is the alternative use of that factor that is given up.

The opportunity cost of a decision is measured in terms of A. the price of a new opportunity that arises. B. the price of the alternative we choose. time. C. the next best thing given up. D. sunk cost.

C. the next best thing given up.

A correlation between two variables implies that: A. it is impossible to measure one variable without measuring the other. B. when one variable changes, the other variable always changes by exactly the same amount. C. there is a mutual relationship between both the variables. D. there is a cause-effect relationship between the two variables.

C. there is a mutual relationship between both the variables.

Consumers determine what gets made in the economy because; A. they elect the government that says what is made. B. they communicate to producers on social media. C. they buy things they like. D. they complain about low-quality merchandise. E. B and C above.

C. they buy things they like.

On Saturday morning, you rank your choices for activities in the following order: go to the library, work out at the gym, have breakfast with friends, and sleep late. Suppose you decide to go to the library. Your opportunity cost is A. zero because you do not have to pay money to use the library. B. not clear because not enough information is given. C. working out at the gym. D. working out at the gym, having breakfast with friends, and sleeping late.

C. working out at the gym.

Normative economic analysis involves A testable hypotheses by scientists. B purely descriptive statements. C true statements of facts only. D value judgments and opinions.

D value judgments and opinions.

Which of the following can be derived from other assumptions of economics? A. Scarcity. B. Tradeoffs. C. Opportunity costs. D. B and C above. E. A and B above.

D. B and C above.

Using basic assumptions you can determine: A. Why markets are efficient. B. When markets are efficient. C. When government intervention helps or hurts economic performance. D. All of the above. E. A and B above.

D. All of the above.

Which of the following can be derived from other assumptions about numbers. A. Subtraction. B. Multiplication. C. Division D. All of the above. E. B and C above.

D. All of the above.

According to the video, what is the cornerstone of all markets? A. Prices cannot be too high. B. Prices cannot be too low. C. Markets are regulated by governments. D. People are allowed to freely make the goods they want to make and then to freely sell those goods and trade with others. E. B and C above.

D. People are allowed to freely make the goods they want to make and then to freely sell those goods and trade with others.

Economics studies A. Scarcity. B. The social institutions used to address scarcity. C. What to produce, how to produce it, and who gets it. D. All of the above.

D. All of the above

Advantages of trade include that A. It permits specialization. B. It can improve economic performance. C. It generally benefits both parties. D. All of the above.

D. All of the above.

The key advantage of market exchange compared to one-on-one (barter) trade is that A. Markets allow for greater specialization. B. Markets allow trading to occur to a larger extent. C. Markets are more efficient. D. All of the above.

D. All of the above.

Which of the following is a positive economic statement? A. U.S. citizens should only buy products which are produced in the United States. B. The government should ban the production and sale of incandescent light bulbs. C.The government should revamp its immigration policies. D. Raising the tax on gasoline raises the selling price of gasoline.

D. Raising the tax on gasoline raises the selling price of gasoline.

Which of the following is a normative economic statement? A. When the price of wheat falls, the quantity of wheat purchased rises. B. The current low price of wheat is the result of increased worldwide supply. C. When the price of wheat falls, the cost of wheat-based products falls. D. The price of wheat is too low.

D. The price of wheat is too low.

Adam Smith's book, the Wealth of Nations, investigated: A. The factors affecting economic wealth across countries. B. The role of wealth played in social well-being. C. The role of custom in the economy. D. The role of markets in determining economic efficiency. E. All of the above.

D. The role of markets in determining economic efficiency.

Which of the following is NOT an economic question: A. Do we have enough medical care in the economy? B. Which type of music should we produce more of? C. Should we make hybrids or SUVs? D. Why do we need more Blue Bell ice cream? E. None of the above.

D. Why do we need more Blue Bell ice cream?

Economists measure opportunity cost A. as the same as marginal benefit. B. as equal to the sum of all the sunk costs. C. as the sum of all forgone opportunities. D. as the best thing given up. only when it is on the margin.

D. as the best thing given up.

If a consumer purchases any combination of goods and services on his ________, he will exhaust his income completely. A. demand schedule B. indifference curve C. demand function D. budget constraint

D. budget constraint

Making "how much" decisions involves A. calculating the total costs of the activity and determining if you can afford to incur that expenditure. B. calculating the average benefit and the average cost of an activity to determine if it is worthwhile undertaking that activity. C. calculating the total benefits of the activity and determining if you are satisfied with that amount. D. determining the additional benefits and the additional costs of that activity.

D. determining the additional benefits and the additional costs of that activity.

Scarcity results from the fact that A. not all goals are desirable. B. the population keeps growing. C. we cannot answer the major economic questions. D. people's wants exceed the resources available to satisfy them. E. choices made in self-interest are not always in the social interest.

D. people's wants exceed the resources available to satisfy them.

Amy can study for an hour or spend that hour sleeping or going out for dinner. If she decides to study for the hour, the opportunity cost of the hour spent studying is A. definitely going to sleep. B. studying, since this is the choice she opted for. C. sleeping and going out for dinner. D. sleeping or going out for dinner, whichever she would have preferred the most. E. definitely going out to dinner because she must eat at some time.

D. sleeping or going out for dinner, whichever she would have preferred the most.

What does it mean for a prediction to be "testable" A.The model is not oversimplified. B. The model can predict any outcome. C.The model relies on data. D.It's possible to show the model is wrong.

D.It's possible to show the model is wrong.

What does the video say about scarcity? A. We must find ways to deal with that scarcity. B. People should always want more. C. Figure out the best set of social arrangements to address scarcity. D. All of the above. E. A and C above.

E. A and C above.

Which of the following are assumptions needed for simple arithmetic A. Numbers exist. B. Multiplication. C. Addition. D. All of the above. E. A and C above.

E. A and C above.

Are you richer than: A. King George III of England? B. Bill Gates? C. Most people in the world today? D. All of these E. A and C

E. A and C King George ||| of England and Most people in the world today.

Which of the following is NOT an example of central economic control: A. Family or clan leaders. B. Warlords. C. Dictators. D. Tribal chieftains. E. All of the above are examples of central control.

E. All of the above are examples of central control.

Which of the following can be established using economic analysis: A. People should work on teams to produce things because there is more job satisfaction. B. Products should be made more reliably. C. The government should not be the entity to choose the amounts of all available goods and services in the economy. D. None of the above can be established through economic analysis. E. All of the above can be established through economic analysis.

E. All of the above can be established through economic analysis.

Which of the following methods have been used to govern economic activity? A. Customs. B. Apprenticeships. C. Markets. D. Central control. E. All of the above have been used to govern economic activities.

E. All of the above have been used to govern economic activities.

A hunter-gatherer society: A. Is a notable exception to the general proposition that all societies must answer the question of what to produce. B. Is a notable exception to the general proposition that all societies must answer the question of how to produce it. C. Is a notable exception to the general proposition that all societies must answer the question of who gets it. D. All of the above. E. None of the above.

E. None of the above.

True or False: The enjoyment or satisfaction people receive from consuming goods and services is called utility.

True

A budget constraint is a straight line because: a consumer has a limited money income. the tastes and preferences of the consumer change along the constraint. the opportunity cost of buying each of the goods changes along the constraint. a consumer faces a fixed price of both goods that do not change with changes in consumption.

a consumer faces a fixed price of both goods that do not change with changes in consumption.

A budget constraint is a straight line because: the tastes and preferences of the consumer change along the constraint. a consumer has a limited money income. the opportunity cost of buying each of the goods changes along the constraint. a consumer faces a fixed price of both goods that do not change with changes in consumption.

a consumer faces a fixed price of both goods that do not change with changes in consumption.

The budget line is the boundary between goods and bads. income and consumption. affordable and unaffordable consumption combinations. preferred and nonpreferred consumption combinations. income and expenditure.

affordable and unaffordable consumption combinations.

The figure above shows a consumer's budget line for sodas and DVD rentals. Point a represents an affordable combination of sodas and DVDs that spends the entire budget. affordable combination of sodas and DVDs that does not spend the entire budget. unaffordable combination of sodas and DVDs. affordable combination of sodas and DVDs but whether it spends the entire budget cannot be determined from the figure. None of the above answers is correct

affordable combination of sodas and DVDs that does not spend the entire budget.

The figure above shows a consumer's budget line between sodas and DVD rentals. Point b represents an affordable combination of sodas and DVDs that spends the entire budget. affordable combination of sodas and DVDs that does not spend the entire budget. unaffordable combination of sodas and DVDs. affordable combination of sodas and DVDs but whether it spends the entire budget cannot be determined from the figure. None of the above answers is correct.

affordable combination of sodas and DVDs that spends the entire budget.

If a consumer purchases any combination of goods and services on his ________, he will exhaust his income completely. demand schedule budget constraint demand function indifference curve

budget constraint

Which of the following is held constant along the demand curve? price of the good quantity income both A and B

income

The extra cost associated with undertaking an activity is called A. opportunity cost. B.net loss. C. Marginal cost. D. foregone cosT

marginal cost.

If quantity of tea is measured on the horizontal axis and quantity of coffee is measured on the vertical axis, an increase in the price of coffee will cause the budget constraint to: pivot rightward (pivot out) along the horizontal axis. pivot leftward (pivot in) along the vertical axis. pivot leftward (pivot in) along the horizontal axis. pivot rightward (pivot out) along the vertical axis.

pivot leftward (pivot in) along the vertical axis.

If quantity of milk is measured on the horizontal axis and quantity of juice is measured on the vertical axis, a decrease in the price of milk will cause the budget constraint to: pivot rightward (pivot out) along the vertical axis. shift to the left. shift to the right. pivot rightward (pivot out) along the horizontal axis.

pivot rightward (pivot out) along the horizontal axis.

If the price of the good measured along the vertical axis increases without a change in the price of the good measured along the horizontal axis, the consumer's budget constraint: pivots leftward (pivot in) without a change in the intercept on the horizontal axis. pivots rightward (pivot out) without a change in the intercept on the horizontal axis. shifts to the right. shifts to the left.

pivots leftward (pivot in) without a change in the intercept on the horizontal axis.

A budget line shows the the prices of the two goods a buyer can purchase. total utility a consumer realizes from consuming different quantities of a good. relationship between price and quantity demanded. quantities of goods a buyer can purchase with given income and prices. quantities of consumption that maximizes marginal utility.

quantities of goods a buyer can purchase with given income and prices.

Lily wants to maximize her benefit of consuming apples and bananas, given her fixed budget of $10 for these two fruits. The price of an apple is $1, and the price of a banana is $0.50. In order to derive Lily's demand curve for bananas, we need to ________. draw a downward sloping line with slope of -2 solve the buyer's problem for her once, and find the optimal number of bananas, when price of a bananas is $0.50 draw a downward sloping line with slope of -1 solve the buyer's problem for her multiple times and find the optimal number of bananas, when price of a bananas is at a different level each time

solve the buyer's problem for her multiple times and find the optimal number of bananas, when price of a bananas is at a different level each time

The restriction that a consumer's total expenditure on goods and services purchased cannot exceed the income available is referred to as economizing behavior. maximizing behavior. the price constraint. the budget constraint.

the budget constraint.

The restriction that a consumer's total expenditure on goods and services purchased cannot exceed the income available is referred to as economizing behavior. the price constraint. maximizing behavior. the budget constraint.

the budget constraint.

Assume that an individual spends his income on sweaters and shirts. If the price of a sweater increases: the opportunity cost of buying shirts increases. the opportunity cost of buying sweaters increases. the opportunity cost of buying sweaters decreases. There is no change in the opportunity cost of consuming either good.

the opportunity cost of buying sweaters increases.

Assume that an individual spends his income on sweaters and shirts. If the price of a sweater increases: the opportunity cost of buying sweaters decreases. There is no change in the opportunity cost of consuming either good. the opportunity cost of buying shirts increases. the opportunity cost of buying sweaters increases.

the opportunity cost of buying sweaters increases.

The slope of a budget constraint represents: the opportunity cost of one good in terms of another. the price of the good measured along the horizontal axis. the price of the good measured along the vertical axis. the money income of the consumer.

the opportunity cost of one good in terms of another.

The absolute value of the slope of the budget line is: the ratio of the price of one good to the price of the other good. dependent on consumer income. the ratio of the marginal utility of one good to the marginal utility of the other good. the ratio of the marginal utility of one good to the price of the other good.

the ratio of the price of one good to the price of the other good.

The figure above shows a consumer's budget line between sodas and DVD rentals. Point d represents an affordable combination of sodas and DVDs that spends the entire budget. affordable combination of sodas and DVDs that does not spend the entire budget. unaffordable combination of sodas and DVDs. affordable combination of sodas and DVDs, but whether it spends the entire budget cannot be determined from the figure. None of the above answers is correct.

unaffordable combination of sodas and DVDs.