Exam 1 Review
By selecting a bundle where MRS = MRT, the consumer is saying
"I am willing to trade one good for the other at the sae rate that I am required to do so"
Joe's income is $500, the price of food (F,Y-axis) is $2 per unit, and the price of shelter (s,x-axis) is $100. Which of the following represents his marginal rate of transformation of food for shelter?
-50
Joe's income is $500, the price of food (F,y-axis) is $2, and the price of shelter (S,x-axis) is $100. Which of the following bundles is in Joe's opportunity set?
100 units of food, 1 unit of shelter
Joe's budget constraint equals 500 = 2F + 100S, where $500 is Joe's income, $2 is the price of food (F, y-axis) and $100 is the price of shelter (S, x-axis). How much food can Joe buy if he buys one unit of shelter?
200 Units
Given the production function q=4L + K what is the marginal product of labor when capital is fixed at 50?
4
Assume the price of beet is $4, the price of pizza is $10 and the consumer's income is $250. Which consumption bundle will not be the consumers choice
5 beer, 5 pizza
There is an indifference curve through every bundle because of the assumption of
Completeness
If fred's marginal rate of substitution of salad for pizza equals 5, then
He would give up 5 salads to get the next pizza
The indifference curve for left shoes and right shoes would most likely be
L-Shaped
Joe's income is $500, the price of food (F,y-axis) is $2 per unit and the price of shelter (s,X-axis) is $100. Which of the following represents his budget constraint?
S=5-.02F, F=250-50S, 500=2F+100S
The consumer is in equilibrium when
The budget line is tangent to the indifference curve at the budle chosen, Px/Py = MUx/MUy, MRT=MRS
If the price of one good increases while the price of the other good and the consumer's income remain unchanged, what will happen to the budget line?
The budget line rotates inward from the intercept on the axis of the good that did not change in price
If the consumer's income increases while the prices of both goods remain unchanged, what will happen to the budget line?
The budget line shifts outward without a change in slope
The assumption of completeness means that
The consumer can ran all possible consumption bundles.
An individual demand curve for a good can be derived by measuring the quantities selected as
The price of the good changes
Suppose the production of DVD players can be represented by the following production function =L^.4K^.4. Which of the following statements is true?
The production function has decreasing returns to scale.
If two indifference curves were to intersect at a point, this would violate the assumption of
Transitivity
If a consumer prefers apples to bananas and prefers bananas to citrus fruit, in order to satisfy assumptions about preferences she has to prefer
apples to citrus fruit
Isoquants that are downward-sloping straight lines imply that the inputs
are perfect substitutes
A firm engaging in efficient production, using current technology, ________ produces its current level of production with ________ inputs.
cannot, fewer
There is an indifference curve through every bundle because of the assumption of
completeness
If two goods are perfect substitutes, then the indifference curves for those two goods would be
downward sloping and straight
Convexity of indifference curves implies that consumers are willing to
give up more "y" to get an extra "x" the less "x" they have
Perfect Substitutes
have fixed rates of trading off one good for another.
If Fred's Marginal utility of pizza equals 10 and his marginal utility of salad equals 2, then
he would give up 5 salads to get the next pizza
With respect to production, the short run is best defined as a time period
in which at least one input is fixed
If a firm doubles inputs and produces three times the output, then there are
increasing returns to scale
Measuring "y" on the vertical axis and "x" on the horizontal axis, convexity of indifference curves implies that the MRS of "y" for "x"
is decreasing as "x" increases
Average product will fall as long as
it exceeds marginal product
The marginal rate of technical substitution always equals
minus the ratio of the marginal products of inputs
Indifference curves are downward sloping because of the assumptions of
more is better
For which of the following pairs of good would most people likely have convex indifference curves?
movie tickets and concert tickets
By selecting a bundle where MRS = MRT, the consumer is
reaching the highest possible indifference curve she can afford
If both prices increase by 50%
slope of the budge constraint stay the same
The marginal product of labor is
the change in total product resulting from an extra unit of labor, holding other factors constant
The slope of an isoquant tells us
the decrease in capital necessary to keep output constant when labor increases by one unit
The marginal rate of transformation of y for x represents
the slope of the budget constraint
If two indifference curves were to intersect at a point, this would violate the assumption of
transitivity
Indifference curves close to the origin are ________ those farther from the origin because of ______.
worse than, nonsatiation
