Intermediate
Microeconomics
NINTH EDITION
TEST BANK
Intermediate
Microeconomics
NINTH EDITION
Hal R. Varian
Theodore C. Bergstrom
James E. West
TEST BANK
W • W • NORTON & COMPANY • NEW YORK • LONDON
n
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v
Chapter 23 | Firm Supply 150
Chapter 24 | Industry Supply 155
Chapter 25 | Monopoly 162
Chapter 26 | Monopoly Behavior 172
Chapter 27 | Factor Markets 177
Chapter 28 | Oligopoly 181
Chapter 29 | Game Theory 189
Chapter 30 | Game Applications 195
Chapter 31 | Behavioral Economics 202
Chapter 32 | Exchange 207
Chapter 33 | Production 217
Chapter 34 | Welfare 224
Chapter 35 | Externalities 228
Chapter 36 | Information Technology 235
Chapter 37 | Public Goods 239
Chapter 38 | Asymmetric Information 243
Part II Alternative Quizzes
Chapter 2 | Bud get Constraint 251
Chapter 3 | Preferences 256
Chapter 4 | Utility 261
Chapter 5 | Choice 266
Chapter 6 | Demand 270
Preface vii
Part I Test Bank
Chapter 2 | Bud get Constraint 3
Chapter 3 | Preferences 11
Chapter 4 | Utility 17
Chapter 5 | Choice 24
Chapter 6 | Demand 32
Chapter 7 | Revealed Preference 41
Chapter 8 | Slutsky Equation 49
Chapter 9 | Buying and Selling 55
Chapter 10 | Intertemporal Choice 65
Chapter 11 | Asset Markets 72
Chapter 12 | Uncertainty 79
Chapter 13 | Risky Assets 86
Chapter 14 | Consumer’s Surplus 89
Chapter 15 | Market Demand 94
Chapter 16 | Equilibrium 105
Chapter 17 | Mea sure ment 112
Chapter 18 | Auctions 113
Chapter 19 | Technology 119
Chapter 20 | Pro t Maximization 125
Chapter 21 | Cost Minimization 132
Chapter 22 | Cost Curves 143
CONTENTS
vi | Contents
Chapter 23 | Firm Supply 341
Chapter 24 | Industry Supply 343
Chapter 25 | Monopoly 348
Chapter 26 | Monopoly Behavior 353
Chapter 27 | Factor Markets 356
Chapter 28 | Oligopoly 360
Chapter 29 | Game Theory 365
Chapter 30 | Game Applications 371
Chapter 31 | Behavioral Economics 377
Chapter 32 | Exchange 378
Chapter 33 | Production 384
Chapter 34 | Welfare 389
Chapter 35 | Externalities 394
Chapter 36 | Information Technology 399
Chapter 37 | Public Goods 402
Chapter 38 | Asymmetric Information 406
Chapter 7 | Revealed Preference 275
Chapter 8 | Slutsky Equation 280
Chapter 9 | Buying and Selling 285
Chapter 10 | Intertemporal Choice 290
Chapter 11 | Asset Markets 294
Chapter 12 | Uncertainty 299
Chapter 13 | Risky Assets 304
Chapter 14 | Consumer’s Surplus 306
Chapter 15 | Market Demand 311
Chapter 16 | Equilibrium 315
Chapter 17 | Mea sure ment 319
Chapter 18 | Auctions 320
Chapter 19 | Technology 326
Chapter 20 | Pro t Maximization 330
Chapter 21 | Cost Minimization 333
Chapter 22 | Cost Curves 337
vii
A computerized version of this Test Bank is available at
no charge to any instructor who adopts Hal Varian’s Inter-
mediate Microeconomics, Ninth Edition by contacting your
local representative at 1– 800- 353– 9909 or wwnorton .com.
The second part of this volume consists of alternative quiz–
zes for the multiple- choice questions in Bergstrom and Var–
ian’s Workouts in Intermediate Microeconomics. These
questions use new pa ram e ters and scrambled responses so
that an instructor can use them as a quiz or for more formal
graded examinations.
PREFACE
PART I: TEST BANK
3
7. If there are two goods and the prices of both goods
rise, then the bud get line must become steeper.
ANS: F DIF: 1
8. There are two goods. You know how much of good 1 a
consumer can afford if she spends all of her income on
good 1. If you knew the ratio of the prices of the two
goods, then you could draw the consumer’s bud get line
without any more information.
ANS: T DIF: 1
9. A consumer prefers more to less of every good. Her
income rises, and the price of one of the goods falls
while other prices stay constant. These changes must
have made her better off.
ANS: T DIF: 1
10. There are 3 goods. The price of good 1 is −1, the price
of good 2 is +1, and the price of good 3 is +2. It is
physically possible for a consumer to consume any
commodity bundle with nonnegative amounts of each
good. A consumer who has an income of 10 could
afford to consume some commodity bundles that
include 5 units of good 1 and 6 units of good 2.
ANS: T DIF: 2
11. A decrease in income pivots the bud get line around the
bundle initially consumed.
ANS: F DIF: 1
TRUE/FALSE
1. If there are two goods with positive prices and the
price of one good is reduced, while income and other
prices remain constant, then the size of the bud get set
is reduced.
ANS: F DIF: 1
2. If good 1 is mea sured on the horizontal axis and good
2 is mea sured on the vertical axis and if the price of
good 1 is p1 and the price of good 2 is p2, then the
slope of the bud get line is −p2/p1.
ANS: F DIF: 1
3. If all prices are doubled and money income is left the
same, the bud get set does not change because relative
prices do not change.
ANS: F DIF: 1
4. If there are two goods and if one good has a negative
price and the other has a positive price, then the slope
of the bud get line will be positive.
ANS: T DIF: 1
5. If all prices double and income triples, then the bud get
line will become steeper.
ANS: F DIF: 1
6. If good 1 is on the horizontal axis and good 2 is on the
vertical axis, then an increase in the price of good 1
will not change the horizontal intercept of the bud get
line.
ANS: F DIF: 1
CHAPTER 2 Bud get Constraint
4 | Chapter 2
a. 2 bags of pretzels per day but no more.
b. 5 seafood salads per day but no more.
c. 4 bags of pretzels per day but no more.
d. 5 bags of pretzels per day but no more.
e. None of the above.
ANS: C DIF: 2
5. Clara spends her entire bud get and consumes 5 units of
x and 13 units of y. The price of x is twice the price of
y. Her income doubles and the price of y doubles, but
the price of x stays the same. If she continues to buy 13
units of y, what is the largest number of units of x that
she can afford?
a. 10
b. 5
c. 12
d. 14
e. There is not enough information to say.
ANS: A DIF: 1
6. Maria spends her entire bud get and consumes 5 units
of x and 6 units of y. The price of x is twice the price of
y. Her income doubles and the price of y doubles, but
the price of x stays the same. If she continues to buy
6units of y, what is the largest number of units of x
that she can afford?
a. 12
b. 10
c. 14
d. 5
e. There is not enough information to say.
ANS: B DIF: 1
7. In year 1, the price of good x was $3, the price of good
y was $2, and income was $90. In year 2, the price of x
was $9, the price of good y was $6, and income was
$90. On a graph with x on the horizontal axis and y on
the vertical, the new bud get line is
a. atter than the old one and lies below it.
b. atter than the old one and lies above it.
c. steeper than the old one and lies below it.
d. steeper than the old one and lies above it.
e. None of the above.
ANS: E DIF: 1
8. In year 1, the price of good x was $4, the price of good
y was $1, and income was $70. In year 2, the price of x
was $9, the price of good y was $2, and income was
$70. On a graph with x on the horizontal axis and y on
the vertical, the new bud get line is
a. steeper than the old one and lies below it.
b. steeper than the old one and lies above it.
c. atter than the old one and lies below it.
MULTIPLE CHOICE
1. If she spends all of her income on breadfruits and mel-
ons, Natalie can just afford 9 breadfruits and 10 mel–
ons per day. She could also use her entire bud get to buy
3 breadfruits and 12 melons per day. The price of
breadfruits is 8 yen each. How much is Natalie’s
income per day?
a. 313 yen
b. 317 yen
c. 309 yen
d. 303 yen
e. None of the above.
ANS: E DIF: 1
2. If she spends all of her income on uglifruits and bread-
fruits, Maria can just afford 11 uglifruits and 4 bread-
fruits per day. She could also use her entire bud get to
buy 3 uglifruits and 8 breadfruits per day. The price of
uglifruits is 6 pesos each. How much is Maria’s income
per day?
a. 115 pesos
b. 105 pesos
c. 114 pesos
d. 119 pesos
e. None of the above.
ANS: C DIF: 1
3. Harold lives on Doritos and seafood salads. The price
of Doritos is 1 dollar per bag and the price of seafood
salads is 2 dollars each. Harold allows himself to spend
no more than 11 dollars a day on food. He also restricts
his consumption to 6,500 calories per day. There are
1,500 calories in a bag of Doritos and 500 calories in a
seafood salad. If he spends his entire money bud get
each day and consumes no more calories than his calo–
rie limit, he can consume up to
a. 3 bags of Doritos per day but no more.
b. 1 bag of Doritos per day but no more.
c. 4 seafood salads per day but no more.
d. 4 bags of Doritos per day but no more.
e. None of the above.
ANS: A DIF: 2
4. Quincy lives on pretzels and seafood salads. The price
of pretzels is 1 dollar per bag and the price of seafood
salads is 2 dollars each. Quincy allows himself to
spend no more than 14 dollars a day on food. He also
restricts his consumption to 3,400 calories per day.
There are 600 calories in a bag of pretzels and 200 cal-
ories in a seafood salad. If he spends his entire money
bud get each day and consumes no more calories than
his calorie limit, he can consume up to
Bud get Constraint | 5
afford a commodity bundle with A sacks of acorns and
B crates of butternuts that satis es the bud get equation
a. 9A + 4B = 88.
b. 18A + 4B = 176.
c. 11A + 2B = 88.
d. 9A + 6B = 90.
e. None of the above.
ANS: B DIF: 1
14. Eduardo spends his entire income on 9 sacks of
acorns and 4 crates of butternuts. The price of acorns
is 6dollars per sack and his income is 90 dollars. He
can just afford a commodity bundle with A sacks of
acorns and B crates of butternuts that satis es the bud-
get equation
a. 6A + 13B = 92.
b. 12A + 18B = 180.
c. 8A + 9B = 90.
d. 6A + 11B = 90.
e. None of the above.
ANS: B DIF: 1
15. Harry thrives on two goods, paperback novels and
bananas. The cost of paperback novels is 4 dollars each
and the cost of bananas is 3 dollars per bunch. If Harry
spent all of his income on bananas, he could afford 12
bunches of bananas per week. How many paperback
novels could he buy if he spent all of his income on
paperback novels?
a. 36
b. 48
c. 9
d. 16
e. None of the above.
ANS: C DIF: 1
16. Suppose that the prices of good x and good y both dou–
ble and income triples. On a graph where the bud get
line is drawn with x on the horizontal axis and y on the
vertical axis,
a. the bud get line becomes steeper and shifts inward.
b. the bud get line becomes  atter and shifts outward.
c. the bud get line becomes  atter and shifts inward.
d. the new bud get line is parallel to the old bud get line
and lies below it.
e. None of the above.
ANS: E DIF: 1
17. Suppose that the price of good x triples and the price of
good y doubles while income remains constant. On a
graph where the bud get line is drawn with x on the
horizontal axis and y on the vertical axis, the new bud-
get line
d. atter than the old one and lies above it.
e. None of the above.
ANS: A DIF: 1
9. If she spends her entire bud get, Betsy can afford 74
peaches and 9 pineapples. She can also just afford
14peaches and 21 pineapples. The price of peaches is
17 cents. What is the price of pineapples in cents?
a. 95 cents
b. 5 cents
c. 22 cents
d. 85 cents
e. None of the above.
ANS: D DIF: 1
10. If she spends her entire bud get, Heidi can afford 39
peaches and 12 pears. She can also just afford 24
peaches and 17 pears. The price of peaches is 9 cents.
What is the price of pears in cents?
a. 12 cents
b. 37 cents
c. 27 cents
d. 3 cents
e. None of the above.
ANS: C DIF: 1
11. Isabella thrives on two goods: lemons and tangerines.
The cost of lemons is 40 guineas each and the cost of
tangerines is 20 guineas each. If her income is 320
guineas, how many lemons can she buy if she spends
all of her income on lemons?
a. 6
b. 8
c. 16
d. 11
e. None of the above.
ANS: B DIF: 1
12. Georgina thrives on two goods: pears and bananas.
The cost of pears is 30 pesos each and the cost of
bananas is 15 pesos each. If her income is 180 pesos,
how many pears can she buy if she spends all of her
income on pears?
a. 9
b. 12
c. 4
d. 6
e. None of the above.
ANS: D DIF: 1
13. Will spends his entire income on 8 sacks of acorns and
8 crates of butternuts. The price of acorns is 9 dollars
per sack and his income is 88 dollars. He can just
6 | Chapter 2
c. 4s + 5c = 95.
d. 4s + 5c = 75.
e. 14s + 5c = 120.
ANS: D DIF: 2
21. If you spent your entire income, you could afford either
3 units of x and 9 units of y or 9 units of x and 3 units
of y. If you spent your entire income on x, how many
units of x could you buy?
a. 21
b. 16
c. 12
d. There is not enough information to determine the
number of x.
e. None of the above.
ANS: C DIF: 1
22. If you spent your entire income, you could afford either
6 units of x and 13 units of y or 13 units of x and 6
units of y. If you spent your entire income on x, how
many units of x could you buy?
a. 19
b. 32
c. 24
d. There is not enough information to determine the
number of x.
e. None of the above.
ANS: A DIF: 1
23. Bella’s bud get line for x and y depends on all of the fol-
lowing except
a. the amount of money she has to spend on
x and y.
b. the price of x.
c. her preferences between x and y.
d. the price of y.
e. None of the above.
ANS: C DIF: 1
24. Your bud get constraint for the two goods A and B is
12A + 4B = I, where I is your income. You are currently
consuming more than 27 units of B. In order to get
3more units of A, how many units of B would you
have to give up?
a. 0.33
b. 0.11
c. 3
d. 9
e. None of the above.
ANS: D DIF: 1
25. Your bud get constraint for the two goods A and B is
8A + 4B = I, where I is your income. You are currently
consuming more than 18 units of B. In order to get
a. is atter than the old one and lies below it.
b. is atter than the old one and lies above it.
c. crosses the old bud get line.
d. is steeper than the old one and lies below it.
e. is steeper than the old one and lies above it.
ANS: D DIF: 1
18. While traveling abroad, Tammy spent all of the money
in her purse to buy 5 plates of spaghetti and 6 oysters.
Spaghetti costs 8 units of the local currency per plate
and she had 82 units of currency in her purse. If s
denotes the number of plates of spaghetti and o denotes
the number of oysters purchased, the set of commodity
bundles that she could just afford with the money in
her purse is described by the equation
a. 8s + 6o = 82.
b. 6s + 8o = 82.
c. 8s + 7o = 82.
d. 5s + 6o = 82.
e. There is not enough information to determine
theanswer.
ANS: C DIF: 3
19. Billy Bob wants to gain some weight so that he can
play football. Billy consumes only milk shakes and
spinach. Milk shakes cost him $1 each and spinach
costs $2 per serving. A milk shake has 850 calories
and a serving of spinach has 200 calories. Billy Bob
never spends more than $20 a day on food and he
always consumes at least 8,000 calories per day. Which
of the following is necessarily true?
a. Billy Bob consumes at least 9 milk shakes a day.
b. Billy Bob never consumes more than 6 servings of
spinach a day.
c. Billy Bob never consumes positive amounts of both
goods.
d. Billy Bob consumes only milk shakes.
e. None of the above.
ANS: B DIF: 2
20. Lars consumes only potatoes and herring. When the
price of potatoes was 9 crowns per sack and the price
of herring was 5 crowns per crock, he spent his entire
income to buy 5 sacks of potatoes and 10 crocks of
herring per month. Now the government subsidizes
potatoes. Market prices haven’t changed, but consum-
ers get a subsidy of 5 crowns for every sack of potatoes
consumed. To pay for this subsidy, the government
introduced an income tax. Lars pays an income tax of
20 crowns per month. If s is the number of sacks of
potatoes and c is the number of crocks of herring, what
is Lars’s new bud get equation?
a. 9s + 5c = 100.
b. 14s + 5c = 95.
Bud get Constraint | 7
29. Edmund must pay $6 each for punk rock video cas-
settes, V. If Edmund is paid $24 per sack for accepting
garbage, G, and if his relatives send him an allowance
of $96, then his bud get line is described by the
equation
a. 6V = 24G.
b. 6V + 24G = 96.
c. 6V = 96 − G.
d. 6V − 24G = 96.
3more units of A, how many units of B would you
have to give up?
a. 6
b. 0.50
c. 0.17
d. 2
e. None of the above.
ANS: A DIF: 1