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Principles of Microeconomics, 12e (Case/Fair/Oster)
Chapter 6 Household Behavior and Consumer Choice
6.1 Household Choice in Output Markets
1) Jane has $500 a week to spend on clothing and food. The price of clothing is $25 and the price of food is
$10. The clothing and food pairs in Jane’s choice set include ________ units of clothing and ________ units
of food.
A) 50; 50
B) 20; 50
C) 15; 25
D) 8; 30
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
2) Jane has $500 a week to spend on clothing and food. The price of clothing is $25 and the price of food is
$10. Jane spends her entire income when she purchases ________ units of clothing and ________ units of
food.
A) 10; 10
B) 25; 5
C) 12; 20
D) 16; 8
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
3) Jim has $600 a week to spend on clothing and food. The price of clothing is $30 and the price of food is
$5. The clothing and food pairs in Jim’s choice set include ________ units of clothing and ________ units
of food.
A) 20; 50
B) 15; 70
C) 10; 60
D) 0; 200
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
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4) Jane has $500 a week to spend on clothing (c) and food (f). The price of clothing is $25 and the price of
food is $10. What is the equation for Jane’s budget constraint?
A) ($25 × Clothing) × ($10 × Food) < $500
B) $25 × Clothing + $10 × Food ≥ $500
C) ($25 × Clothing) / ($10 × Food) = $500
D) $25 × Clothing + $10 × Food = $500
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
5) Ted has $600 a week to spend on clothing (c) and food (f). The price of clothing is $30 and the price of
food is $5. What is the equation for Ted’s budget constraint, assuming he spends his entire budget?
A) $30 × Clothing + $5 × Food < $600
B) $30 × Clothing + $5 × Food ≤ $600
C) $30 × Clothing + $5 × Food > $600
D) $30 × Clothing + $5 × Food = $600
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
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Refer to the information provided in Figure 6.1 below to answer the question(s) that follow.
Figure 6.1
6) Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hamburger is $4.00.
Tom’s monthly income is
A) $20.
B) $60.
C) $80.
D) $100.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
7) Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hot dog is $2.00. Tom’s
monthly income is
A) $40.
B) $60.
C) $80.
D) $100.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
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8) Refer to Figure 6.1. The slope of budget constraint AC is
A) –5.0.
B) –2.0.
C) –0.5.
D) indeterminate from this information because prices are not given.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
9) Refer to Figure 6.1. Assume Tom’s budget constraint is AC. If the price of a hamburger is $10, the price
of a hot dog is
A) $4.
B) $5.
C) $10.
D) $20.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
10) Refer to Figure 6.1. Assume Tom’s budget constraint is AC. If the price of a hot dog is $3, the price of a
hamburger is
A) $1.50.
B) $3.
C) $6.
D) $12.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
11) Refer to Figure 6.1. Assume Tom’s budget constraint is AC. At which point does Tom consume only
hot dogs?
A) A.
B) B.
C) E.
D) D.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
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12) Refer to Figure 6.1. Along budget constraint AC, the opportunity cost of one hamburger
A) is 1/4 of a hot dog.
B) is 1/2 of a hot dog.
C) is 2 hot dogs.
D) changes as you move down along the budget constraint.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
13) Refer to Figure 6.1. Along budget constraint AC, the opportunity cost of one hot dog
A) is 1/4 of a hamburger.
B) is 1/2 of a hamburger.
C) is 2 hamburgers.
D) changes as you move down along the budget constraint.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
14) Refer to Figure 6.1. Tom’s budget constraint is AC. His choice set includes all points
A) to the right of budget constraint AC.
B) bounded by the area OAC.
C) along budget constraint AC.
D) along the vertical and horizontal axes.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
15) Refer to Figure 6.1. AC represents Tom’s budget constraint. Point D then represents a point that is
A) an available option, as Tom is just spending all of his income.
B) available, but at which he does not spend all his income.
C) not available because it represents a combination of hamburgers and hot dogs that he cannot purchase
with his income.
D) in his opportunity set but not on his budget constraint.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
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16) Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hamburger is $5.00.
Tom’s monthly income is
A) $4.
B) $60.
C) $80.
D) $100.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
17) Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hot dog is $2.50. Tom’s
monthly income is
A) $16.
B) $50.
C) $80.
D) $100.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
18) Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hamburger is $8.00.
Tom’s monthly income is
A) $2.50.
B) $20.
C) $80.
D) $160.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
19) Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hot dog is $5.00. Tom‘s
monthly income is
A) $40.
B) $100.
C) $200.
D) $400.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
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20) Refer to Figure 6.1. Assume Tom’s budget constraint is AC. He will have leftover income if he
purchases the bundle represented by point
A) A.
B) B.
C) E.
D) D.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
21) Refer to Figure 6.1. Assume Tom’s budget constraint is AC. Given his current monthly income, he will
not have enough income to purchase the bundle represented by point
A) A.
B) B.
C) E.
D) D.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
22) Refer to Figure 6.1. Assume Tom’s budget constraint is AC. At which point does Tom consume only
hamburgers?
A) A
B) B
C) C
D) D
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
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23) Refer to Figure 6.1. AC represents Tom’s budget constraint. Point E then represents a point that is
A) an available option, as Tom is just spending all of his income.
B) available, but at which he does not spend all his income.
C) not available because it represents a combination of hamburgers and hot dogs that he cannot purchase
with his income.
D) outside his opportunity set but not on his budget constraint.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
Refer to the information provided in Figure 6.2 below to answer the question(s) that follow.
Figure 6.2
24) Refer to Figure 6.2. Assume Mr. Lingle is on budget constraint AC. If the price of a gardenburger is $6,
Mr. Lingle’s monthly income is
A) $24.
B) $60.
C) $200.
D) $240.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
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25) Refer to Figure 6.2. Assume Mr. Lingle is on budget constraint AC. If the price of a gardenburger is $9,
Mr. Lingle’s monthly income is
A) $40.
B) $80.
C) $180.
D) $360.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
26) Refer to Figure 6.2. Assume Mr. Lingle is on budget constraint AC. If the price of a beer is $5, Mr.
Lingle’s monthly income is
A) $40.
B) $80.
C) $100.
D) $200.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
27) Refer to Figure 6.2. Assume Mr. Lingle is on budget constraint AC. If the price of a beer is $2.50, Mr.
Lingle’s monthly income is
A) $40.
B) $100.
C) $125.
D) $200.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
28) Refer to Figure 6.2. The slope of budget constraint AC is
A) –1/2.
B) –1.
C) –2.
D) indeterminate from this information because prices are not given.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
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29) Refer to Figure 6.2. Assume Mr. Lingle’s budget constraint is AC. If the price of a beer is $3, the price
of a gardenburger is
A) $1.50.
B) 3.00.
C) $6.00.
D) $12.00.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
30) Refer to Figure 6.2. Assume Mr. Lingle’s budget constraint is AC. If the price of a gardenburger is
$7.50, the price of a beer is
A) $3.75.
B) $4.00.
C) $7.50.
D) $15.00.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
31) Refer to Figure 6.2. Assume Mr. Lingle’s budget is AC. At which point does Mr. Lingle spend exactly
his income?
A) A.
B) D.
C) E.
D) The answer cannot be determined with the given information.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
32) Refer to Figure 6.2. Along budget constraint AC, the opportunity cost of one gardenburger is
A) 1/4 of a beer.
B) 1 beer.
C) 2 beers.
D) changing as Mr. Lingle moves down his budget constraint.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2