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64) Refer to Figure 6.5. Molly’s budget constraint is BD. Molly’s income is $375, the price of a DVD is $15
and the price of a CD is $25. At point D the consumer is buying ________ DVDs and ________ CDs.
A) 0; 15
B) 25; 0
C) 25; 15
D) 50; 30
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
65) Refer to Figure 6.5. Molly’s budget constraint is AD. If the price of CDs decreases, her new budget
constraint becomes
A) AE.
B) A0.
C) BD.
D) EF.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
66) Refer to Figure 6.5. Molly’s budget constraint is CD. If the price of CDs increases, her new budget
constraint becomes
A) AD.
B) A0.
C) BE.
D) EF.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
22
67) Refer to Figure 6.5. Molly’s budget constraint is AD. If her income decreases, her new budget
constraint is
A) CD.
B) BD.
C) EF.
D) not shown on this graph.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
68) Refer to Figure 6.5. Molly’s budget constraint is EF. If her income decreases while the price of the
goods are unchanged, her new budget constraint is
A) AD.
B) BD.
C) CD.
D) It is not shown on this graph.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
69) Refer to Figure 6.5. Molly’s budget constraint is CD. Molly’s income is $200, the price of a DVD is
$7.50 and the price of a CD is $10. At point C, she is buying ________ DVDs and ________ CDs.
A) 0; 20
B) 20; 0
C) 20; 15
D) 40; 30
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
70) Refer to Figure 6.5. Molly’s budget constraint is CD. Molly’s income is $75, the price of a DVD is $3
and the price of a CD is $5. At point D, she is buying ________ DVDs and ________ CDs.
A) 0; 15
B) 25; 0
C) 25; 15
D) 50; 30
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
23
Refer to the information provided in Figure 6.6 below to answer the question(s) that follow.
Figure 6.6
71) Refer to Figure 6.6. Bill’s budget constraint was originally CD. If his new budget constraint is EF, then
his income
A) increased.
B) decreased.
C) did not change but the price of black beans decreased.
D) did not change but the price of bell peppers decreased.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
72) Refer to Figure 6.6. Bill‘s budget constraint was originally AD. If his new budget constraint is EF, then
his income
A) increased.
B) decreased.
C) increased and the price of black beans price increased.
D) increased and the price of bell peppers decreased.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
24
73) Refer to Figure 6.6. Bill’s budget constraint is BD. If the price of bell peppers increases, Bill’s new
budget constraint is
A) AD.
B) A0.
C) CD.
D) EF.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
74) Refer to Figure 6.6. Bill’s budget constraint is BD. Bill’s income is $800, the price of a bell pepper is $1,
and the price of a bag of black beans is $1. At point B Bill is buying ________ bell peppers and ________
bags of black beans.
A) 0; 800
B) 800; 0
C) 400; 400
D) 600; 200
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
75) Refer to Figure 6.6. Bill’s budget constraint was originally EF. If his new budget constraint is CD, then
his income
A) increased.
B) decreased.
C) did not change but the price of black beans decreased.
D) did not change but the price of black beans increased.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
25
76) Refer to Figure 6.6. Bill‘s budget constraint was originally EF. If his new budget constraint is AD, then
his income
A) increased.
B) decreased.
C) increased and the price of bell peppers decreased.
D) decreased and the price of bell peppers increased.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
77) Refer to Figure 6.6. Bill’s budget constraint is CD. If the price of bell peppers increases, Bill’s new
budget constraint is
A) AD.
B) A0.
C) BE.
D) EF.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
78) Refer to Figure 6.6. Bill’s budget constraint is BD. Bill’s income is $600, the price of a bell pepper is $1,
and the price of a bag of black beans is $2. At point D Bill is buying ________ bell peppers and ________
bags of black beans.
A) 0; 300
B) 600; 0
C) 300; 150
D) 600; 300
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
26
79) Michael can buy either pizzas or submarine sandwiches. If the prices of pizzas and submarine
sandwiches fall by half and so does Michael‘s money income, we can conclude that Michael’s budget
constraint will
A) shift in but remain parallel to the old one.
B) shift out but remain parallel to the old one.
C) swivel in so that the slope of the budget constraint is doubled.
D) remain unchanged.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Analytical Thinking
Learning Outcome: Micro–10
80) Michael can buy either pizzas or submarine sandwiches. If the prices of pizzas and submarine
sandwiches double and Michael’s money income triples, we can conclude that Michael’s budget
constraint will
A) shift in but remain parallel to the old one.
B) shift out but remain parallel to the old one.
C) swivel in so that the slope of the budget constraint is doubled.
D) remain unchanged.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Analytical Thinking
Learning Outcome: Micro–10
81) Price decreases will ________ a household’s choice set.
A) increase
B) decrease
C) not change
D) sometimes increase and other times decrease
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–10
82) A car’s real cost is its opportunity cost. Opportunity cost is determined by
A) the price of the car.
B) relative prices.
C) wealth.
D) the prices of the goods that are compliments to a car.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–20
27
Refer to the information provided in Figure 6.7 below to answer the question(s) that follow.
Figure 6.7
83) Refer to Figure 6.7. Along budget constraint AB, the price of good X is $10 and the price of good Y is
$12. If the price of X increases to $15, the budget constraint will
A) pivot in at point B.
B) pivot out at point A.
C) shift in parallel to AB.
D) pivot in at point A.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
84) Refer to Figure 6.7. Along budget constraint AB, the price of good X is $25 and the price of good Y is
$18. If the price of Y decreases to $14, the budget constraint will
A) pivot in at point B.
B) pivot out at point A.
C) shift in parallel to AB.
D) pivot in at point A.
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
28
85) Hector has $2,000 a month to spend on clothing and food. The price of clothing is $50 and the price of
food is 20. The clothing and food pairs in Hector’s choice set include ________ units of clothing and
________ units of food.
A) 100; 100
B) 40; 100
C) 30; 50
D) 16; 60
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
86) Hector has $2,000 a month to spend on clothing and food. The price of clothing is $50 and the price of
food is $20. Hector spends his entire income when he purchases ________ units of clothing and ________
units of food.
A) 20; 20
B) 50; 10
C) 24; 40
D) 32; 16
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
87) Sonia has $2,400 a month to spend on clothing and food. The price of clothing is $60 and the price of
food is $10. The clothing and food pairs in Sonia’s choice set include ________ units of clothing and
________ units of food.
A) 40; 100
B) 30; 140
C) 20; 120
D) 0; 400
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
29
88) Hector has $1,000 a month to spend on clothing (c) and food (f). The price of clothing is $50 and the
price of food is $20. What is the equation for Hector‘s budget constraint?
A) Clothing + Food < $1,000
B) $50 × Clothing + $20 × Food ≥ $1,000
C) ($50 × Clothing) / ($20 × Food) = $1,000
D) $50 × Clothing + $20 × Food = $1,000
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
89) Darius has $1,200 a month to spend on clothing (c) and food (f). The price of clothing is $60 and the
price of food is $10. What is the equation for Darius’s budget constraint, assuming he spends his entire
budget?
A) Clothing + Food < $1,200
B) $60 × Clothing + $10 × Food ≤ $1,200
C) $60 × Clothing + $10 × Food > $1,200
D) $60 × Clothing + $10 × Food = $1,200
Topic: Household Choices in Output Markets
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
90) If a household’s income is cut in half, its budget constraint will
A) shift out parallel to the old one.
B) pivot at the Y–intercept.
C) shift in parallel to the old one.
D) be unaffected.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–10
91) If a household’s income rises by 30%, its budget constraint will
A) shift out parallel to the old one.
B) pivot at the Y–intercept.
C) shift in parallel to the old one.
D) be unaffected.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–10
30
92) Carlos can buy either sushi or eggrolls. If the prices of sushi and eggrolls triple and so does Carlos’s
money income, we can deduce that Carlos’s budget constraint will
A) shift in but remain parallel to the old one.
B) shift out but remain parallel to the old one.
C) swivel in so that the slope of the budget constraint is tripled.
D) remain unchanged.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–10
93) Carlos can buy either sushi or eggrolls. If the prices of sushi and eggrolls triple and Carlos’s money
income doubles, we can deduce that Carlos’s budget constraint will
A) shift in but remain parallel to the old one.
B) shift out but remain parallel to the old one.
C) swivel in so that the slope of the budget constraint is doubled.
D) remain unchanged.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–10
94) Price increases will ________ a household’s choice set.
A) increase
B) decrease
C) not change
D) sometimes increase and other times decrease
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–10
95) When the price of a good increases, the budget constraint does not change.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–10