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17) Refer to Figure 6.14. If the price of an ice cream cone is $3, Jason‘s income is
A) $50.
B) $375.
C) $450.
D) indeterminate because the price of ice cream sandwiches is not given.
Topic: Appendix: Indifference Curves
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
18) Refer to Figure 6.14. Jason cannot afford the bundle represented by point
A) E.
B) B.
C) C.
D) D.
Topic: Appendix: Indifference Curves
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
19) Refer to Figure 6.14. The ________ is the ratio of the marginal utility of ice cream cones to the marginal
utility of ice cream sandwiches.
A) slope of the indifference curve
B) slope of the budget constraint
C) maximum number of ice cream cones that can be purchased
D) maximum number of ice cream sandwiches that can be purchased
Topic: Appendix: Indifference Curves
Skill: Definition
Learning Outcome: Micro-2
20) Refer to Figure 6.14. At point ________, the slope of the indifference curve is –0.67.
A) A
B) B
C) C
D) All of the above are correct.
Topic: Appendix: Indifference Curves
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
79
21) Refer to Figure 6.14. If the price of an ice cream cone is $3, the price of ice cream sandwiches is
A) $3.
B) $4.50.
C) $33.33.
D) $150.
Topic: Appendix: Indifference Curves
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
Refer to the information provided in Figure 6.15 below to answer the question(s) that follow.
Figure 6.15
22) Refer to Figure 6.15. If the price of a hot dog is $2, Jason’s income is
A) $25.
B) $200.
C) $300.
D) indeterminate because the price of sandwiches is not given.
Topic: Appendix: Indifference Curves
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
80
23) Refer to Figure 6.15. Why was Jason not maximizing his utility at point C?
A) He is not spending his entire budget.
B) His marginal utility per dollar spent on the last sandwich is greater than his marginal utility per dollar
spent on his last hot dog.
C) His marginal utility per dollar spent on the last sandwich is less than his marginal utility per dollar
spent on his last hot dog.
D) He is maximizing his utility at point C.
Topic: Appendix: Indifference Curves
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-2
24) Refer to Figure 6.15. The highest indifference curve depicted is the one on which point D lies. Why is
Jason not maximizing his utility at point D?
A) He cannot afford point D.
B) His marginal utility per dollar spent on the last sandwich is greater than his marginal utility per dollar
spent on his last hot dog.
C) His marginal utility per dollar spent on the last sandwich is less than his marginal utility per dollar
spent on his last hot dog.
D) He is maximizing his utility at point C.
Topic: Appendix: Indifference Curves
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-2
25) Refer to Figure 6.15. If the price of a hot dog is $4, Jason‘s income is
A) $50.
B) $400.
C) $600.
D) indeterminate because the price of sandwiches is not given.
Topic: Appendix: Indifference Curves
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
81
26) Refer to Figure 6.15. Why was Jason not maximizing his utility at point B?
A) He is not spending his entire budget.
B) His marginal utility per dollar spent on the last sandwich is greater than his marginal utility per dollar
spent on his last hot dog.
C) His marginal utility per dollar spent on the last sandwich is less than his marginal utility per dollar
spent on his last hot dog.
D) He is maximizing his utility at point B.
Topic: Appendix: Indifference Curves
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-2
27) Refer to Figure 6.15. Jason is not maximizing his utility at point
A) E.
B) B.
C) C.
D) All of the above are correct.
Topic: Appendix: Indifference Curves
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-2
28) We derive the demand curve for X from indifference curves and a budget constraint by changing the
A) level of income.
B) price of X.
C) price of Y.
D) consumers‘ preferences.
Topic: Appendix: Indifference Curves
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–11
29) Toby tells you that he prefers hamburgers to hot dogs, hot dogs to tacos, and hamburgers to tacos.
This violates what assumption made when analyzing consumer preferences?
A) that more is better
B) that there is a diminishing marginal rate of substitution
C) that consumers are rational
D) This does not violate any assumptions relating to consumer preference.
Topic: Appendix: Indifference Curves
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–11
82
30) A consumer satisfies the condition MUx/Px = MUy/Py when his indifference curve ________ his
budget constraint.
A) is completely above
B) is completely below
C) is just tangent to
D) crosses
Topic: Appendix: Indifference Curves
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–10
31) Assume Gloria is initially in equilibrium and that X and Y are normal goods for her. Then the price of
X falls. For Gloria to move to a new equilibrium point her consumption of
A) X must remain constant, but her consumption of Y must decrease.
B) X must decrease.
C) X must increase.
D) both X and Y must decrease.
Topic: Appendix: Indifference Curves
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–11
32) An assumption underlying indifference curve analysis is that MUx/MUy ________ as less of X and
more of Y is consumed.
A) increases
B) decreases
C) remains constant
D) always equals one
Topic: Appendix: Indifference Curves
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–11
33) As you move down an indifference curve, the absolute value of the slope
A) increases.
B) decreases.
C) remains constant.
D) initially decreases and then increases.
Topic: Appendix: Indifference Curves
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–11
83
34) We derive the ________ for X from indifference curves and a budget constraint by changing the price
of X.
A) supply curve
B) demand curve
C) marginal utility
D) total utility
Topic: Appendix: Indifference Curves
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–11
35) Assuming the properties of normal indifference curves, a consumer will maximize his utility where
his indifference curve is just tangent to his budget constraint.
Topic: Appendix: Indifference Curves
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–11
36) An indifference curve is a set of points, each point representing a combination of two goods, all of
which represent the same total utility.
Topic: Appendix: Indifference Curves
Skill: Definition
Learning Outcome: Micro–11
37) Indifference curves can never cross on a preference map.
Topic: Appendix: Indifference Curves
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–11
38) On a preference map, higher indifference curves represent higher levels of total utility.
Topic: Appendix: Indifference Curves
Skill: Definition
Learning Outcome: Micro–11
39) Indifference curves have positive slopes.
Topic: Appendix: Indifference Curves
Skill: Definition
Learning Outcome: Micro–11
84
40) The slope of an indifference curve for products X and Y is the ratio of the marginal utility of product
X to the marginal utility of product Y.
Topic: Appendix: Indifference Curves
Skill: Definition
Learning Outcome: Micro–11