978-1259723223 Test Bank TBChap007 Part 9

subject Type Homework Help
subject Pages 9
subject Words 2271
subject Authors Campbell McConnell, Sean Flynn, Stanley Brue

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286.
The graph shows two indifference curves, and QR and QS represent different budget lines. A
change in the equilibrium position on the diagram from point 1 to point 2 could result, other
things being equal, from
287. If a consumer is initially in equilibrium, an increase in money income will
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D. have no effect on the equilibrium position.
288.
Given the indifference map and budget constraint lines above, what is the demand curve for
sweaters?
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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Blooms: Understand
D i f f i c u l t y :
02 Medium
Learning Objective: 07-06 Appendix: Relate how the indifference curve model of
consumer behavior derives demand curves from budget lines, indifference curves, and
utility maximization.
Test Bank: II
To pi c:
Indifference Curve Analysis
289.
Given the indifference curves for an individual as shown above, if the price of good Y = $1, it
can be determined that two points on his or her demand curve for good X are
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7-158
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written consent of McGraw-Hill Education.
To pi c:
Indifference Curve Analysis
290.
The individual demand curve that is implied by the budget constraints and indifference curves
above will be
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291.
In the graph, a decrease in the price of good Y will result in
A. a decrease in demand for good Y.
B. an increase in demand for good Y.
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292.
Graph I above shows E.T.'s equilibrium combinations of beer and candy for three different
prices of beer. (I1, I2, and I3 are indifference curves. The price of a package of candy is
constant at $1.00.) Letting PC represent the price of beer, which demand curve (d) above is
consistent with graph I?
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293.
Recently, the price of lentils increased. As a result Lincoln residents noticed that their neighbor,
Rasputin, decreased his consumption of lentils and of steak. Rasputin said his utility had
declined. Many citizens made donations to the "Rasputin Relief Fund." Rasputin was given a
cash grant equal to the amount he claimed to need to regain his initial utility level. Happy and
thankful, Rasputin rushed off to the store to make his new purchases-consisting of more steak
and slightly less lentils. Each graph above shows two indifference curves for Rasputin, I1 and
I2, and the two budget constraints, B1 and B2, that he faced. Let E1 represent Rasputin's initial
equilibrium, E2 equal his equilibrium following the
increase in the price of lentils, and E3 his equilibrium after receiving the cash from the relief
fund. Which graph above is consistent with Rasputin's claims in the above story?
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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
D i f f i c u l t y :
02 Medium
Learning Objective: 07-06 Appendix: Relate how the indifference curve model of
consumer behavior derives demand curves from budget lines, indifference curves, and
utility maximization.
Test Bank: II
To pi c:
Indifference Curve Analysis
294.
Suppose an individual's budget line shifted as shown above. Which of the four pairs of graphs,
each showing the demand for Good X and a separate demand for Good Y, is the most consistent
with the given change in the top graph?
A. pair A
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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
B. pair B
C. pair C
D. pair D
295. In a topographic map, each line represents a particular elevation above sea level, and in an
indifference map, each line represents a particular level of
A. total utility.
True / False Questions
296. The budget line shows all the combinations of two products that the consumer can buy,
given money income and product prices.
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written consent of McGraw-Hill Education.
utility maximization.
Test Bank: II
To pi c:
Indifference Curve Analysis
297. If the quantity of X is measured on the horizontal axis and the quantity of Y on the vertical,
then the slope of the budget line is equal to the price of X divided by the price of Y.
298. A parallel shift in a budget line is caused by changes in a consumer's level of satisfaction.
299. A change in the relative prices for two goods can be shown as a parallel shift in a
consumer's budget line.
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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
utility maximization.
Test Bank: II
To pi c:
Indifference Curve Analysis
300. Indifference curves are convex to the origin due to diminishing marginal rates of
substitution.
301. Indifference curves and budget lines can be used to derive an individual's demand curve
for a product.
302. The consumer will select that point on the budget line which puts him or her on the highest
attainable indifference curve.
page-pfc
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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
consumer behavior derives demand curves from budget lines, indifference curves, and
utility maximization.
Test Bank: II
To pi c:
Indifference Curve Analysis
303. A consumer maximizes total utility when she or he purchases the combination of the two
products at which her or his budget line is tangent to an indifference curve.
304. An increase in the price of a product normally enables a consumer to reach a higher
indifference curve.
305. It is possible that as a result of the budget line shifting outward, the consumer will buy less
of a product.
page-pfd
7-167
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Learning Objective: 07-06 Appendix: Relate how the indifference curve model of
consumer behavior derives demand curves from budget lines, indifference curves, and
utility maximization.
Test Bank: II
To pi c:
Indifference Curve Analysis

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