The Theory of Consumer Choice 5183
33. Refer to Figure 21-7. Suppose a consumer has $500 in income, the price of a book is $10, and
the value of B is 50. What is the price of a DVD?
a. $5
b. $10
c. $50
d. $100
34. Refer to Figure 21-7. Suppose a consumer has $200 in income, the price of a book is $5, and
the price of a DVD is $10. What is the value of A?
a. 40
b. 20
c. 10
d. 2
35. Refer to Figure 21-7. Suppose a consumer has $200 in income, the price of a book is $5, and
the price of a DVD is $10. What is the value of B?
a. 40
b. 20
c. 10
d. 2
5184 The Theory of Consumer Choice
36. Refer to Figure 21-7. Suppose the price of a book is $15, the price of a DVD is $10, the value
of A is 5, and the value of B is 7.5. How much income does the consumer have?
a. $150
b. $100
c. $75
d. $37.50
Figure 21-8
37. Refer to Figure 21-8. You have $36 to spend on good X and good Y. If good X costs $6 and
good Y costs $12, your budget constraint is
a. AB.
b. BC.
c. CD.
d. DE.
The Theory of Consumer Choice 5185
38. Refer to Figure 21–8. You have $300 to spend on good X and good Y. If good X costs $30 and
good Y costs $50, your budget constraint is
a. AB.
b. BC.
c. CD.
d. DE.
39. Refer to Figure 21–8. You have $600 to spend on good X and good Y. If good X costs $100
and good Y costs $100, your budget constraint is
a. AB.
b. BC.
c. CD.
d. DE.
5186 The Theory of Consumer Choice
40. Refer to Figure 21-8. If the price of good X is $5, and your budget constraint is DE, what is the
price of good Y?
a. $10
b. $5
c. $2.50
d. $1.67
41. Refer to Figure 21-8. If the price of good X is $3, and your budget constraint is BC, what is the
price of good Y?
a. $3.33
b. $5
c. $15
d. $30
Figure 21-9
The Theory of Consumer Choice 5187
42. Refer to Figure 21-9. If the consumer has $600 in income, what is the price of good X?
a. $20
b. $6
c. $3
d. $0.33
43. Refer to Figure 21-9. If the consumer has $600 in income, what is the price of good Y?
a. $20
b. $6
c. $3
d. $0.33
44. Refer to Figure 21-9. If the price of good Y is $5, what is the price of good X?
a. $500
b. $150
c. $16.67
d. $1.50
5188 The Theory of Consumer Choice
45. Refer to Figure 21-9. If the price of good X is $15, what is the price of good Y?
a. $1,500
b. $50
c. $5
d. $0.50
46. The following diagram shows two budget lines: A and B.
Which of the following could explain the change in the budget line from A to B?
a. a decrease in the price of X
b. an increase in the price of Y
c. a decrease in the price of Y
d. More than one of the above could explain this change.
The Theory of Consumer Choice 5189
47. The following diagram shows two budget lines: A and B.
Which of the following could explain the change in the budget line from A to B?
a. a simultaneous decrease in the price of X and the price of Y
b. an increase in income
c. a decrease in income and a decrease in the price of Y
d. Both a and b are correct.
48. The following diagram shows two budget lines: A and B.
5190 The Theory of Consumer Choice
Which of the following could explain the change in the budget line from A to B?
a. a decrease in income and a decrease in the price of X
b. a decrease in income and an increase in the price of X
c. an increase in income and a decrease in the price of X
d. an increase in income and an increase in the price of X
49. The following diagram shows a budget constraint for a particular consumer.
If the price of X is $20, then what is the price of Y?
a. $15
b. $25
c. $35
d. $70
The Theory of Consumer Choice 5191
50. The following diagram shows a budget constraint for a particular consumer.
If the price of X is $12, then what is the price of Y?
a. $9
b. $16
c. $24
d. $30
5192 The Theory of Consumer Choice
51. The following diagram shows a budget constraint for a particular consumer.
If the price of X is $5, what is the consumer’s income?
a. $10
b. $30
c. $150
d. $300
Scenario 21-1
Suppose the price of hot wings is $10, the price of beer is $1, and the consumer’s income is $50.
In addition, suppose the consumer’s budget constraint illustrates hot wings on the horizontal axis
and beer on the vertical axis.
52. Refer to Scenario 21-1. If the price of beer doubles to $2, then the
a. budget constraint intersects the vertical axis at 25 beers.
b. slope of the budget constraint rises to –2.
c. slope of the budget constraint falls to –4.
d. budget constraint shifts inward in a parallel fashion.
The Theory of Consumer Choice 5193
53. Refer to Scenario 21–1. If the consumer’s income rises to $60, then the budget line for hot
wings and beer would
a. now intersect the horizontal axis at 6 orders of hot wings and the vertical axis at 60 beers.
b. not change.
c. now intersect the horizontal axis at 4 orders of hot wings and the vertical axis at 16 beers.
d. rotate outward along the beer axis.
54. A budget constraint illustrates the
a. prices that a consumer chooses to pay for products he consumes.
b. purchases made by consumers.
c. consumption bundles that a consumer can afford.
d. consumption bundles that give a consumer equal satisfaction.
5194 The Theory of Consumer Choice
55. A budget constraint shows
a. the maximum utility that a consumer can achieve for a given level of income.
b. a series of bundles that cost the consumer the same amount of money.
c. a series of bundles that give the consumer the same level of utility.
d. All of the above are correct.
56. Budget constraints exist for consumers because
a. their utility from consuming goods eventually reaches a maximum level.
b. even with unlimited incomes they have to pay for each good they consume.
c. they have to pay for goods, and they have limited incomes.
d. prices and incomes are inversely related.
The Theory of Consumer Choice 5195
57. Karen, Tara, and Chelsea each buy ice cream and paperback novels to enjoy on hot summer
days. Ice cream costs $5 per gallon, and paperback novels cost $8 each. Karen has a budget of
$80, Tara has a budget of $60, and Chelsea has a budget of $40 to spend on ice cream and
paperback novels. Who can afford to purchase 8 gallons of ice cream and 5 paperback novels?
a. Karen, Tara, and Chelsea
b. Karen only
c. Tara and Chelsea but not Karen
d. none of the women
58. Karen, Tara, and Chelsea each buy ice cream and paperback novels to enjoy on hot summer
days. Ice cream costs $5 per gallon, and paperback novels cost $8 each. Karen has a budget of
$80, Tara has a budget of $60, and Chelsea has a budget of $40 to spend on ice cream and
paperback novels. Who can afford to purchase 5 gallons of ice cream and 8 paperback novels?
a. Karen, Tara, and Chelsea
b. Karen only
c. Tara and Chelsea but not Karen
d. none of the women
5196 The Theory of Consumer Choice
59. Abby, Bobbi, and Deborah each buy ice cream and paperback novels to enjoy on hot summer
days. Ice cream costs $5 per gallon, and paperback novels cost $8 each. Abby has a budget of
$80, Bobbi has a budget of $60, and Deborah has a budget of $40 to spend on ice cream and
paperback novels. Who can afford to purchase 4 gallons of ice cream and 5 paperback novels?
a. Abby, Bobbi, and Deborah
b. Abby only
c. Abby and Bobbi, but not Deborah
d. None of the women can afford to purchase 4 gallons of ice cream and 5 paperback novels.
60. Abby, Bobbi, and Deborah each buy ice cream and paperback novels to enjoy on hot summer
days. Ice cream costs $5 per gallon, and paperback novels cost $8 each. Abby has a budget of
$80, Bobbi has a budget of $60, and Deborah has a budget of $40 to spend on ice cream and
paperback novels. Which of the following statements is correct?
a. Each woman faces the same budget constraint.
b. The slope of the budget constraint is the same for each woman.
c. The area underneath the budget constraint is larger for Deborah than for Abby.
d. All of the above are correct.
The Theory of Consumer Choice 5197
61. Jack and Diane each buy pizza and paperback novels. Pizza costs $3 per slice, and paperback
novels cost $5 each. Jack has a budget of $30, and Diane has a budget of $15 to spend on pizza
and paperback novels. Which consumer(s) can afford to purchase 5 slices of pizza and 3
paperback novels?
a. Jack only
b. Diane only
c. both Jack and Diane
d. neither Jack nor Diane
62. Jack and Diane each buy pizza and paperback novels. Pizza costs $3 per slice, and paperback
novels cost $5 each. Jack has a budget of $30, and Diane has a budget of $15 to spend on pizza
and paperback novels. Which consumer(s) can afford to purchase 3 slices of pizza and 4
paperback novels?
a. Jack only
b. Diane only
c. both Jack and Diane
d. neither Jack nor Diane
5198 The Theory of Consumer Choice
63. Jack and Diane each buy pizza and paperback novels. Pizza costs $3 per slice, and paperback
novels cost $5 each. Jack has a budget of $30, and Diane has a budget of $15 to spend on pizza
and paperback novels. Which consumer(s) can afford to purchase 5 slices of pizza and 5
paperback novels?
a. Jack only
b. Diane only
c. both Jack and Diane
d. neither Jack nor Diane
64. Suppose a consumer has an income of $800 per month and that she spends her entire income
each month on beer and bratwurst. The price of a pint of beer is $5, and the price of a bratwurst
is $4. Which of the following combinations of beers and bratwursts represents a point that would
lie to the interior of the consumer’s budget constraint?
a. 160 beers and 200 bratwursts
b. 40 beers and 50 bratwursts
c. 80 beers and 100 bratwursts
d. 160 beers and 0 bratwursts
The Theory of Consumer Choice 5199
65. Suppose a consumer has an income of $800 per month and that she spends her entire income
each month on beer and bratwurst. The price of a pint of beer is $5, and the price of a bratwurst
is $4. Which of the following combinations of beers and bratwursts represents a point that would
lie to the exterior of the consumer’s budget constraint?
a. 160 beers and 200 bratwursts
b. 40 beers and 50 bratwursts
c. 80 beers and 100 bratwursts
d. 160 beers and 0 bratwursts
66. Suppose a consumer has an income of $800 per month and that she spends her entire income
each month on beer and bratwurst. The price of a pint of beer is $5, and the price of a bratwurst
is $4. Which of the following combinations of beers and bratwursts represents a point that would
lie directly on the consumer’s budget constraint?
a. 160 beers and 200 bratwursts
b. 40 beers and 50 bratwursts
c. 80 beers and 100 bratwursts
d. 80 beers and 0 bratwursts
5200 The Theory of Consumer Choice
67. Consider two goods: peanuts and crackers. The slope of the consumer’s budget constraint is
measured by the
a. consumer’s income divided by the price of crackers.
b. relative price of peanuts and crackers.
c. consumer’s marginal rate of substitution.
d. number of peanuts purchased divided by the number of crackers purchased.
68. Suppose a consumer spends his income on CDs and DVDs. If his income decreases, the budget
constraint for CDs and DVDs will
a. shift outward, parallel to the original budget constraint.
b. shift inward, parallel to the original budget constraint.
c. rotate outward along the CD axis because he can afford more CDs.
d. rotate outward along the DVD axis because he can afford more DVDs.
The Theory of Consumer Choice 5201
69. Assume that a college student spends her income on books and pizza. The price of a pizza is $8,
and the price of a book is $15. If she has $120 in income, she could choose to consume
a. 8 pizzas and 4 books.
b. 4 pizzas and 6 books.
c. 5 pizzas and 5 books.
d. 2 pizzas and 7 books.
70. Assume that a college student spends her income on mac-n-cheese and CDs. The price of one
box of mac-n- cheese is $1, and the price of one CD is $12. If she has $200 of income, she could
choose to consume
a. 30 boxes of mac-n-cheese and 12 CDs.
b. 40 boxes of mac-n-cheese and 14 CDs.
c. 20 boxes of mac-n-cheese and 16 CDs.
d. 60 boxes of mac-n-cheese and 12 CDs.
5202 The Theory of Consumer Choice
71. A consumer who doesn’t spend all of her income
a. would be at a point outside of her budget constraint.
b. would be at a point inside her budget constraint.
c. must not be consuming positive quantities of all goods.
d. must be consuming at a point where her budget constraint touches one of the axes.
72. A decrease in income will cause a consumer’s budget constraint to
a. shift outward, parallel to its initial position.
b. shift inward, parallel to its initial position.
c. pivot along the horizontal axis.
d. pivot along the vertical axis.