Figure: Consumer Equilibrium IV
Reference: Ref 10-19
(Figure: Consumer Equilibrium IV) Look at the figure Consumer Equilibrium IV.
Assume that you are consuming the combination of goods at point G. Given the
budget constraint FL, utility can be increased by moving to point:
203. Multiple Choice: Figure: Consumer Equilibrium IV Refer…
Question
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Figure: Consumer Equilibrium IV
Reference: Ref 10-19
(Figure: Consumer Equilibrium IV) Look at the figure Consumer Equilibrium IV.
Assume that you are consuming the combination of goods at point K. Given the
budget constraint FL, utility can be increased by moving to point:
204. Multiple Choice: Figure: Oreos and Apples Reference: R...
Question Figure: Oreos and Apples
Reference: Ref 10-20
(Figure: Oreos and Apples) The figure Oreos and Apples provides an indifference
curve map for Diego. For Diego, the consumption bundle that provides the highest
level of utility is bundle:
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205. Multiple Choice: Figure: Oreos and Apples Reference: R...
Question Figure: Oreos and Apples
Reference: Ref 10-20
(Figure: Oreos and Apples) The figure Oreos and Apples provides an indifference
curve map for Diego. Diego prefers:
206. Multiple Choice: Figure: Oreos and Apples Reference: R...
Question
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Figure: Oreos and Apples
Reference: Ref 10-20
(Figure: Oreos and Apples) Look at the figure Oreos and Apples. The figure provides
an indifference curve map for Diego. As Diego moves along an indifference curve
from point F to point E, Diego buys:
207. Multiple Choice: An indifference curve map illustrates...
Question An indifference curve map illustrates ________ levels of utility, while each
indifference curve in the map indicates consumption bundles that yield the ________
level of utility for an individual.
208. Multiple Choice: If Vanessa needed to find her optimal...
Question If Vanessa needed to find her optimal consumption bundle, she would need to be
able to:
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209. Multiple Choice: When an individual’s consumption of a...
Question When an individual‘s consumption of an additional unit of a good generates a smaller
increase in total utility than the previous unit consumed, then this person’s
indifference curve will be:
210. Multiple Choice: The assumption that “more is pr…
Question The assumption that “more is preferred to less” explains why indifference curves:
211. Multiple Choice: Diminishing marginal utility is the r…
Question Diminishing marginal utility is the reason most indifference curves:
212. Multiple Choice: Reference: Ref 10-21 (Table: Madelin...
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Question
Reference: Ref 10-21
(Table: Madeline‘s Preferences for T–Shirts and Coffee) Look at the table Madeline’s
Preferences for T-Shirts and Coffee. Assume each consumption bundle provides the
same level of utility for Madeline. Suppose Madeline is consuming bundle C. If she
changes her purchases to bundle D, this means that she:
213. Multiple Choice: Reference: Ref 10-21 (Table: Madelin...
Question
Reference: Ref 10-21
(Table: Madeline‘s Preferences for T–Shirts and Coffee) Look at the table Madeline’s
Preferences for T-Shirts and Coffee. Assume each consumption bundle provides the
same level of utility for Madeline. Suppose Madeline is consuming bundle A but then
changes her consumption and slowly moves along her indifference curve to bundles
B, C, D, and finally E. As she moves toward bundle E, she gives up:
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214. Multiple Choice: Reference: Ref 10-21 (Table: Madelin...
Question
Reference: Ref 10-21
(Table: Madeline‘s Preferences for T–Shirts and Coffee) Look at the table Madeline’s
Preferences for T-Shirts and Coffee. Assume each consumption bundle provides the
same level of utility for Madeline. As Madeline moves from bundle A to bundle E, her
total utility:
215. Multiple Choice: Ellen consumes goods X and Y. As she ...
Question Ellen consumes goods X and Y. As she consumes less X, she must be
compensated with additional units of Y, and her marginal rate of substitution of X for
Y decreases as she consumes more Y. This means that goods X and Y are:
216. Multiple Choice: A typical indifference curve is:
Question A typical indifference curve is:
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217. Multiple Choice: The ratio of the prices of the two go...
Question The ratio of the prices of the two goods is equal to the ratio of the marginal utilities of
the two goods at:
218. Multiple Choice: Since indifference curves depend on t...
Question Since indifference curves depend on the ________ for individuals, this means that
two consumers with the same income ________.
219. Multiple Choice: Scenario: Music Downloads and Streame…
Question
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Scenario: Music Downloads and Streamed Movies
Phillip has an income of $300 per month, which he uses to purchase two goods,
music downloads (MD) and streamed movies (SM). Each music download costs $1
and each streamed movie costs $5.
Reference: Ref 10-22
(Scenario: Music Downloads and Streamed Movies) Look at the scenario Music
Downloads and Streamed Movies. Which of the following equations expresses
Phillip’s budget line?
220. Multiple Choice: Scenario: Music Downloads and Streame…
Question Scenario: Music Downloads and Streamed Movies
Phillip has an income of $300 per month, which he uses to purchase two goods,
music downloads (MD) and streamed movies (SM). Each music download costs $1
and each streamed movie costs $5.
Reference: Ref 10-22
(Scenario: Music Downloads and Streamed Movies) Look at the scenario Music
Downloads and Streamed Movies. Suppose Phillip’s income falls by one–half, and
the prices for both music downloads and streamed movies also fall by one-half. As a
result of this, Phillip will notice that he:
221. Multiple Choice: Scenario: Music Downloads and Streame…
Question
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Scenario: Music Downloads and Streamed Movies
Phillip has an income of $300 per month, which he uses to purchase two goods,
music downloads (MD) and streamed movies (SM). Each music download costs $1
and each streamed movie costs $5.
Reference: Ref 10-22
(Scenario: Music Downloads and Streamed Movies) Look at the scenario Music
Downloads and Streamed Movies. Phillip’s optimal consumption bundle will be one
whose:
222. Multiple Choice: Scenario: Music Downloads and Streame…
Question Scenario: Music Downloads and Streamed Movies
Phillip has an income of $300 per month, which he uses to purchase two goods,
music downloads (MD) and streamed movies (SM). Each music download costs $1
and each streamed movie costs $5.
Reference: Ref 10-22
(Scenario: Music Downloads and Streamed Movies) Look at the scenario Music
Downloads and Streamed Movies. For Phillip, the horizontal (music download)
intercept is:
223. Multiple Choice: Scenario: Music Downloads and Streame…
Question
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Scenario: Music Downloads and Streamed Movies
Phillip has an income of $300 per month, which he uses to purchase two goods,
music downloads (MD) and streamed movies (SM). Each music download costs $1
and each streamed movie costs $5.
Reference: Ref 10-22
(Scenario: Music Downloads and Streamed Movies) Look at the scenario Music
Downloads and Streamed Movies. The slope of Phillip’s budget line is equal to:
224. Multiple Choice: Two goods in an individual’s consumpt...
Question Two goods in an individual’s consumption bundle are perfect substitutes. For a given
amount of income, the individual‘s optimal consumption bundle will be:
225. Multiple Choice: For some people, coffee and milk are ...
Question For some people, coffee and milk are perfect complements. Their indifference curves
are:
226. Multiple Choice: Paola gets 50 units of utility when s…
Question
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Paola gets 50 units of utility when she consumes 4 cupcakes and 2 glasses of milk.
She also gets 50 units of utility when she consumes 3 cupcakes and 2 glasses of
milk. This means that:
227. Multiple Choice: Scenario: e-Books and Sports TicketsP...
Question Scenario: e-Books and Sports Tickets
Phillip has an income of $300 per month, which he uses to purchase two goods, e-
Books and sports tickets. Each e-Book costs $10, and each ticket costs $15.
Reference: Ref 10-23
(Scenario: e-Books and Sports Tickets) Look at the scenario e-Books and Sports
Tickets. Measure e-Books on the horizontal axis and sports tickets on the vertical
axis. Suppose the price of e-Books decreases. Holding everything else constant,
Phillip’s budget line has become:
228. Multiple Choice: Scenario: e-Books and Sports TicketsP...
Question Scenario: e-Books and Sports Tickets
Phillip has an income of $300 per month, which he uses to purchase two goods, e-
Books and sports tickets. Each e-Book costs $10, and each ticket costs $15.
Reference: Ref 10-23
(Scenario: e-Books and Sports Tickets) Look at the information provided in the
scenario e-Books and Sports Tickets. Suppose Phillip discovers that if he spends all
of his money on sports tickets, he can buy more sports tickets than he could
previously because something changed. This is a result of:
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229. Multiple Choice: Scenario: e-Books and Sports TicketsP...
Question Scenario: e-Books and Sports Tickets
Phillip has an income of $300 per month, which he uses to purchase two goods, e-
Books and sports tickets. Each e-Book costs $10, and each ticket costs $15.
Reference: Ref 10-23
(Scenario: e-Books and Sports Tickets) Look at the information provided in the
scenario e-Books and Sports Tickets. Phillip gets an increase in the amount of his
monthly income allotted for e-Books and sports tickets. Holding everything else
constant, Phillip’s budget line has:
230. Multiple Choice: Figure: Kristin‘s Budget Line Referen…
Question Figure: Kristin‘s Budget Line
Reference: Ref 10-24
(Figure: Kristin’s Budget Line) Look at the figure Kristin’s Budget Line. The price of a
cup of cappuccino is $3, and the price of an apple is $1. Kristin’s income is equal to:
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231. Multiple Choice: Figure: Kristin‘s Budget Line Referen…
Question Figure: Kristin‘s Budget Line
Reference: Ref 10-24
(Figure: Kristin’s Budget Line) Look at the figure Kristin’s Budget Line. The price of a
cup of cappuccino is $3, and the price of an apple is $1. Given her income and the
prices of the two goods, which of the following consumption bundles could Kristin
consume?
232. Multiple Choice: Figure: Kristin‘s Budget Line Referen…
Question
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Figure: Kristin‘s Budget Line
Reference: Ref 10-24
(Figure: Kristin’s Budget Line) Look at the figure Kristin’s Budget Line. The price of a
cup of cappuccino is $3, and the price of an apple is $1. Suppose Kristin initially
consumes 10 cups of cappuccino and 30 apples. Then, the price of apples
increases to $3 each and the price of a cappuccino remains unchanged. As a result
of this price change, Kristin’s optimal consumption bundle changes and is reflected
by a decrease in the consumption of both apples and cappuccinos. This suggests
that:
233. Multiple Choice: Figure: Kristin‘s Budget Line Referen…
Question Figure: Kristin‘s Budget Line
Reference: Ref 10-24
(Figure: Kristin’s Budget Line) Look at the figure Kristin’s Budget Line. The price of a
cup of cappuccino is $3, and the price of an apple is $1. Suppose Kristin initially
consumes 10 cups of cappuccino and 30 apples. Then, the price of apples
increases to $3 each and the price of a cappuccino remains unchanged. As a result
of the price change, Kristin’s optimal consumption bundle changes and is reflected
by a decrease in the consumption of both apples and cappuccinos. If Kristin is to
maintain the same level of utility as before the price change, she must:
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234. Multiple Choice: Figure: Kristin‘s Budget Line Referen…
Question Figure: Kristin‘s Budget Line
Reference: Ref 10-24
(Figure: Kristin’s Budget Line) Look at the figure Kristin’s Budget Line. The price of a
cup of cappuccino is $3, and the price of an apple is $1. Suppose Kristin initially
consumes 10 cups of cappuccino and 30 apples. Then, the price of apples
increases to $3 each and the price of a cappuccino remains unchanged. As a result
of this price change, Kristin’s optimal consumption bundle is now 9 cups of
cappuccino and 11 apples. If Kristin’s income could be adjusted so that she could
maintain her initial level of utility after the price change, she would consume more
cappuccino and more apples. This reflects:
235. Essay: How is a utility function different f...
Question How is a utility function different from an indifference curve?
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236. Essay: Patrick enjoys consuming chocolate bu...
Question Patrick enjoys consuming chocolate but really detests broccoli. Describe the shape
of Patrick‘s indifference curves for these two goods and explain your reasoning.
237. Essay: Consider the following bundles of two...
Question Consider the following bundles of two ordinary goods, X and Y. Can you rank them
from the one that provides the most utility to the least? Explain your reasoning.
238. Essay: Explain why an individual’s indiffere...
Question Explain why an individual‘s indifference curves cannot intersect. Use an example to
explain.
239. Essay: Jaime enjoys both iced tea and hot do...
Question Jaime enjoys both iced tea and hot dogs. Explain why Jaime‘s indifference curves for
these two goods must slope downward.
240. Essay: Explain the concept of the marginal r…
Question Explain the concept of the marginal rate of substitution. Provide an intuitive rather
than mathematical reason it is believed to be diminishing as a consumer moves
down an indifference curve.
Answer
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241. Essay: Mallory consumes a bundle of candy an...
Question Mallory consumes a bundle of candy and cookies, spending all of her income. The
price of candy is $1 and the price of a cookie is $0.50. At her current bundle, the
marginal utility of the next bar of candy she could purchase is 12 utils and the
marginal utility of the next cookie she could purchase is 6 utils. Should Mallory
consume more cookies, more candy, or leave her consumption unchanged?
242. Essay: Michaela consumes a bundle of candy a...
Question Michaela consumes a bundle of candy and cookies, spending all of her income. The
price of candy is $1 and the price of a cookie is $0.50. At her current bundle, the
marginal utility of the next bar of candy she could purchase is 16 utils and the
marginal utility of the next cookie she could purchase is 7 utils. Should Michaela
consume more cookies, more candy, or leave her consumption unchanged?
243. Essay: Jennifer has $10 to spend on tomatoes...
Question Jennifer has $10 to spend on tomatoes and cheese. The price of a pound of
tomatoes is $2 and the price of a pound of cheese is $4. She has found her utility–
maximizing bundle at 2 pounds of tomatoes and 1.5 pounds of cheese. Suppose
Jennifer‘s income falls to $8 and the price of tomatoes falls to $1. The price of
cheese remains the same. Jennifer is considering a bundle of zero units of tomatoes
and 2 units of cheese. What is your advice?
244. Essay: Kelli likes to bake cookies and doesn...
Question Kelli likes to bake cookies and doesn’t care whether she uses corn or safflower oil in
her recipes. To her, they provide the same function and the same taste in her cakes
and cookies. What do Kelli’s indifference curves look like for corn oil and safflower
oil? What is her tangency condition when it comes to finding the utility maximizing
bundle?
Answer
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