1. Which of the following does not represent a tradeoff facing a consumer?
a.
choosing to purchase more of all goods
b.
choosing to spend more time on leisure and less time on work
c.
choosing to spend more now and consume less in the future
d.
choosing to purchase less of one good in order to purchase more of another good
2. How are the following three questions related: 1) Do all demand curves slope downward? 2) How do wages affect labor
supply? 3) How do interest rates affect household saving?
a.
They all relate to macroeconomics.
b.
They all relate to monetary economics.
c.
They all relate to the theory of consumer choice.
d.
They are not related to each other in any way.
3. Just as the theory of the competitive firm provides a more complete understanding of supply, the theory of consumer
choice provides a more complete understanding of
a.
demand.
b.
profits.
c.
production possibility frontiers.
d.
wages.
4. The theory of consumer choice most closely examines which of the following Ten Principles of Economics?
a.
People face trade-offs.
b.
Governments can sometimes improve market outcomes.
c.
Trade can make everyone better off.
d.
Markets are usually a good way to organize economic activity.
5. Which of the following statements is correct?
a.
The theory of consumer choice provides a more complete understanding of supply, just as the theory of the
competitive firm provides a more complete understanding of demand.
b.
The theory of consumer choice provides a more complete understanding of demand, just as the theory of the
competitive firm provides a more complete understanding of supply.
c.
Monetary theory provides a more complete understanding of demand, just as the theory of the competitive
firm provides a more complete understanding of supply.
d.
The theory of public choice provides a more complete understanding of supply, just as the theory of the
competitive firm provides a more complete understanding of demand.
6. When a consumer spends less time enjoying leisure and more time working, she has
a.
lower income and therefore cannot afford more consumption.
b.
lower income and therefore can afford more consumption.
c.
higher income and therefore cannot afford more consumption.
d.
higher income and therefore can afford more consumption.
7. The theory of consumer choice provides the foundation for understanding the
a.
structure of a firm.
b.
profitability of a firm.
c.
demand for a firm’s product.
d.
supply of a firm’s product.
8. The theory of consumer choice examines
a.
the determination of output in competitive markets.
b.
the tradeoffs inherent in decisions made by consumers.
c.
how consumers select inputs into manufacturing production processes.
d.
the determination of prices in competitive markets.
9. The theory of consumer choice examines how
a.
firms make profit-maximizing decisions.
b.
consumers make utility-maximizing decisions.
c.
wages are determined in competitive labor markets.
d.
prices are determined in competitive goods markets.
10. The theory of consumer choice illustrates the
a.
importance of property rights in creating efficient markets.
b.
ability of a single economic actor to have a substantial influence on market prices.
c.
the trade-offs that people face in their role as purchasers.
d.
All of the above are correct.
11. The theory of consumer choice is to demand as the theory of
a.
public goods is to supply.
b.
oligopoly is to supply.
c.
the competitive firm is to supply.
d.
comparative advantage is to supply.
12. The theory of consumer choice
a.
underlies the concept of the demand for a particular good.
b.
underlies the concept of the supply of a particular good.
c.
ignores, for the sake of simplicity, the trade-offs that consumers face.
d.
can be applied to many questions about household decisions, but it cannot be applied to questions concerning
wages and labor supply.
13. Which of the following statements is not true?
a.
When consumers purchase more of one good, they are giving up the ability to buy as much of other goods.
b.
When consumers choose to take more leisure time, they are giving up the ability to consume as much as
before.
c.
Consumers face consumption tradeoffs because they have limited income.
d.
Consumers face consumption tradeoffs because they have limited preferences for goods.
