1. Indifference curves:
a.
may sometimes intersect.
b.
are contour lines only of a linear utility function.
c.
are convex if the utility function is quasi-concave.
d.
shift when prices change.
2. For an individual who consumes only two goods, x and y, the opportunity cost of consuming one more unit of x in
terms of how much y must be given up is reflected by:
a.
the individual’s marginal rate of substitution.
b.
the market prices of x and y.
c.
the slope of the individual’s indifference curve.
d.
none of the above.
b
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3. If bundles of goods A and B lie on the same indifference curve, one can assume the individual:
a.
prefers bundle A to bundle B.
b.
prefers bundle B to bundle A.
c.
enjoys bundle A and B equally.
d.
bundle A contains the same goods as bundle B.
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Questions 4 and 5 refer to an individual whose utility function is given by:
.
4. With this utility function, the bundle (3,2) provides the same utility as the bundle:
a.
(2, 3).
b.
(2, 4).
c.
(2, 5).
d.
(3, 3).
b
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5. For this utility function, the MRS:
a.
depends on the values of x and y.
b.
is always 0.
c.
is always 2.
d.
is always 4.
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6. Which of these utility functions represent the same preferences as ?
a.
b.
c.
d.
All of the above represent the same preferences.
d
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7. If utility is given by , then the person’s MRS at the point x = 5, y = 2 is given by:
a.
0.4.
b.
1.0.
c.
2.5.
d.
5.0.
a
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8. If utility is given by , this person’s indifference curves are:
a.
parabolas.
b.
hyperbolas.
c.
concentric circles.
d.
straight lines.
d
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9. Which of the following utility functions best represents the idea that two goods, x and y, are perfect complements?
a.
b.
c.
d.
d
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10. If an individual’s utility function is quasi-concave, his or her MRS will:
a.
diminish as x is substituted for y.
b.
increase as x is substituted for y.
c.
be undefined except in special cases.
d.
always depend only on the ratio of x to y.
a
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11. If utility is given by then the bundle (3, 2) provides the same utility as the bundle:
a.
(1, 3).
b.
(2, 3).
c.
(4, 1).
d.
(4, 2).
12. Which of the following utility functions would not be consistent with the notion that x and y are both “goods” with
positive marginal utilities?
a.
b.
c.
d.
Problems 13 and 14 concern the CES utility function:
.
13. For this utility function, marginal utilities are:
a.
negative for
b.
diminishing only for
c.
increasing for
d.
always positive.
14. For this utility function smaller values for imply:
a.
increasingly concave indifference curves.
b.
increasingly convex indifference curves.
c.
indifference curves that are convex, linear, and then concave.
d.
indifference curves that are concave, linear, and then convex.