CHAPTER 9: Buying and Selling
MULTIPLE CHOICE
1. In Problem 1, if Abishag owned 12 quinces and 20 kumquats and if the price of kumquats is 3 times
the price of quinces, how many kumquats could she afford if she spent all of her money on kumquats?
a.
48
b.
32
c.
20
d.
24
e.
21
2. In Problem 1, if Abishag owned 10 quinces and 10 kumquats and if the price of kumquats is 2 times
the price of quinces, how many kumquats could she afford if she spent all of her money on kumquats?
a.
10
b.
15
c.
20
d.
30
e.
12
3. In Problem 1, if Abishag owned 20 quinces and 20 kumquats and if the price of kumquats is 4 times
the price of quinces, how many kumquats could she afford if she spent all of her money on kumquats?
a.
50
b.
25
c.
40
d.
20
e.
22
4. In Problem 1, if Abishag owned 8 quinces and 10 kumquats and if the price of kumquats is 2 times the
price of quinces, how many kumquats could she afford if she spent all of her money on kumquats?
a.
18
b.
14
c.
10
d.
28
e.
11
5. In Problem 1, if Abishag owned 6 quinces and 5 kumquats and if the price of kumquats is 3 times the
price of quinces, how many kumquats could she afford if she spent all of her money on kumquats?
a.
7
b.
14
c.
11
d.
5
e.
4
6. Suppose that Mario in Problem 2 consumes eggplants and tomatoes in the ratio of 1 bushel of
eggplants per 1 bushel of tomatoes. His garden yields 30 bushels of eggplants and 10 bushels of
tomatoes. He initially faced prices of $10 per bushel for each vegetable, but the price of eggplants rose
to $20 per bushel, while the price of tomatoes stayed unchanged. After the price change, he would
a.
increase his eggplant consumption by 3.33 bushels.
b.
decrease his eggplant consumption by at least 3.33 bushels.
c.
increase his consumption of eggplants by 5.33 bushels.
d.
decrease his consumption of eggplants by 5.33 bushels.
e.
decrease his tomato consumption by at least 1 bushel.
7. Suppose that Mario in Problem 2 consumes eggplants and tomatoes in the ratio of 1 bushel of
eggplants per 1 bushel of tomatoes. His garden yields 30 bushels of eggplants and 10 bushels of
tomatoes. He initially faced prices of $10 per bushel for each vegetable, but the price of eggplants rose
to $20 per bushel, while the price of tomatoes stayed unchanged. After the price change, he would
a.
decrease his eggplant consumption by at least 3.33 bushels.
b.
decrease his consumption of eggplants by 5.33 bushels.
c.
increase his consumption of eggplants by 5.33 bushels.
d.
increase his eggplant consumption by 3.33 bushels.
e.
decrease his tomato consumption by at least 1 bushel.
8. Suppose that Mario in Problem 2 consumes eggplants and tomatoes in the ratio of 1 bushel of
eggplants per 1 bushel of tomatoes. His garden yields 30 bushels of eggplants and 10 bushels of
tomatoes. He initially faced prices of $10 per bushel for each vegetable, but the price of eggplants rose
to $40 per bushel, while the price of tomatoes stayed unchanged. After the price change, he would
a.
increase his eggplant consumption by 6 bushels.
b.
increase his consumption of eggplants by 8 bushels.
c.
decrease his consumption of eggplants by 8 bushels.
d.
decrease his eggplant consumption by at least 6 bushels.
e.
decrease his tomato consumption by at least 1 bushel.
9. Suppose that Mario in Problem 2 consumes eggplants and tomatoes in the ratio of 1 bushel of
eggplants per 1 bushel of tomatoes. His garden yields 30 bushels of eggplants and 10 bushels of
tomatoes. He initially faced prices of $25 per bushel for each vegetable, but the price of eggplants rose
to $100 per bushel, while the price of tomatoes stayed unchanged. After the price change, he would
a.
increase his eggplant consumption by 6 bushels.
b.
increase his consumption of eggplants by 8 bushels.
c.
decrease his consumption of eggplants by 8 bushels.
d.
decrease his eggplant consumption by at least 6 bushels.
e.
decrease his tomato consumption by at least 1 bushel.
10. Suppose that Mario in Problem 2 consumes eggplants and tomatoes in the ratio of 1 bushel of
eggplants per 1 bushel of tomatoes. His garden yields 30 bushels of eggplants and 10 bushels of
tomatoes. He initially faced prices of $25 per bushel for each vegetable, but the price of eggplants rose
to $50 per bushel, while the price of tomatoes stayed unchanged. After the price change, he would
a.
increase his consumption of eggplants by 5.33 bushels.
b.
increase his eggplant consumption by 3.33 bushels.
c.
decrease his eggplant consumption by at least 3.33 bushels.
d.
decrease his consumption of eggplants by 5.33 bushels.
e.
decrease his tomato consumption by at least 1 bushel.
11. Dr. J has 80 hours per week to divide between work and leisure. His wage rate if $5 per hour. Dr. J
receives a lump sum payment of $100 per week. Suppose that the first $50 per week of his labor
income is untaxed, but all labor income above $50 is taxed at a rate of 70%.
a.
Dr. J’s budget line has a kink in it at the point where he takes 80 units of leisure.
b.
Dr. J’s budget line has a kink where his income is $150 and his leisure is 70 hours.
c.
The slope of Dr. J’s budget line is everywhere −1.50.
d.
Dr. J’s budget line has no kinks in the part of it that corresponds to a positive labor supply.
e.
Dr. J’s budget line has a piece that is a horizontal straight line.
12. Dr. J has 80 hours per week to divide between work and leisure. His wage rate if $5 per hour. Dr. J
receives a lump sum payment of $150 per week. Suppose that the first $100 per week of his labor
income is untaxed, but all labor income above $100 is taxed at a rate of 70%.
a.
Dr. J’s budget line has no kinks in the part of it that corresponds to a positive labor supply.
b.
The slope of Dr. J’s budget line is everywhere −1.50.
c.
Dr. J’s budget line has a kink in it at the point where he takes 70 units of leisure.
d.
Dr. J’s budget line has a kink where his income is $250 and his leisure is 60 hours.
e.
Dr. J’s budget line has a piece that is a horizontal straight line.
13. Dr. J has 80 hours per week to divide between work and leisure. His wage rate if $5 per hour. Dr. J
receives a lump sum payment of $250 per week. Suppose that the first $150 per week of his labor
income is untaxed, but all labor income above $150 is taxed at a rate of 70%.
a.
Dr. J’s budget line has a kink where his income is $400 and his leisure is 50 hours.
b.
The slope of Dr. J’s budget line is everywhere −1.50.
c.
Dr. J’s budget line has a kink in it at the point where he takes 60 units of leisure.
d.
Dr. J’s budget line has no kinks in the part of it that corresponds to a positive labor supply.
e.
Dr. J’s budget line has a piece that is a horizontal straight line.
14. Dr. J has 80 hours per week to divide between work and leisure. His wage rate if $5 per hour. Dr. J
receives a lump sum payment of $250 per week. Suppose that the first $50 per week of his labor
income is untaxed, but all labor income above $50 is taxed at a rate of 10%.
a.
The slope of Dr. J’s budget line is everywhere −4.50.
b.
Dr. J’s budget line has a kink where his income is $300 and his leisure is 70 hours.
c.
Dr. J’s budget line has no kinks in the part of it that corresponds to a positive labor supply.
d.
Dr. J’s budget line has a kink in it at the point where he takes 80 units of leisure.
e.
Dr. J’s budget line has a piece that is a horizontal straight line.
15. Dr. J has 80 hours per week to divide between work and leisure. His wage rate if $5 per hour. Dr. J
receives a lump sum payment of $150 per week. Suppose that the first $100 per week of his labor
income is untaxed, but all labor income above $100 is taxed at a rate of 70%.
a.
Dr. J’s budget line has a kink where his income is $250 and his leisure is 60 hours.
b.
Dr. J’s budget line has no kinks in the part of it that corresponds to a positive labor supply.
c.
The slope of Dr. J’s budget line is everywhere −1.50.
d.
Dr. J’s budget line has a kink in it at the point where he takes 70 units of leisure.
e.
Dr. J’s budget line has a piece that is a horizontal straight line.
16. Dudley, in Problem 15, has a utility function U(C, R) = C − (12 − R)2, where R is leisure and C is
consumption per day. He has 16 hours per day to divide between work and leisure. If Dudley has a
nonlabor income of $15 per day and is paid a wage of $8 per hour, how many hours of leisure will he
choose per day?
a.
5
b.
6
c.
7
d.
9
e.
8
17. Dudley, in Problem 15, has a utility function U(C, R) = C − (12 − R)2, where R is leisure and C is
consumption per day. He has 16 hours per day to divide between work and leisure. If Dudley has a
nonlabor income of $30 per day and is paid a wage of $4 per hour, how many hours of leisure will he
choose per day?
a.
9
b.
7
c.
8
d.
11
e.
10
18. Dudley, in Problem 15, has a utility function U(C, R) = C − (12 − R)2, where R is leisure and C is
consumption per day. He has 16 hours per day to divide between work and leisure. If Dudley has a
nonlabor income of $35 per day and is paid a wage of $0 per hour, how many hours of leisure will he
choose per day?
a.
11
b.
9
c.
10
d.
13
e.
12
19. Dudley, in Problem 15, has a utility function U(C, R) = C − (12 − R)2, where R is leisure and C is
consumption per day. He has 16 hours per day to divide between work and leisure. If Dudley has a
nonlabor income of $10 per day and is paid a wage of $4 per hour, how many hours of leisure will he
choose per day?
a.
7
b.
8
c.
11
d.
9
e.
10
20. Dudley, in Problem 15, has a utility function U(C, R) = C − (12 − R)2, where R is leisure and C is
consumption per day. He has 16 hours per day to divide between work and leisure. If Dudley has a
nonlabor income of $20 per day and is paid a wage of $8 per hour, how many hours of leisure will he
choose per day?
a.
7
b.
6
c.
9
d.
5
e.
8
21. Mr. Cog in Problem 7 has 18 hours a day to divide between labor and leisure. If he has 13 dollars of
nonlabor income per day and gets a wage rate of 17 dollars per hour when he works, his budget
equation, expressing combinations of consumption and leisure that he can afford to have, can be
written as
a.
17R + C = 13.
b.
17R + C = 319.
c.
R + C/17 = 421.
d.
C = 319 + 17R.
e.
C = 358 + 17R.
22. Mr. Cog in Problem 7 has 18 hours a day to divide between labor and leisure. If he has 9 dollars of
nonlabor income per day and gets a wage rate of 15 dollars per hour when he works, his budget
equation, expressing combinations of consumption and leisure that he can afford to have, can be
written as
a.
C = 279 + 15R.
b.
15R + C = 9.
c.
15R + C = 279.
d.
R + C/15 = 369.
e.
C = 306 + 15R.
23. Mr. Cog in Problem 7 has 18 hours a day to divide between labor and leisure. If he has 16 dollars of
nonlabor income per day and gets a wage rate of 7 dollars per hour when he works, his budget
equation, expressing combinations of consumption and leisure that he can afford to have, can be
written as
a.
7R + C = 142.
b.
C = 142 + 7R.
c.
7R + C = 16.
d.
R + C/7 = 184.
e.
C = 190 + 7R.
24. Mr. Cog in Problem 7 has 18 hours a day to divide between labor and leisure. If he has 8 dollars of
nonlabor income per day and gets a wage rate of 5 dollars per hour when he works, his budget
equation, expressing combinations of consumption and leisure that he can afford to have, can be
written as
a.
5R + C = 98.
b.
R + C/5 = 128.
c.
C = 98 + 5R.
d.
5R + C = 8.
e.
C = 122 + 5R.
25. Mr. Cog in Problem 7 has 18 hours a day to divide between labor and leisure. If he has 17 dollars of
nonlabor income per day and gets a wage rate of 13 dollars per hour when he works, his budget
equation, expressing combinations of consumption and leisure that he can afford to have, can be
written as
a.
R + C/13 = 329.
b.
13R + C = 17.
c.
C = 251 + 13R.
d.
13R + C = 251.
e.
C = 302 + 13R.
26. Mr. Cog in Problem 7 has 18 hours per day to divide between labor and leisure. If he has a nonlabor
income of 44 dollars per day and a wage rate of 14 dollars per hour, he will choose a combination of
labor and leisure that allows him to spend
a.
296 dollars per day on consumption.
b.
138 dollars per day on consumption.
c.
170 dollars per day on consumption.
d.
148 dollars per day on consumption.
e.
222 dollars per day on consumption.
27. Mr. Cog in Problem 7 has 18 hours per day to divide between labor and leisure. If he has a nonlabor
income of 40 dollars per day and a wage rate of 6 dollars per hour, he will choose a combination of
labor and leisure that allows him to spend
a.
148 dollars per day on consumption.
b.
74 dollars per day on consumption.
c.
94 dollars per day on consumption.
d.
64 dollars per day on consumption.
e.
111 dollars per day on consumption.
28. Mr. Cog in Problem 7 has 18 hours per day to divide between labor and leisure. If he has a nonlabor
income of 38 dollars per day and a wage rate of 9 dollars per hour, he will choose a combination of
labor and leisure that allows him to spend
a.
90 dollars per day on consumption.
b.
200 dollars per day on consumption.
c.
100 dollars per day on consumption.
d.
119 dollars per day on consumption.
e.
150 dollars per day on consumption.
29. Mr. Cog in Problem 7 has 18 hours per day to divide between labor and leisure. If he has a nonlabor
income of 34 dollars per day and a wage rate of 17 dollars per hour, he will choose a combination of
labor and leisure that allows him to spend
a.
160 dollars per day on consumption.
b.
340 dollars per day on consumption.
c.
187 dollars per day on consumption.
d.
170 dollars per day on consumption.
e.
255 dollars per day on consumption.
30. Mr. Cog in Problem 7 has 18 hours per day to divide between labor and leisure. If he has a nonlabor
income of 48 dollars per day and a wage rate of 15 dollars per hour, he will choose a combination of
labor and leisure that allows him to spend
a.
318 dollars per day on consumption.
b.
149 dollars per day on consumption.
c.
159 dollars per day on consumption.
d.
183 dollars per day on consumption.
e.
238.50 dollars per day on consumption.