Question

Question 1

The line that connects the combinations of goods that leave you indifferent is called:

Select one:

a. the indifference curve.

b. the budget constraint.

c. the indifference constraint.

d. the indifference line.

Question 2

An increase in income will cause:

Select one:

a. the budget constraint to become flatter, so that it includes more combinations.

b. the budget constraint to become steeper, so that it includes more combinations.

c. a parallel shift inward of the budget constraint.

d. a parallel shift outward of the budget constraint.

Question 3

As you move down and to the right along an indifference curve:

Select one:

a. the marginal rate of substitution rises.

b. the marginal rate of substitution falls.

c. the price ratio falls

d. the price ratio rises.

Question 4

The budget constraint has a:

Select one:

a. negative slope, because the law of demand says that when price rises, quantity demanded falls.

b. positive slope, because consumers face a tradeoff when deciding between purchasing two different goods.

c. negative slope, because having more of one good requires giving up some of the other.

d. positive slope, because if prices rise consumers will need a larger budget to afford a given combination of goods.

Question 5

When we graph a budget constraint, we put _______ on the vertical axis and _______ on the horizontal axis.

Select one:

a. the price of one good; the price of another good

b. the quantity of one good; the price of another good

c. the price of one good; the quantity of another good

d. the quantity of one good; the quantity of another good

Question 6

If the price of one of the two goods on the budget constraint were to change:

Select one:

a. the slope of the budget constraint, but neither of its endpoints, would change.

b. the slope of the budget constraint and one of its endpoints would both change.

c. the slope of the budget constraint and both of its endpoints would all change.

d. the slope of the budget constraint would not change, but both of its endpoints would change.

Question 7

The slope of the indifference curve is called the:

Select one:

a. bang for the buck.

b. marginal utility.

c. price ratio.

d. marginal rate of substitution.

Question 8

To be indifferent between two combinations of goods is to:

Select one:

a. make a determination about which combination provides more utility.

b. receive the same amount of utility from the two combinations.

c. pay the same price for the two combinations.

d. have a budget constraint that runs through both combinations.

Question 9

Consumers decide to buy another unit of a good by:

Select one:

a. comparing the price of the good to the total utility of the good.

b. comparing the total spending on the good to the marginal utility of the good.

c. comparing the price of the good to the marginal utility of the good.

d. comparing the total spending on the good to the total utility of the good.

Question 10

Which of the following is NOT necessarily true about indifference curves?

Select one:

a. Indifference curves cannot intersect each other.

b. Indifference curves further from the origin represent greater levels of utility.

c. Indifference curves slope downward.

d. Indifference curves are always symmetrical.

Question 11

The budget constraint shows how:

Select one:

a. the consumer values two goods relative to one another.

b. the market values two goods relative to one another.

c. quantity demanded goes up when income goes up.

d. quantity demanded goes down when a price goes up.

Question 12

Suppose that the MRS is 4 cups of coffee per pizza and that the prices of coffee and pizza are $2.50 and $10 respectively. In this situation:

Select one:

a. You are not maximizing utility since the MRS is equal to 4 but the price ratio is equal to 1/4.

b. You should purchase more cups of coffee because the MRS is greater than the price of a cup of coffee.

c. You are maximizing utility since you and the market value pizza relative to coffee in the same way.

d. You should purchase more pizzas because the price of a pizza is greater than the MRS.

Question 13

The marginal utility of a good is:

Select one:

a. the increase in utility that you get from buying an additional unit of a good.

b. the total amount that you spend on buying a certain number of units of a good.

c. the increase in spending that occurs when you get an additional unit of a good.

d. the total utility that you get from buying a certain number of units of a good.

Question 14

Your income is:

Select one:

a. determined both by factors under your control and factors not under your control.

b. essentially a random variable from the perspective of economists.

c. determined entirely by factors not under your control.

d. determined entirely by factors under your control.

Question 15

The law of demand states that:

Select one:

a. if the price of a good rises, then it must be because the quantity of that good demanded has risen.

b. if the price of a good falls then the quantity of that good demanded will rise.

c. if the price of a good rises then the quantity of that good demanded will rise.

d. if the price of a good falls, then it must be because the quantity of that good demanded has risen.

Answer 1

Answer for 1)

The indifference curve Hence option a is correct

Answer for 2)

A parallel shift outward for budget constraint

Option d) is correct response

Answer for 4)

Option a is correct answer as quantity demanded increases as price decreases and vice versa

ANswer for 3)

SLope of indifference curvef is MRS as we move towards right it becomes flatter hence slope decreases therefore MRS

Option b) is correct

Answer for 5)

Option a) is correct

ANswer for 6)

Option b) is correct

Answer for 7)

Option d is correct

Answer for 8)

OPtin b is correct

Answer for 9)

Option c is correct

Answer for 10)

Option d is correct

Answer for 13)

Option a is correct

Answer for 15)

Option b is correct

ANswer for 11)

Option C is correct (Just check i am doubtful here)