Question

12. In relation to a bundle of two products where the prices have not changed, if a budget constraint increases, then the consumer can afford *

less of both products.

the same amount of both products.

more of both products.

cannot be determined, because information about indifference curves is needed

13. When are hourly rates preferred to piece rates? *

When employees demand it

When it is difficult to measure output

When wage equality isn't very important

When one person is much better than the rest

14. Which of the following best illustrates the concept of diminishing marginal utility? *

Elton likes carrots more than Mariah. Mariah gets less utility from carrots than Elton.

Whitney likes cashews more than Billy. Whitney gets more utility from cashews than Billy.

Tina is hungry and the first piece of chocolate she eats tastes great. Although she enjoys her fifth piece of chocolate, it does not taste as great.

Taylor likes hamburgers, but the price she is willing to pay for them is low compared with higher end foods, such as steak and lobster.

15. Non-monetary incentives are *

not important and should not be used.

not important, but are often used.

important, but should not be used.

important and should be used.

16. When a speculative bubble bursts *

unemployment usually decreases.

there is a "boom" in the overall economy.

the effects are contained only in that specific market.

people feel worse off because of lower stock prices and often spend less.

17. Speculation is *

wondering about the meaning of life.

a disruption of the normal market mechanism.

the attempt to profit from future price changes.

ignoring price signals and guessing randomly (wildly) about the future.

Answer 1

Answer 12:

Option C. If the budget constraint of the consumer increases, then consumer can afford more of both the products given that the prices are constant.

Answer 13:

Option B. When it is difficult to measure output produced by each person, then hourly rates are preferred over piece rates.

Answer 14:

Option C. Tina is hungry and the first piece of chocolate she eats tastes great. Although she enjoys her fifth piece of chocolate, it does not taste as great.This is because marginal utility derived from the good decreases as the consumption of the good is increased.

Answer 15:

Option D. Non monetary incentives are important and should be used to increases product awareness.