Question 1

An economics professor went out to dinner one night and observed one of her students drinking heavily.The next day was a final exam.When the professor's husband found out the student was in her class,he said the student's behavior was irrational.The professor disagreed.Under what condition is behavior irrational according to the properties of consumer behavior discussed in the chapter?
 What situations could make the student's behavior rational?

Accepted Answer

It is irrational if (1)drinking will cau...

Question 2

If you were running an advertising campaign for designer men's suits,you should target families with:

Accepted Answer

A)   lower incomes.
B)   higher incomes.
C)   poor taste in clothing.
D)   similar tastes and preferences.

Question 3

If the price of good X is $10 and the price of good Y is $5,how much of good X will the consumer purchase if her income is $15?

Accepted Answer

A)   0
B)   2
C)   3
D)   Cannot tell based on the above information.

Question 4

The total earnings of a worker are represented by E = 100 + $10(24 − L) ,where E is earnings and L is the number of hours of leisure.How much will the worker earn if he takes 14 hours of leisure per day?

Accepted Answer

A)   $150
B)   $240
C)   $100
D)   $200

Question 5

The difference between a price decrease and an increase in income is that

Accepted Answer

A)   A price decrease does not affect the consumption of other goods, while an increase in income does.
B)   An increase in income does not affect the slope of the budget line, while a decrease in price does change the slope.
C)   A price decrease decreases real income, while an increase in income increases real income.
D)   A price decrease leaves real income unchanged, while an increase in income increases real income.

Question 6

Most workers view leisure and income as:

Accepted Answer

A)   goods.
B)   bads.
C)   goods and bads, respectively.
D)   bads and goods, respectively.

Question 7

If the price of computers decreases,then the:

Accepted Answer

A)   sales of a substitute, such as a telephone, decrease.
B)   sales of a substitute, such as a telephone, increase.
C)   inventory of computers increases.
D)   inventory of computer software increases.

Question 8

Along the same indifference curve,MRS is ________ as more of one good is obtained.

Accepted Answer

A)   constant
B)   increasing
C)   decreasing
D)   varying irregularly

Question 9

Suppose that consumers' preferences are well behaved in that properties 4-1 to 4-4 are satisfied.Furthermore,assume that both X and Y are normal goods and that the price of good Y increases.Then,which of the following effects is known with certainty?

Accepted Answer

A)   The income and substitution effects reinforce one another, leading to an overall increase in the consumption of good X.
B)   The income and substitution effects reinforce one another, leading to an overall decrease in the consumption of good X.
C)   There will be an indeterminate effect on the consumption of good X.
D)   The income and substitution effects will reinforce one another, leading to an overall increase in the consumption of good Y.

Question 10

Under the buy one,get one free regime,the:

Accepted Answer

A)   budget line rotates counterclockwise.
B)   price is reduced by 50 percent.
C)   budget set expands.
D)   indifference curve is changed.

Question 11

If a consumer is given a $10 gift certificate good for items in store X,and all items in store X are inferior goods,then the consumer desires to consume:

Accepted Answer

A)   more goods in store X.
B)   fewer goods in store X.
C)   the same amount of goods in store X.
D)   None of the preceding statements is correct.

Question 12

The total earnings of a worker are represented by E = 150 + $12(24 − L) ,where E is earnings and L is the number of hours of leisure.How much will the worker earn if he takes 16 hours of leisure per day?

Accepted Answer

A)   $96
B)   $246
C)   $278
D)   $342

Question 13

Explain what would happen to the equilibrium consumption of two goods,X and Y,if (a)income doubled and all prices tripled,(b)all prices doubled and income tripled,and (c)all prices and income doubled.In each case,show the effects when both goods are normal goods and when one good is a normal good and the other an inferior good.

Accepted Answer

a.When both goods are normal,the consump...

Question 14

The substitution effect reflects how a consumer will react to a different:

Accepted Answer

A)   marginal rate of substitution.
B)   market rate of substitution.
C)   level of real income.
D)   level of nominal income.

Question 15

If the price of a good Y falls,then the marginal rate of substitution between X and Y:

Accepted Answer

A)   increases.
B)   decreases.
C)   remains the same.
D)   depends on whether X and Y are normal or inferior goods, and we cannot tell without that information.

Question 16

After a price decrease for good X,the new consumer equilibrium level of good X will be:

Accepted Answer

A)   higher than before the price change.
B)   lower than before the price change.
C)   indeterminate without more information.
D)   the same as before the price change.

Question 17

Sally Consumer's indifference curve between cigarettes and hamburgers is upward sloping.Based on this information,can we conclude that Sally views cigarettes as "bads" and hamburgers as "goods"?

Accepted Answer

No.But we can conclu...

Question 18

Which of the following is most likely NOT an example of a normal good?

Accepted Answer

A)   Lobster
B)   Sports cars
C)   Bus travel
D)   Jacuzzis

Question 19

Sam Voter prefers Ronald to Joe,Joe to Gary,and Gary to Ronald.Sam's preferences:

Accepted Answer

A)   are consistent with our assumptions about consumer behavior.
B)   indicate that he is a liberal.
C)   are not complete.
D)   are not transitive.

Question 20

Kate's money income is $250,the price of X is $3,and the price of Y is $2.Given these prices and income,Kate buys 60 units of X and 35 units of Y.Call this combination of X and Y bundle J.At bundle J,Kate's MRS is 3.At bundle J,if Kate increases consumption of Y by 1 unit,how many units of X must she give up in order to satisfy her budget constraint?

Accepted Answer

A)   3/2
B)   3
C)   2/3
D)   1

Exam 4: The Theory of Individual Behavior

If the price of a good Y falls,then the marginal rate of substitution between X and Y:

Correct Answer
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Correct Answer
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Along the same indifference curve,MRS is ________ as more of one good is obtained.

Correct Answer
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The total earnings of a worker are represented by E = 150 + $12(24 − L) ,where E is earnings and L is the number of hours of leisure.How much will the worker earn if he takes 16 hours of leisure per day?

Correct Answer
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If a consumer is given a $10 gift certificate good for items in store X,and all items in store X are inferior goods,then the consumer desires to consume:

Correct Answer
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Under the buy one,get one free regime,the:

Correct Answer
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Correct Answer
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a.When both goods are normal,the consump...
View Answer

If the price of computers decreases,then the:

Correct Answer
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After a price decrease for good X,the new consumer equilibrium level of good X will be:

Correct Answer
verified

If you were running an advertising campaign for designer men's suits,you should target families with:

Correct Answer
verified

Most workers view leisure and income as:

Correct Answer
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Suppose that consumers' preferences are well behaved in that properties 4-1 to 4-4 are satisfied.Furthermore,assume that both X and Y are normal goods and that the price of good Y increases.Then,which of the following effects is known with certainty?

Correct Answer
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The substitution effect reflects how a consumer will react to a different:

Correct Answer
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If the price of good X is $10 and the price of good Y is $5,how much of good X will the consumer purchase if her income is $15?

Correct Answer
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Which of the following is most likely NOT an example of a normal good?

Correct Answer
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Correct Answer
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It is irrational if (1)drinking will cau...
View Answer

Sally Consumer's indifference curve between cigarettes and hamburgers is upward sloping.Based on this information,can we conclude that Sally views cigarettes as "bads" and hamburgers as "goods"?

Correct Answer
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No.But we can conclu...
View Answer

The difference between a price decrease and an increase in income is that

Correct Answer
verified

Sam Voter prefers Ronald to Joe,Joe to Gary,and Gary to Ronald.Sam's preferences:

Correct Answer
verified

The total earnings of a worker are represented by E = 100 + $10(24 − L) ,where E is earnings and L is the number of hours of leisure.How much will the worker earn if he takes 14 hours of leisure per day?

Correct Answer
verified

Exam 4: The Theory of Individual Behavior

If the price of a good Y falls,then the marginal rate of substitution between X and Y:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Along the same indifference curve,MRS is ________ as more of one good is obtained.

Correct AnswerverifiedShow Answer

The total earnings of a worker are represented by E = 150 + $12(24 − L) ,where E is earnings and L is the number of hours of leisure.How much will the worker earn if he takes 16 hours of leisure per day?

Correct AnswerverifiedShow Answer

If a consumer is given a $10 gift certificate good for items in store X,and all items in store X are inferior goods,then the consumer desires to consume:

Correct AnswerverifiedShow Answer

Under the buy one,get one free regime,the:

Correct AnswerverifiedShow Answer

Correct Answerverifieda.When both goods are normal,the consump...View AnswerShow Answer

If the price of computers decreases,then the:

Correct AnswerverifiedShow Answer

After a price decrease for good X,the new consumer equilibrium level of good X will be:

Correct AnswerverifiedShow Answer

If you were running an advertising campaign for designer men's suits,you should target families with:

Correct AnswerverifiedShow Answer

Most workers view leisure and income as:

Correct AnswerverifiedShow Answer

Suppose that consumers' preferences are well behaved in that properties 4-1 to 4-4 are satisfied.Furthermore,assume that both X and Y are normal goods and that the price of good Y increases.Then,which of the following effects is known with certainty?

Correct AnswerverifiedShow Answer

The substitution effect reflects how a consumer will react to a different:

Correct AnswerverifiedShow Answer

If the price of good X is $10 and the price of good Y is $5,how much of good X will the consumer purchase if her income is $15?

Correct AnswerverifiedShow Answer

Which of the following is most likely NOT an example of a normal good?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIt is irrational if (1)drinking will cau...View AnswerShow Answer

Sally Consumer's indifference curve between cigarettes and hamburgers is upward sloping.Based on this information,can we conclude that Sally views cigarettes as "bads" and hamburgers as "goods"?

Correct AnswerverifiedNo.But we can conclu...View AnswerShow Answer

The difference between a price decrease and an increase in income is that

Correct AnswerverifiedShow Answer

Sam Voter prefers Ronald to Joe,Joe to Gary,and Gary to Ronald.Sam's preferences:

Correct AnswerverifiedShow Answer

The total earnings of a worker are represented by E = 100 + $10(24 − L) ,where E is earnings and L is the number of hours of leisure.How much will the worker earn if he takes 14 hours of leisure per day?

Correct AnswerverifiedShow Answer

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a.When both goods are normal,the consump...
View Answer

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Correct Answer
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It is irrational if (1)drinking will cau...
View Answer

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No.But we can conclu...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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