An optimal choice in which a consumer does not consume all types of goods A) is a corner solution. B) cannot be an equilibrium. C) cannot exhaust the budget constraint. D) is an interior solution. ANSWER A
Date: September 9th, 2020
If income increases due to a decrease in taxes, then A) utility will increase because consumers can afford a larger bundle of goods. B) utility will fall because consumers will be forced to buy a smaller bundle of goods. C) utility will remain constant. D) utility will increase because consumers will be forced to buy […]
Date: September 9th, 2020
Data shows that United States college students purchase more e-books than German college students. Assuming that all students have identical preferences for e-books and textbooks, what is the likely explanation for this result? A) Taxes on textbooks are higher in the United States than taxes on textbooks in Germany. B) Taxes on textbooks are lower […]
Date: September 9th, 2020
One reason more sport utility vehicles (SUVs) are driven in the United States than in Europe is A) different marginal rates of substitution. B) different marginal rates of transformation. C) the United States hasn’t had a recession since 2000-2001. D) Either A or B ANSWER D
Date: September 9th, 2020
If both prices decreases by 50%, A) budget constraint will be unchanged. B) slope of the budget constraint will increase. C) slope of the budget constraint will decrease. D) budget constraint will shift outward in a parallel fashion. ANSWER D
Date: September 9th, 2020
If a consumer’s budget line for food (F) and shelter (S) is represented as F = 250 – 5S, we know that A) the consumer’s income is 250. B) the price of shelter is 5. C) the price of shelter is 5 times the price of food. D) All of the above. ANSWER C […]
Date: September 9th, 2020
Suppose a taco costs $4 and a burrito costs $2. Moreover, this Mexican restaurant has a special deal. After you’ve bought 6 burritos, you can buy each extra burrito for $1.50. Assume that tacos are on the vertical axis and burritos on the horizontal axis. What is the marginal rate of transformation (MRT) when 8 […]
Date: September 9th, 2020
The consumer is in equilibrium when A) MRT = MRS. B) Px/Py=MUx/MUy C) the budget line is tangent to the indifference curve at the bundle chosen. D) All of the above. ANSWER D
Date: September 9th, 2020
The intuition behind the budget constraint is that A) more options are preferred to less. B) money is the root of all happiness. C) information is power. D) scarcity is avoidable with prosperity. ANSWER A
Date: September 9th, 2020
If both prices increases by 50%, A) budget constraint will be unchanged. B) slope of the budget constraint stay the same. C) slope of the budget constraint will decrease. D) budget constraint will shift outward in a parallel fashion. ANSWER B
Date: September 9th, 2020
