Max has allocated $100 toward meats for his barbecue. His budget line and indifference map are shown in the above figure. If Max is currently at point d, A) the absolute value of his MRS is larger than the trade-off offered by the market. B) he is willing to give up more chicken than he […]
Date: September 9th, 2020
What is one reason a gift card might be less desirable than cash? A) A gift card requires an individual to purchase from a particular store, which restricts the choice set. B) Cash requires an individual to purchase from a particular country, which restricts the choice set. C) Cash and the gift card are equally […]
Date: September 9th, 2020
If the food stamp program in the United States moved from coupons redeemable for food to cash payments, A) everyone would buy less food and more of other goods. B) everyone would buy more food and less of other goods. C) some people might buy less food and obtain a higher level of utility. D) […]
Date: September 9th, 2020
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
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
Quotas, such as limiting the amount of residential water use during a drought, restricts an individual’s preference set and A) reduces utility because an individual cannot consume as much as they would without the quota. B) increases utility because quotas restrict output and raise profits for the water company. C) reduces utility because an individual […]
Date: September 9th, 2020
By selecting a bundle where MRS = MRT, the consumer is A) achieving a corner solution. B) reaching the highest possible indifference curve she can afford. C) not behaving in an optimal way. D) All of the above. ANSWER B
Date: September 9th, 2020
Johnny has allocated $30 toward coffee and tea and feels that coffee and tea are perfect substitutes. Due to differences in caffeine levels, his MRS of tea for coffee equals 2. If coffee and tea sell for the same price, Johnny will A) spend all $30 on tea. B) spend all $30 on coffee. C) […]
Date: September 9th, 2020
By selecting a bundle where MRS = MRT, the consumer is saying A) “I value my last unit of each good equally.” B) “I am willing to trade one good for the other at the same rate that I am required to do so.” C) “I will equate the amounts spent on all goods consumed.” […]
Date: September 9th, 2020
