The marginal rate of transformation of y for x represents A) the slope of the budget constraint. B) the rate at which the consumer must give up y to get one more x. C) – / . D) All of the above. ANSWER D
Date: September 9th, 2020
If the consumer’s income increases while the prices of both goods remain unchanged, what will happen to the budget line? A) The budget line rotates inward from the intercept on the horizontal axis. B) The budget line rotates outward from the intercept on the vertical axis. C) The budget line shifts inward without a change […]
Date: September 9th, 2020
The absolute value of the slope of an indifference curve equals the ratio of the marginal utilities of the two goods involved. Indicate whether the statement is true or false ANSWER True . The MRS can be represented as the ratio of both those quantities.
Date: September 9th, 2020
Clifford lives by the motto “Eat drink and be merry today, for tomorrow doesn’t matter.” If today’s consumption is represented by “x” and tomorrow’s consumption is represented by “y”, then which of the following best represents Clifford’s utility function? A) U = x – y B) U = x/y C) U = x D) U […]
Date: September 9th, 2020
If Fred’s marginal utility of pizza equals 10 and his marginal utility of salad equals 2, then A) he would give up 5 pizzas to get the next salad. B) he would give up 5 salads to get the next pizza. C) he will eat five times as much pizza as salad. D) he will […]
Date: September 9th, 2020
Measuring “y” on the vertical axis and “x” on the horizontal axis, convexity of indifference curves implies that the MRS of “y” for “x” A) is decreasing as “x” increases. B) is increasing as “x” increases. C) is constant as “x” increases. D) cannot be calculated for large levels of “x”. ANSWER A
Date: September 9th, 2020
Lisa views pizzas and burritos as goods. If she prefers a bundle of 4 burritos and 4 pizzas to a bundle of 4 burritos and 5 pizzas, which property of consumer preference is violated? What change in the assumptions could lead a rational consumer to prefer the first bundle? What will be an ideal response? […]
Date: September 9th, 2020
If Fred’s marginal rate of substitution of salad for pizza equals 5, then A) he would give up 5 pizzas to get the next salad. B) he would give up 5 salads to get the next pizza. C) he will eat five times as much pizza as salad. D) he will eat five times as […]
Date: September 9th, 2020
Diminishing marginal rate of substitution can be seen when indifference curves A) cross. B) are convex. C) are downward sloping. D) become flatter as we move down and to the right. ANSWER D
Date: September 9th, 2020
Utility is the set of numerical values that A) yields an absolute level of pleasure from a bundle of goods. B) reflects the relative ranking of various bundles of goods. C) describes how much more a consumer prefers one bundle to another. D) yields a cardinal ranking of bundles. ANSWER B
Date: September 9th, 2020
