Some people view cosmetic surgery (c) and facials (f) as perfect substitutes as measured by the utility function U(c,f) = 5c + 10f. What is the marginal utility of cosmetic surgery? A) MU = 5. B) MU = 10. C) MU = 15. D) None of the above. ANSWER A
Date: September 9th, 2020
If the prices of both goods and income increase by the same percentage, what will happen to the budget line? A) The budget line rotates inward from the intercept on the axis of the good that did not change in price. B) The budget line rotates outward from the intercept on the axis of the […]
Date: September 9th, 2020
If the price of one good increases while the price of the other good and the consumer’s income remain unchanged, what will happen to the budget line? A) The budget line rotates inward from the intercept on the axis of the good that did not change in price. B) The budget line rotates outward from […]
Date: September 9th, 2020
People view alcohol and marijuana as perfect substitutes. This means that A) individuals will consume either alcohol or marijuana, but not both, regardless of price. B) as the price of alcohol decreases, marijuana use decreases. C) the marginal utility for alcohol and marijuana is constant. D) Both B and C. ANSWER D
Date: September 9th, 2020
If two bundles are on the same indifference curve, then A) the consumer derives the same level of utility from each. B) the consumer derives the same level of ordinal utility from each but not the same level of cardinal utility. C) no comparison can be made between the two bundles since utility cannot really […]
Date: September 9th, 2020
If two goods are perfect substitutes, then the indifference curves for those two goods would be A) upward sloping and concave to the origin. B) downward sloping and convex to the origin. C) downward sloping and straight. D) L-shaped. ANSWER C
Date: September 9th, 2020
The statement “There is no accounting for taste” implies A) individuals all have the same preferences. B) individuals all have different cardinal preferences but the same ordinal preferences. C) individuals all have different ordinal preferences but the same cardinal preferences. D) individuals all have different ordinal and cardinal preferences. ANSWER D
Date: September 9th, 2020
Assuming that good “x” is measured on the x-axis and good “y” is measured on the y-axis, if the utility for the two goods “x” and “y” can be measured as U = y, then it can be concluded that A) “x” and “y” are perfect complements. B) “x” is a “bad”. C) the indifference […]
Date: September 9th, 2020
Indifference curves that are upward-sloping violate A) the assumption of transitivity. B) the assumption of completeness. C) the assumption that more is better. D) none of the assumptions. ANSWER C
Date: September 9th, 2020
Economists use a preference map to illustrate that A) more is better than less. B) preferences are transitive. C) preferences are complete. D) All of the above. ANSWER D
Date: September 9th, 2020
