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
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
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
Suppose that an ad valorem tax of 10% is imposed on consumers of butter. The bread market supply is Qs = 10 + P and the bread market demand is Qd = 220-P. What is the consumers’ tax burden? A) Consumers’ tax burden is $3. B) Consumers’ tax burden is $10 C) Consumers’ tax burden […]
Date: September 9th, 2020
Suppose that an ad valorem tax of 10% is imposed on producers of butter. The bread market supply is Qs = 10 + P and the bread market demand is Qd = 220-P. What is the producers’ tax burden? A) Producers’ tax burden is $8. B) Producers’ tax burden is $10 C) Producers’ tax burden […]
Date: September 9th, 2020
Suppose the market for grass seed can be expressed as Demand: QD = 100 – 2p Supply: QS = 3p Price elasticity of supply is constant at 1. If the demand curve is changed to Q = 10 – .2p, price elasticity of demand at any given price is the same as before. Yet, the […]
Date: September 9th, 2020
Suppose the market for grass seed is expressed as Demand: QD = 100 – 2p Supply: QS = 3p Price elasticity of supply is constant at 1. If the supply curve is changed to Q = 8p, price elasticity of supply is still constant at 1. Yet, with the new supply curve, consumers pay a […]
Date: September 9th, 2020
