The slope of the budget constraint is determined by the level of income of the c

Question

1. The slope of the budget constraint is determined by
   1. the level of income of the consumer
   2. the relative price of commodities represented on the axes
   3. the preferences of a consumer
   4. the endowment of productive resource

2. If the consumption of one good is reduced, how must a consumeralter his consumption of another good in order to remainindifferent between two bundles?
   1. He must reduce his consumption of another good
   2. He must increase his consumption of another good
   3. He must not change his consumption of another
   4. He can reduce, increase, or not change his consumption ofanother good

3. If an indifference curve is bowed in toward the origin, themarginal rate of substitution
   1. is different for each bundle along the indifference curve
   2. is likely to be constant for all bundles along the indifferencecurve
   3. is likely to be identical to the price ratio for each bundlealong the indifference curve
   4. is not likely to reflect relative value of goods

4. A consumer’s set of indifference curves provides
   1. a complete ranking of all possible consumption bundles
   2. a ranking of the set of bundles that happen to fall onindifference curves
   3. a framework for evaluating market equilibrium
   4. a relative ranking of bundles that provide more of allgoods

5. If indifference curves could cross, it would suggest that
   1. it is possible to demonstrate that all standard properties ofindifference curves are typically satisfied
   2. consumers are likely to prefer a redistribution of income fromrich to poor
   3. it is possible to demonstrate that a consumer does not prefermore to less
   4. it facilitates the explanation of differences in consumptionchoices across individuals

6. When indifference curves are bowed in and toward theorigin,
   1. people are less inclined to trade away goods that they have anabundance of
   2. people can only increase satisfaction by consuming more of allcommodities
   3. it is unlikely that consumers will be willing to engage intrade
   4. the marginal rate of substitution decreases as a consumer movesdown an indifference curve

7. The highest indifference curve that a consumer can reach is
   1. the one farthest from the origin
   2. the one that is tangent to the budget constraint
   3. the one that intersects the budget constraint in at least twoplaces
   4. all of the above

8. When the indifference curve is tangent to the budgetconstraint,
   1. the consumer is likely to be at a sub-optimal level ofconsumption
   2. indifference curves are likely to intersect
   3. a consumer cannot be made better off without increasing herincome
   4. income is at its maximum for a consumer

9. Assume that a college student purchases only Coke andSnickers. If Coke is an inferior good and Snickers are normalgoods, the income-effect associated with an increase in the priceof a Snickers will result in
   1. an increase in the consumption of Snickers, and an increase inthe consumption of Coke
   2. an increase in the consumption of Snickers, and a decrease inthe consumption of Coke
   3. a decrease in the consumption of Snickers, and an decrease inthe consumption of Coke
   4. a decrease in the consumption of Snickers, and a increase inthe consumption of Coke

Explanation / Answer

1. B relative price of commodities represented on the axes. 2.B he must increase his consumption of another good. 3.A. is difficult for each bundle along the indifference curve.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects