Question 1

A worker with a backward-bending labor supply curve responds to an increase in wages by working more hours.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is not correct?

Accepted Answer

A)   If Jane gets a higher wage and works more,the substitution effect is greater than the income effect for her.
B)   If Spencer experiences a wage decrease and works less,the income effect is greater than the substitution effect for him.
C)   If the substitution effect is greater than the income effect,the labor-supply curve is upward sloping.
D)   If the income effect is greater than the substitution effect,the labor-supply curve is downward sloping.E) A) and D)
F) C) and D)

Question 3

The indifference curves for nickels and dimes are straight lines.

Accepted Answer

A) True 
 B)False

Question 4

If a consumer experiences a decrease in income,the new budget constraint will have the same slope as the old budget constraint.

Accepted Answer

A) True 
 B)False

Question 5

Calvin is planning ahead for retirement and must decide how much to spend and how much to save while he's working in order to have money to spend when he retires.When the substitution effect dominates the income effect,an increase in the interest rate on savings will cause him to

Accepted Answer

A)   increase his savings rate.
B)   decrease his savings rate.
C)   continue saving at the same rate.
D)   Any of the above are possible.E) All of the above
F) B) and D)

Question 6

Figure 21-17 xy > Py/Px. B)  MRSxy = Px/Py. C)  MRSxy x/Py. D)  MRSxy y/Px." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 21-17.Bundle D represents a point where

Accepted Answer

A)   MRSxy > Py/Px.
B)   MRSxy = Px/Py.
C)   MRSxy x/Py.
D)   MRSxy y/Px.E) None of the above
F) B) and C)

Question 7

The theory of consumer choice provides a(n)

Accepted Answer

A)   literal account of how people make decisions.
B)   unrealistic picture of how people make decisions.
C)   model that is consistent with how people make decisions.
D)   in-depth model that is based more in psychology than in economics.E) A) and B)
F) All of the above

Question 8

When Adam's income increases,he purchases more tickets to Broadway musicals than he did before his income increased.For Adam,Broadway musicals are a(n)

Accepted Answer

A)   normal good.
B)   inferior good that is not a Giffen good.
C)   Giffen good.
D)   optimal good.E) All of the above
F) B) and C)

Question 9

Which of the following statements is correct?

Accepted Answer

A)   The theory of consumer choice provides a more complete understanding of supply,just as the theory of the competitive firm provides a more complete understanding of demand.
B)   The theory of consumer choice provides a more complete understanding of demand,just as the theory of the competitive firm provides a more complete understanding of supply.
C)   Monetary theory provides a more complete understanding of demand,just as the theory of the competitive firm provides a more complete understanding of supply.
D)   The theory of public choice provides a more complete understanding of supply,just as the theory of the competitive firm provides a more complete understanding of demand.E) A) and C)
F) A) and B)

Question 10

Which of the following is not correct?

Accepted Answer

A)   An increase in income shifts a consumer's budget constraint outward.
B)   An increase in the price of good X causes a consumer's budget constraint to rotate inward along the X axis.
C)   A decrease in the price of good Y causes a consumer's budget constraint to rotate outward along the Y axis.
D)   Changes in income affect the slope of the budget constraint as well as its location on a graph.E) None of the above
F) B) and C)

Question 11

Indifference curves that cross violate the property of

Accepted Answer

A)   the marginal rate of substitution.
B)   transitivity.
C)   indifference curves bowing inward.
D)   They do not violate any properties of indifference curves.E) C) and D)
F) A) and C)

Question 12

Carlos goes to the movies every Sunday afternoon.The movie theater offers 4 combinations of popcorn and beverages: the "mini-combo" costs $5 and includes a small popcorn and a small drink,the "medium-combo" costs $7 and includes a medium popcorn and a medium drink,the "value-combo" also costs $7 and includes a small popcorn and a large drink,and the "large-combo" costs $9 and includes a large popcorn and a large drink.Carlos always purchases the "value-combo." We can conclude that

Accepted Answer

A)   Carlos cannot afford the "large-combo."
B)   Carlos cannot afford the "medium-combo."
C)   Carlos prefers a combo with a larger popcorn-to-beverage ratio.
D)   Carlos prefers a combo with a smaller popcorn-to-beverage ratio.E) None of the above
F) B) and C)

Exam 21: The Theory of Consumer Choice

Correct Answer
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Which of the following statements is correct?

Correct Answer
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The indifference curves for nickels and dimes are straight lines.

Correct Answer
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A worker with a backward-bending labor supply curve responds to an increase in wages by working more hours.

Correct Answer
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Which of the following is not correct?

Correct Answer
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Figure 21-17 -Refer to Figure 21-17.Bundle D represents a point where

Correct Answer
verified

Indifference curves that cross violate the property of

Correct Answer
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If a consumer experiences a decrease in income,the new budget constraint will have the same slope as the old budget constraint.

Correct Answer
verified

When Adam's income increases,he purchases more tickets to Broadway musicals than he did before his income increased.For Adam,Broadway musicals are a(n)

Correct Answer
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The theory of consumer choice provides a(n)

Correct Answer
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Calvin is planning ahead for retirement and must decide how much to spend and how much to save while he's working in order to have money to spend when he retires.When the substitution effect dominates the income effect,an increase in the interest rate on savings will cause him to

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Exam 21: The Theory of Consumer Choice

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The indifference curves for nickels and dimes are straight lines.

Correct AnswerverifiedShow Answer

A worker with a backward-bending labor supply curve responds to an increase in wages by working more hours.

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Figure 21-17 -Refer to Figure 21-17.Bundle D represents a point where

Correct AnswerverifiedShow Answer

Indifference curves that cross violate the property of

Correct AnswerverifiedShow Answer

If a consumer experiences a decrease in income,the new budget constraint will have the same slope as the old budget constraint.

Correct AnswerverifiedShow Answer

When Adam's income increases,he purchases more tickets to Broadway musicals than he did before his income increased.For Adam,Broadway musicals are a(n)

Correct AnswerverifiedShow Answer

The theory of consumer choice provides a(n)

Correct AnswerverifiedShow Answer

Calvin is planning ahead for retirement and must decide how much to spend and how much to save while he's working in order to have money to spend when he retires.When the substitution effect dominates the income effect,an increase in the interest rate on savings will cause him to

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

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