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What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and PX = $10, PY = $15, X = 30, and M = 600?
Correct answer(s):
- 20
A decrease in the price of good Y will have what effect on the budget line on a normal X-Y graph?
Correct answer(s):
- Increase the vertical intercept
The rate at which a consumer is willing to substitute one good for another, while still maintaining a given level of satisfaction is called the
Correct answer(s):
- Marginal rate of substitution
Which combination of the properties given below rules out indifference curves that intersect one another?
Correct answer(s):
- Transitivity and more-is-better
The difference between a price increase and a decrease in income is that
Correct answer(s):
- A decrease in income does not affect the slope of the budget line while an increase in price does change the slope
If money income doubles and the prices of all goods triples, then the
Correct answer(s):
- Consumer is worse off due to inflation
Joe consumes 10 units of food and 12 units of clothing. Since food is an inferior good, a gift to Joe of a $12 gift certificate at a clothing store will
Correct answer(s):
- Induce Joe to eat more than 10 units of food
At any point on an indifference curve, the slope indicates
Correct answer(s):
- None of the statements associated with this question are correct
Consider a two good world, with commodities X and Y. If Y is an inferior good, then an increase in consumer income cannot
Correct answer(s):
- Decrease the demand for X
If the price of a good purchased by a utility maximizing consumer goes down, all other things remain the same, and the consumer’s income is adjusted so that he can just barely attain his previous level of satisfaction, and if the consumer had indifference curves of the usual shape it will be found that
Correct answer(s):
- More of the good will be purchased than before
Sam Voter prefers Ronald to Joe, Joe to Gary, and Gary to Ronald. Sam’s preferences
Correct answer(s):
- Are not transitive
If widgets and gidgets are complements and both are normal goods, then an increase in the demand for widgets will result from
Correct answer(s):
- A decrease in the price of gidgets
If sugar and Nutrasweet are substitutes, then we can be certain that a decrease in the price of sugar will lead to an increase in the consumption of ____?
Correct answer(s):
- Sugar
If widgets and gidgets are complements and both are normal goods, then a decrease in the demand for widgets will result from
Correct answer(s):
- A decrease in income
Consider a two good world, with commodities X and Y. Which of the following statements is correct?
Correct answer(s):
- If good X is an inferior good, good Y must be a normal good
Joe consumes 48 units of food and 12 units of clothing. If food is an inferior good,
Correct answer(s):
- Joe would strictly prefer receiving $10 in cash to receiving a $10 gift certificate at a clothing store
Mitchell’s money income is $150, the price of X is $2, and the price of Y is $2. Given these prices and income, Mitchell buys 50 units of X and 25 units of Y. Call this combination of X and Y bundle J. At bundle J Mitchell’s MRS is 2. At bundle J, if Mitchell increases consumption of Y by 1 unit how many units of X must he give up in order to satisfy his budget constraint?
Correct answer(s):
- 1
Mitchell’s money income is $150, the price of X is $2, and the price of Y is $2. Given these prices and income, Mitchell buys 50 units of X and 25 units of Y. Call this combination of X and Y bundle J. At bundle J Mitchell’s MRS is 2. Given these prices and income, what is Mitchell’s equilibrium consumption of X?
Correct answer(s):
- X > 50
Mitchell’s money income is $150, the price of X is $2, and the price of Y is $2. Given these prices and income, Mitchell buys 50 units of X and 25 units of Y. Call this combination of X and Y bundle J. At bundle J Mitchell’s MRS is 2. At bundle J, if Mitchell increases consumption of Y by 1 unit how many units of X can he give up and still reach the same level of utility?
Correct answer(s):
- ½
Managers can get workers to work longer hours
Correct answer(s):
- With higher overtime pay in excess of regular hourly pay