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Consider a two good world, with commodities X and Y. If X is an inferior good, then an increase in consumer income cannot
Correct answer(s):
- Decrease the demand for Y
Sam Voter prefers Jack to Rob, Rob to Mark, and Jack to Mark. Sam’s preferences
Correct answer(s):
- Are transitive
Given that income is $300, the price of good Y is $15, and the price of good X is $20. What is the vertical intercept of the budget line?
Correct answer(s):
- 20
The maximum quantity of good Y that is affordable is:
Correct answer(s):
- M/PY
Suppose earnings are given by E = $50 + $20(24 – L), where E is earnings and L is the hours of leisure. What is the price to the worker of consuming an additional hour of leisure?
Correct answer(s):
- $20
The total earnings of a worker are represented by E = 150 + $12(24 – L), where E is earnings and L is the number of hours of leisure. How much will the worker earn if he takes 16 hours of leisure per day?
Correct answer(s):
- $246
A price decrease causes a consumer’s “real” income to:
Correct answer(s):
- Increase
The substitution affect isolates the change in the consumption of a good caused by:
Correct answer(s):
- The change in the relative prices of two goods
If the price of good X decreases, what will happen to the budget line?
Correct answer(s):
- It will become flatter
Given that income is $750 and PX = $32 and PY = $8, what is the market rate of substitution between goods X and Y?
Correct answer(s):
- -4
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