Question 1

If a candy bar sells for 50 cents and video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12 and the vertical (video game) intercept of Ann's budget line is 24. Giving up one video game makes it possible for Ann to afford
A) 2 fewer candy bars
B) half of an additional candy bar
C) 2 more candy bars
D) 12 more candy bars
E) 24 more candy bars

Accepted Answer

The answer of If a candy bar sells for 50...

Question 2

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24. If Ann's income increased to $20, the vertical intercept would be
A) $4
B) $2
C) 20
D) 40
E) 80

Accepted Answer

The answer of A candy bar sells for 50 cents,...

Question 3

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24. Which of the following best describes what would happen to the budget line if Ann's income increased?
A) It would shift rightward to a parallel position.
B) It would shift rightward to a nonparallel position.
C) It would shift leftward to a parallel position.
D) It would shift leftward to a nonparallel position.
E) Nothing.

Accepted Answer

The budget line represents all the combinations of candy bars and video games that Ann can afford given her budget. An increase in her income will shift the budget line outward (to the right) parallel to the original budget line because both the price of candy bars and video games are unaffected by her increase in income. Therefore, she will be able to purchase more of both goods.

Question 4

The slope of a budget line equals minus the ratio of the
A) marginal utilities of the goods indicated on the two axes
B) total utilities of the goods indicated on the two axes
C) lowest possible consumption levels for each of the goods indicated on the two axes
D) prices of the goods indicated on the two axes
E) sum of the prices of the goods indicated on the two axes and the budget

Accepted Answer

The slope of a budget line represents the rate at which a consumer can exchange one good for another while staying within their budget constraint. This exchange rate is determined by the prices of the goods. Therefore, the slope of a budget line equals the ratio of the prices of the goods indicated on the two axes, which is the answer D.

Question 5

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24. If Ann's income increased to $20, the horizontal intercept would be
A) $4
B) $2
C) 20
D) 40
E) 80

Accepted Answer

The answer of A candy bar sells for 50 cents,...

Question 6

A family on a trip budgets $800 for restaurant meals and fast food. The family can buy 16 restaurant meals if they buy no fast-food meals. What is the price of a restaurant meal for the family?
A) $5
B) $16
C) $20
D) $50
E) it is impossible to tell from the information given

Accepted Answer

The answer of A family on a trip budgets $800...

Question 7

Which of the following can be thought of as the consumer's consumption possibilities frontier?
A) the consumer's marginal utility
B) the consumer's total utility
C) the consumer's budget line
D) the consumer's indifference curve
E) the consumer's demand curve

Accepted Answer

The consumer's consumption possibilities are limited by their budget, so their consumption possibilities frontier can be represented by their budget line, which shows all the combinations of goods that they can afford to consume at a given price level. The other options (A, B, D, E) do not represent the consumer's consumption possibilities frontier.

Question 8

A family on a trip budgets $200 for restaurant meals and fast food. The family can buy 20 restaurant meals if they don't buy any fast-food meals. What is the vertical intercept of the budget line when fast food is measured on the horizontal axis?
A) 1/20
B) 200
C) 10
D) 20
E) $400

Accepted Answer

The answer of A family on a trip budgets $200...

Question 9

If a candy bar sells for 50 cents and video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12 and the vertical (video game) intercept of Ann's budget line is 24. Giving up one candy bar makes it possible for Ann to afford
A) 2 fewer video games
B) half an additional video game
C) 2 more video games
D) 12 more video games
E) 24 more video games

Accepted Answer

The slope of Ann's budget line is 2 (since for every candy bar she gives up, she can buy 2 video games). So, if she gives up one candy bar, she will have an additional 50 cents to spend on video games (since the candy bar costs 50 cents). That means she can now afford 2 more video games (since they are 25 cents each). Therefore, the answer is C, 2 more video games.

Question 10

A family on a trip budgets $200 for restaurant meals and fast food. If the price of a fast-food meal for the whole family is $20, what is the vertical intercept of the budget line when fast food is measured on the horizontal axis?
A) 10
B) 20
C) 200
D) 400
E) it is impossible to tell from the information given

Accepted Answer

The answer of A family on a trip budgets $200...

Question 11

The slope of a budget line with x on the vertical axis and y on the horizontal axis equals A) (-income/P_x) / (income/P_y) B) (income - P_x) / (income - P_y) C) (income + P_x) / (income + P_y) D) (P_x - P_y) / (P_x + P_y) E) (P_x + P_y) / (P_y - P_x)

Accepted Answer

The answer of The slope of a budget line with...

Question 12

Chris budgets $30 this week for spending on his two favorite things, pizza and movies. The price of a movie is $5. Moreover, he could buy 3 pizzas if he doesn't go to the movies. If pizza is on the horizontal axis, what is the slope of the budget line?
A) 2
B) -1/2
C) -1/3
D) 1/3
E) -2

Accepted Answer

The answer of Chris budgets $30 this week for spending...

Question 13

A family on a trip budgets $800 for restaurant meals and fast food. If the price of a fast-food meal for the whole family is $20, how many meals can the family buy if they don't eat at restaurants?
A) 8
B) 15
C) 20
D) 40
E) 160

Accepted Answer

The answer of A family on a trip budgets $800...

Question 14

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24. Which of the following best describes what would happen to the budget line if Ann's income decreased?
A) It would shift rightward to a parallel position.
B) It would shift rightward to a nonparallel position.
C) It would shift leftward to a parallel position.
D) It would shift leftward to a nonparallel position.
E) Nothing.

Accepted Answer

Since Ann's income has decreased, her purchasing power has also decreased. As a result, the budget line shifts leftward to a parallel position, with the same slope but a lower intercept on both axes. This is because she can buy fewer candy bars and video games with her income.

Question 15

Within the framework of indifference curve analysis, what prevents the individual from purchasing more of all goods?
A) Legal prohibitions
B) Budget constraint
C) The slope of the indifference curve
D) Psychological considerations
E) Diminishing marginal utility

Accepted Answer

The budget constraint limits the amount of goods an individual can purchase, as they have limited income and prices for goods. Therefore, the individual cannot purchase more of all goods without violating the budget constraint. Legal prohibitions may prevent the purchase of certain goods, but it is not a general factor preventing the purchase of more goods. The slope of the indifference curve and psychological considerations do not directly limit the individual's ability to purchase more goods. Diminishing marginal utility may decrease the desire to consume additional units of a particular good, but it is not a general factor preventing the purchase of more goods.

Question 16

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24. The slope of the budget line is
A) -50
B) -25
C) -1/2
D) -2
E) -$120

Accepted Answer

The answer of A candy bar sells for 50 cents,...

Question 17

A family on a trip budgets $200 for restaurant meals and fast food. If the price of a fast-food meal for the whole family is $20, what is the horizontal intercept of the budget line when fast food is measured on the horizontal axis?
A) 100
B) 10
C) 20
D) 400
E) it is impossible to tell from the information given

Accepted Answer

The answer of A family on a trip budgets $200...

Question 18

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24. Ann's income must be
A) $3
B) $6
C) $12
D) $24
E) $36

Accepted Answer

The answer of A candy bar sells for 50 cents,...

Question 19

If a consumer's income rises,
A) her indifference curves shift inward
B) her indifference curves shift outward
C) her budget line shifts outward
D) her budget line shifts inward
E) the slope of her budget line increases

Accepted Answer

The answer of If a consumer's income rises,
A) her indifference...

Question 20

Assume that you divide your food budget between fish and chicken. Which of the following would not alter the position of a budget line drawn with fish on the horizontal axis and chicken on the vertical axis?
A) an increase in the price of fish
B) a decrease in the price of chicken
C) a change in your preference for fish
D) an increase in your food budget
E) an increase in the price of fish combined with an increase in your food budget

Accepted Answer

The answer of Assume that you divide your food budget...

Quiz 6: Appendix: Indifference Curves and Utility Maximization

If a candy bar sells for 50 cents and video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12 and the vertical (video game) intercept of Ann's budget line is 24. Giving up one video game makes it possible for Ann to afford

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24. If Ann's income increased to $20, the vertical intercept would be

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24. Which of the following best describes what would happen to the budget line if Ann's income increased?

The slope of a budget line equals minus the ratio of the

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24. If Ann's income increased to $20, the horizontal intercept would be

A family on a trip budgets $800 for restaurant meals and fast food. The family can buy 16 restaurant meals if they buy no fast-food meals. What is the price of a restaurant meal for the family?

Which of the following can be thought of as the consumer's consumption possibilities frontier?

A family on a trip budgets $200 for restaurant meals and fast food. The family can buy 20 restaurant meals if they don't buy any fast-food meals. What is the vertical intercept of the budget line when fast food is measured on the horizontal axis?

If a candy bar sells for 50 cents and video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12 and the vertical (video game) intercept of Ann's budget line is 24. Giving up one candy bar makes it possible for Ann to afford

A family on a trip budgets $200 for restaurant meals and fast food. If the price of a fast-food meal for the whole family is $20, what is the vertical intercept of the budget line when fast food is measured on the horizontal axis?

The slope of a budget line with x on the vertical axis and y on the horizontal axis equals

Chris budgets $30 this week for spending on his two favorite things, pizza and movies. The price of a movie is $5. Moreover, he could buy 3 pizzas if he doesn't go to the movies. If pizza is on the horizontal axis, what is the slope of the budget line?

A family on a trip budgets $800 for restaurant meals and fast food. If the price of a fast-food meal for the whole family is $20, how many meals can the family buy if they don't eat at restaurants?

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24. Which of the following best describes what would happen to the budget line if Ann's income decreased?

Within the framework of indifference curve analysis, what prevents the individual from purchasing more of all goods?

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24. The slope of the budget line is

A family on a trip budgets $200 for restaurant meals and fast food. If the price of a fast-food meal for the whole family is $20, what is the horizontal intercept of the budget line when fast food is measured on the horizontal axis?

A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy) intercept of Ann's budget line is 12, and the vertical (video game) intercept of Ann's budget line is 24. Ann's income must be

If a consumer's income rises,

Assume that you divide your food budget between fish and chicken. Which of the following would not alter the position of a budget line drawn with fish on the horizontal axis and chicken on the vertical axis?