Question 1

Figure 21-4
In each case, the budget constraint moves from BC-1 to BC-2.    
-Refer to Figure 21-4. Which of the graphs in the figure could reflect a decrease in income?
A)graph a
B)graph b
C)graph d
D)None of the above is correct.

Accepted Answer

The answer of Figure 21-4
In each case, the budget constraint...

Question 2

Figure 21-5
(a)
(b)  
-Refer to Figure 21-5. In graph (b), if income is equal to $420, then the price of good X is
A)$1.
B)$3.
C)$10.
D)$30.

Accepted Answer

In graph (b), when income is $420, the budget line intersects the X-axis at point P with quantity of good X equal to 42. At point P, all of the income is spent on good X, so the price of good X is equal to the slope of the budget line, which is (420/42) = 10. Therefore, the answer is C.

Question 3

Figure 21-2 The downward-sloping line on the figure represents a consumer's budget
constraint. 
-Refer to Figure 21-2. Which of the following statements is correct?
A)Points W, X, and Y all cost the consumer the same amount of money.
B)Point V is unaffordable for the consumer given his budget constraint.
C)Point Z costs less than point V.
D)Points W, X, and Y give the consumer the same level of satisfaction.

Accepted Answer

The answer of Figure 21-2 The downward-sloping line on the...

Question 4

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (b), what is the price of good X relative to the price of good Y (i.e., P_x/P_y)? A)1/3 B)1 C)3 D)10

Accepted Answer

In graph (b), P_x/P_y = (60-40)/(20-60) = 1/3. Therefore, the price of good X is one-third the price of good Y. The best choice cannot be determined from the information given.

Question 5

Figure 21-3
In each case, the budget constraint moves from BC-1 to BC-2.    
-Refer to Figure 21-3. Which of the graphs in the figure reflects an increase in the price of good X only?
A)graph a
B)graph b
C)graph c
D)graph d

Accepted Answer

The answer of Figure 21-3
In each case, the budget constraint...

Question 6

Figure 21-3
In each case, the budget constraint moves from BC-1 to BC-2.    
-Refer to Figure 21-3. Which of the graphs in the figure could reflect a simultaneous decrease in the price of good X and increase in the price of good Y?
(i)graph a
(ii)graph b
(iii)graph c
(iv)graph d
A)(ii) only
B)(iii) only
C)(ii) or (iv) only
D)None of the above is correct.

Accepted Answer

The answer of Figure 21-3
In each case, the budget constraint...

Question 7

Figure 21-3
In each case, the budget constraint moves from BC-1 to BC-2.    
-Refer to Figure 21-3. Which of the graphs in the figure could reflect a simultaneous decrease in the prices of both goods?
(i)graph a
(ii)graph b
(iii)graph c
(iv)graph d
A)(i) only
B)(iv) only
C)(ii) or (iii) only
D)None of the above is correct.

Accepted Answer

The answer of Figure 21-3
In each case, the budget constraint...

Question 8

Figure 21-3
In each case, the budget constraint moves from BC-1 to BC-2.    
-Refer to Figure 21-3. Which of the graphs in the figure reflects a decrease in the price of good X only?
A)graph a
B)graph b
C)graph c
D)graph d

Accepted Answer

In graph b, the slope of the budget constraint becomes flatter, indicating an increase in purchasing power. This can be caused by a decrease in the price of good X, which is the only factor that affects the slope of the budget constraint. In graphs a, c, and d, the movement from BC-1 to BC-2 is caused by a change in income or price of both goods X and Y, making it impossible to isolate the effect of a change in the price of good X.

Question 9

Figure 21-3
In each case, the budget constraint moves from BC-1 to BC-2.    
-Refer to Figure 21-3. Which of the graphs in the figure reflects an increase in the price of good Y only?
A)graph a
B)graph b
C)graph c
D)graph d

Accepted Answer

In graph c, the slope of the budget constraint becomes steeper, indicating a decrease in the quantity of good Y that can be purchased with a given income. This is consistent with an increase in the price of good Y. The other graphs do not show a change in the slope of the budget constraint, indicating that the price of good Y has not changed.

Question 10

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a), what is the price of good Y relative to the price of good X (i.e., P_y/P_x)? A)1/4 B)1/3 C)3 D)4

Accepted Answer

The answer of Figure 21-5
(a)
(b)  
-Refer to Figure 21-5....

Question 11

Figure 21-5
(a)
(b)  
-Refer to Figure 21-5. In graph (b), if income is equal to $420, then the price of good Y is
A)$1.
B)$3.
C)$10.
D)$30.

Accepted Answer

According to the graph, if income is $420, the budget line intersects the Y-axis at point (0,14), which means if all income is spent on Y, the maximum quantity of Y that can be purchased is 14. Since the budget line is tangent to the indifference curve for Y at point A, this represents the consumer's optimal consumption choice. At point A, the quantity of Y consumed is approximately 7, which corresponds to a price of $30 (the point where the budget line intersects the Y-axis divided by the quantity consumed). Therefore, the answer is D, $30.

Question 12

Figure 21-5
(a)
(b)  
-Refer to Figure 21-5. In graph (a), if income is equal to $200, then the price of good Y is
A)$3.
B)$5.
C)$7.
D)$10.

Accepted Answer

When income is $200, the budget line intersects the Y-axis at $40. From there, follow the budget line to the point where it intersects the Y-axis (or plug in the numbers to the budget constraint equation). This point is ($80/$8, $40/$4) = (10,10), so the price of good Y is $5. Therefore, the answer is B.

Question 13

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a), what is the price of good X relative to the price of good Y (i.e., P_X/P_Y)? A)1/4 B)1/3 C)3 D)4

Accepted Answer

The answer of Figure 21-5
(a)
(b)  
-Refer to Figure 21-5....

Question 14

Figure 21-4
In each case, the budget constraint moves from BC-1 to BC-2.    
-Refer to Figure 21-4. Which of the graphs in the figure could reflect a simultaneous increase in the price of good X and decrease in the price of good Y?
A)graph a
B)graph b
C)graph c
D)graph d

Accepted Answer

The answer of Figure 21-4
In each case, the budget constraint...

Question 15

Figure 21-5
(a)
(b)  
-Refer to Figure 21-5. In graph (a), if income is equal to $200, then the price of good X is
A)$12.
B)$16.
C)$20.
D)$24.

Accepted Answer

In graph (a), the point where the budget line (purple) intersects with the indifference curve (green) is the optimal consumption point. At an income of $200, the budget line intersects with the highest possible indifference curve at a point where the consumer is consuming 10 units of good X and 5 units of good Y. From this point, we can see that the price of good X must be $20 (since 10 x $20 = $200). Therefore, the answer is C.

Question 16

Figure 21-5
(a)
(b)  
-Refer to Figure 21-5. Assume that a consumer faces the budget constraint shown in graph (a) in January and the budget constraint shown in graph (b) in February. If the consumer's income has remained constant, then what has happened to prices between January and February?
A)The price of X has fallen, but there could not have been a change in the price of Y.
B)The price of Y has fallen, but there could not have been a change in the price of X.
C)The price of X has fallen, and the price of Y has risen.
D)The price of Y has fallen, and the price of X has risen.

Accepted Answer

The answer of Figure 21-5
(a)
(b)  
-Refer to Figure 21-5....

Question 17

Figure 21-3
In each case, the budget constraint moves from BC-1 to BC-2.    
-Refer to Figure 21-3. Which of the graphs in the figure reflects a decrease in the price of good Y only?
A)graph a
B)graph b
C)graph c
D)graph d

Accepted Answer

The answer of Figure 21-3
In each case, the budget constraint...

Question 18

Figure 21-2 The downward-sloping line on the figure represents a consumer's budget
constraint. 
-Refer to Figure 21-2. Which of the following statements is not necessarily correct?
A)Points W, X, and Y all cost the consumer the same amount of money.
B)Point Z is unaffordable for the consumer given his budget constraint.
C)Point V costs less than point Z.
D)Points W, X, and Y give the consumer the same level of satisfaction.

Accepted Answer

The answer of Figure 21-2 The downward-sloping line on the...

Question 19

Figure 21-4
In each case, the budget constraint moves from BC-1 to BC-2.    
-Refer to Figure 21-4. Which of the graphs in the figure could reflect an increase in income?
A)graph a
B)graph b
C)graph d
D)None of the above is correct.

Accepted Answer

In graph b, the initial budget constraint (BC-1) has shifted outward to BC-2, representing an increase in income. In graphs a and d, the budget constraint has shifted inward, indicating a decrease in income.

Question 20

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (b), what is the price of good Y relative to the price of good X (i.e., P_Y/P_X)? A)1/3 B)1 C)3 D)10

Accepted Answer

In graph (b), the slope of the budget line (P_Y/P_X) is equal to the ratio of the prices of two goods (PY/PX) and is equal to 3. Therefore, the price of good Y relative to the price of good X is 3. This means that the consumer should consume more of good Y and less of good X to maximize utility, as indicated by point U2 in the graph. So, the answer is choice C.

Quiz 21: The Theory of Consumer Choice

Figure 21-4 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-4. Which of the graphs in the figure could reflect a decrease in income?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (b) , if income is equal to $420, then the price of good X is

Figure 21-2 The downward-sloping line on the figure represents a consumer's budget constraint. -Refer to Figure 21-2. Which of the following statements is correct?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (b) , what is the price of good X relative to the price of good Y (i.e., P_x/P_y) ?

Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure reflects an increase in the price of good X only?

Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure could reflect a simultaneous decrease in the price of good X and increase in the price of good Y? (i) graph a (ii) graph b (iii) graph c (iv) graph d

Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure could reflect a simultaneous decrease in the prices of both goods? (i) graph a (ii) graph b (iii) graph c (iv) graph d

Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure reflects a decrease in the price of good X only?

Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure reflects an increase in the price of good Y only?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a) , what is the price of good Y relative to the price of good X (i.e., P_y/P_x) ?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (b) , if income is equal to $420, then the price of good Y is

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a) , if income is equal to $200, then the price of good Y is

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a) , what is the price of good X relative to the price of good Y (i.e., P_X/P_Y) ?

Figure 21-4 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-4. Which of the graphs in the figure could reflect a simultaneous increase in the price of good X and decrease in the price of good Y?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a) , if income is equal to $200, then the price of good X is

Figure 21-5 (a) (b) -Refer to Figure 21-5. Assume that a consumer faces the budget constraint shown in graph (a) in January and the budget constraint shown in graph (b) in February. If the consumer's income has remained constant, then what has happened to prices between January and February?

Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure reflects a decrease in the price of good Y only?

Figure 21-2 The downward-sloping line on the figure represents a consumer's budget constraint. -Refer to Figure 21-2. Which of the following statements is not necessarily correct?

Figure 21-4 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-4. Which of the graphs in the figure could reflect an increase in income?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (b) , what is the price of good Y relative to the price of good X (i.e., P_Y/P_X) ?

Quiz 21: The Theory of Consumer Choice

Figure 21-4 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-4. Which of the graphs in the figure could reflect a decrease in income?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (b) , if income is equal to $420, then the price of good X is

Figure 21-2 The downward-sloping line on the figure represents a consumer's budget constraint. -Refer to Figure 21-2. Which of the following statements is correct?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (b) , what is the price of good X relative to the price of good Y (i.e., Px/Py) ?

Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure reflects an increase in the price of good X only?

Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure could reflect a simultaneous decrease in the price of good X and increase in the price of good Y? (i) graph a (ii) graph b (iii) graph c (iv) graph d

Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure could reflect a simultaneous decrease in the prices of both goods? (i) graph a (ii) graph b (iii) graph c (iv) graph d

Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure reflects a decrease in the price of good X only?

Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure reflects an increase in the price of good Y only?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a) , what is the price of good Y relative to the price of good X (i.e., Py/Px) ?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (b) , if income is equal to $420, then the price of good Y is

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a) , if income is equal to $200, then the price of good Y is

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a) , what is the price of good X relative to the price of good Y (i.e., PX/PY) ?

Figure 21-4 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-4. Which of the graphs in the figure could reflect a simultaneous increase in the price of good X and decrease in the price of good Y?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a) , if income is equal to $200, then the price of good X is

Figure 21-5 (a) (b) -Refer to Figure 21-5. Assume that a consumer faces the budget constraint shown in graph (a) in January and the budget constraint shown in graph (b) in February. If the consumer's income has remained constant, then what has happened to prices between January and February?

Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure reflects a decrease in the price of good Y only?

Figure 21-2 The downward-sloping line on the figure represents a consumer's budget constraint. -Refer to Figure 21-2. Which of the following statements is not necessarily correct?

Figure 21-4 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-4. Which of the graphs in the figure could reflect an increase in income?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (b) , what is the price of good Y relative to the price of good X (i.e., PY/PX) ?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (b) , what is the price of good X relative to the price of good Y (i.e., P_x/P_y) ?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a) , what is the price of good Y relative to the price of good X (i.e., P_y/P_x) ?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a) , what is the price of good X relative to the price of good Y (i.e., P_X/P_Y) ?

Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (b) , what is the price of good Y relative to the price of good X (i.e., P_Y/P_X) ?