Questions on Consumer's Budget
Ch.21
Figure 21-1
1. Refer to Figure 21-1. In graph (a), what is the price of good Y relative to good X (i.e., Py/Px)?
a.
1/3
b.
1/4
c.
3
d.
4
ANS: B
2. Refer to Figure 21-1. Assume that a consumer faces both budget constraints in graph (a) and graph (b) on two different occasions. If her income has remained constant, what has happened to prices?
a.
The price of X in graph (a) is higher than the price of X in graph (b).
b.
The price of Y in graph (a) is higher than the price of Y in graph (b).
c.
The prices of both X and Y are lower in graph (a).
d.
None of the above is true.
ANS: A 3. Refer to Figure 21-1. 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, 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.
ANS: C
4. A family on a trip budgets $800 for meals and hotel accommodations. Suppose the price of a meal is $40. In addition, suppose the family could afford a total of 8 nights in a hotel if they don’t buy any meals. How many meals could the family afford if they gave up two nights in the hotel?
a.
1
b.
2
c.
5
d.
8
ANS: C
5. An increase in a consumer's income
a.
increases the slope of the consumer's budget constraint.
b.
has no effect on the slope of the consumer's budget constraint.
c.
decreases the slope of the consumer's budget constraint.
d.
has no effect on the consumer's budget constraint.
ANS: B
6. The following diagram shows one indifference curve representing the preferences for goods X and Y for one consumer.
Figure 21-2
Refer to Figure 21-2.What is the marginal rate of substitution between points A and B?
a.
Figure 21-1
1. Refer to Figure 21-1. In graph (a), what is the price of good Y relative to good X (i.e., Py/Px)?
a.
1/3
b.
1/4
c.
3
d.
4
ANS: B
2. Refer to Figure 21-1. Assume that a consumer faces both budget constraints in graph (a) and graph (b) on two different occasions. If her income has remained constant, what has happened to prices?
a.
The price of X in graph (a) is higher than the price of X in graph (b).
b.
The price of Y in graph (a) is higher than the price of Y in graph (b).
c.
The prices of both X and Y are lower in graph (a).
d.
None of the above is true.
ANS: A 3. Refer to Figure 21-1. 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, 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.
ANS: C
4. A family on a trip budgets $800 for meals and hotel accommodations. Suppose the price of a meal is $40. In addition, suppose the family could afford a total of 8 nights in a hotel if they don’t buy any meals. How many meals could the family afford if they gave up two nights in the hotel?
a.
1
b.
2
c.
5
d.
8
ANS: C
5. An increase in a consumer's income
a.
increases the slope of the consumer's budget constraint.
b.
has no effect on the slope of the consumer's budget constraint.
c.
decreases the slope of the consumer's budget constraint.
d.
has no effect on the consumer's budget constraint.
ANS: B
6. The following diagram shows one indifference curve representing the preferences for goods X and Y for one consumer.
Figure 21-2
Refer to Figure 21-2.What is the marginal rate of substitution between points A and B?
a.