Question :
111) A parallel shift in the consumer’s budget line must : 1384192
111) A parallel shift in the consumer’s budget line must indicate a change in
A) at least one money price.
B) money income.
C) real income.
D) tastes.
E) both prices.
112) In indifference curve analysis, a point to the left of the consumer’s budget line
A) indicates consumption spending beyond current income.
B) implies the household is paying above-market prices for the goods in question.
C) implies the household is paying below-market prices for the goods in question.
D) implies that the household is not spending all of its income on the goods in question.
E) shows a combination of goods that are beyond the income of the household.
113) Assume the quantity of good X is measured on the horizontal axis and the quantity of good Y on the vertical axis. Initial prices are = $5 and = $10. The consumer’s income is $100. If increases to $20, then
A) the entire budget line shifts parallel to the left.
B) the budget line will rotate to the left, slope remaining constant.
C) the budget line will rotate to the left with the slope changing from 1/2 to 1/4 (in absolute values).
D) the entire budget line shifts parallel to the right.
E) the budget line will rotate to the right with the slope changing from 1/4 to 1/2 (in absolute values).
114) Suppose a consumer can purchase only two goods, pasta and cheese. Let the quantity of pasta be measured on the vertical axis and the quantity of cheese be measured on the horizontal axis. If the price of pasta falls, with no change in the price of cheese or in the consumer’s money income, then the budget line for the consumer will rotate
A) toward the origin and become flatter.
B) toward the origin and become steeper.
C) away from the origin and become flatter.
D) away from the origin and become steeper.
E) outward parallel to the existing budget line.
115) Any consumption point that is on the budget line
A) indicates consumption spending beyond current income.
B) implies the household is paying above-market prices for the goods in question.
C) implies the household is paying below-market prices for the goods in question.
D) implies that the household is not spending all of its income on the goods in question.
E) implies that the household is spending all of its income on the goods in question.
116) Suppose a utility-maximizing person consumes only two goods, hamburgers and milkshakes. Suppose the price of milkshakes rises and all other variables remain constant. As a result, this person will certainly
A) purchase more milkshakes and fewer hamburgers.
B) reduce his/her consumption of both milkshakes and hamburgers.
C) consume more hamburgers and the same amount of milkshakes.
D) not increase his consumption of both milkshakes and hamburgers.
E) increase his/her consumption of milkshakes.
117) When a consumer’s marginal rate of substitution between X and Y is equal to the ratio of prices for X and Y, and when the consumer is spending all available income, then
A) the budget line is tangent to an indifference curve.
B) the consumer is not maximizing his utility.
C) a higher indifference curve can be reached given the existing budget line.
D) the budget line is tangent to the indifference curve at all quantities of X and Y.
E) all budget lines are tangent to all indifference curves.
118) In indifference curve analysis, the consumer’s utility-maximizing point is where
A) each indifference curve has the same slope as the relevant budget line.
B) the indifference curve farthest from the origin intersects with the budget line that is farthest from the origin.
C) the consumer’s marginal utility curve is tangent to the relevant budget line.
D) one indifference curve is tangent to the relevant budget line.
E) the price-consumption line is tangent to the budget line.
119) Refer to Figure 6-9. In part (i), the consumer is able to move from point A to point B because of
A) a decrease in the price of milk.
B) a decrease in the price of bread.
C) a decrease in money income.
D) an increase in real income.
E) a decrease in the price of one good and an increase in money income.
120) Refer to Figure 6-9. In part (ii), the consumer’s move from point Z to point Y is caused by
A) a change in the consumer’s preferences towards milk.
B) an increase in the price of milk.
C) an increase in the price of bread.
D) an decrease in the price of bread.
E) a decrease in money income.
