51) In the indifference curve/budget line diagram, consumers reach higher indifference curves when
A) their budget decreases.
B) the price of only the good measured along the y-axis increases.
C) the price of only the good measured along the x-axis increases.
D) the price of either good falls.
E) the price of either good rises.
52) In an indifference curve/budget line diagram, generally when the price of a good increases, the consumer purchases
A) less of the good and moves to a lower indifference curve.
B) less of the good and moves to a higher indifference curve.
C) more of the good and moves to a higher indifference curve.
D) more of the good and moves to a lower indifference curve.
E) the same amount of the good and moves to a higher indifference curve.
53) Gertrude has a $15 budget to spend on soda and crackers. Soda costs $1 per bottle and crackers cost 50¢ each. If the price of soda increases to $2 per bottle, the ________ rotates inward and there is a movement along the ________.
A) budget line; demand curve for crackers
B) demand curve; indifference curve for crackers
C) budget line; demand curve for soda
D) demand curve; indifference curve for soda
E) indifference curves; demand curve for soda
54) Gertrude has a $15 budget to spend on soda and crackers. Soda costs $1 per bottle and crackers cost 50¢ each. The quantity of soda is measured on the vertical axis. If the price of soda increases to $2 per bottle and the price of crackers increase to $1 each, the
A) indifference curves shift inward.
B) indifference curves shift outward.
C) budget line shifts inward.
D) budget line shifts outward.
E) demand curve for soda shifts leftward.
55) Moving down along an indifference curve,
A) the price of the good measured on the vertical axis decreases.
B) total utility decreases.
C) the marginal rate of substitution for the good on the horizontal axis decreases.
D) the slope of the budget line decreases.
E) the consumer increasingly prefers the new consumption points to the old consumption points.
56) Suppose you have one point on a demand curve. To plot another point for this demand curve using a group of indifference curves,
A) transfer all points from the indifference curve to the corresponding demand curve.
B) horizontally sum the indifference curves.
C) change the price of a good, rotate the budget line, and find the new best affordable point. This new price and quantity is another point on the demand curve.
D) calculate the marginal rates of substitution from the indifference curve and transfer these values to the demand curve.
E) transfer the budget line so that it becomes the demand curve.
57) To derive a demand curve using the indifference curve model, you must change the
A) consumer’s preferences.
B) consumer’s income.
C) price of one good, holding the price of the other good and income constant.
D) price of both goods simultaneously but by different amounts.
E) price of both goods simultaneously but by the same percentage.
58) Points on a demand curve
A) reflect best affordable points along indifference curves.
B) show diminishing marginal rate of substitution.
C) show increasing marginal rate of substitution.
D) show combinations of goods among which a consumer is indifferent.
E) show all the combinations of affordable goods the consumer can buy.
59) In the above figure, I is an indifference curve. Moving from point a to point b,
A) the marginal rate of substitution for books decreases.
B) the budget line rotates inward.
C) the budget line rotates outward.
D) there is diminishing total utility.
E) the marginal rate of substitution for books increases.
60) The above figure shows one of Cheri’s indifference curves. Suppose point a represents the best affordable point for Cheri. Cheri’s best affordable point could move to point b if
A) marginal utility increases.
B) total utility increases.
C) the price of a CD falls and the price of a book rises.
D) the price of a CD rises and the price of a book falls.
E) Cheri’s budget increases.
61) Consider an indifference curve for sodas and pizza, drawn in a figure with sodas measured along the horizontal axis. Moving downward along the indifference curve, the
A) marginal utility per dollar for sodas must increase.
B) marginal utility per dollar for pizza must increase.
C) consumer remains indifferent among the different combinations of soda and pizza.
D) the level of total utility must change.
E) marginal rate of substitution is constant.
62) ________ leads to a decrease in marginal utility per dollar for soda.
A) Increasing marginal utility
B) The diminishing marginal rate of substitution as fewer sodas are consumed
C) An outward shift in the indifference curves for soda
D) An increase in the price of soda
E) A fall in the price of soda
63) Suppose Lizzie consumes soda and pizza. If the last bottle of soda she drinks provides 100 units of utility per dollar while the last slice of pizza she eats provides 300 units of utility per dollar,
A) the demand curve for soda must have shifted outward.
B) the demand curve for pizza must have shifted inward.
C) Lizzie should buy more pizza and less soda to maximize her utility.
D) the indifference curve for soda and pizza must have rotated inward.
E) the marginal rate of substitution between soda and pizza equals 3.
13.6 Appendix Figures
The figure above shows three of a consumer’s indifference curves.
1) Which point is most preferred?
A) Point C only
B) Point J only
C) Point G only
D) Points C and G are tied for the most preferred.
E) More information is needed to determine which point is most preferred.
2) Which of the following are true?
i.Points C and G are equally preferred because they lie on the same indifference curve.
ii.Points C and J are equally preferred because on them the consumption of chewing gum is equal.
iii.Points G and J are equally preferred because on them the consumption of water is equal.
A) i only
B) ii only
C) iii only
D) ii and iii
E) i, ii, and iii
The figure above shows one of a consumer’s indifference curves.
3) The marginal rate of substitution (MRS) at point C equals
A) 4.
B) 8.
C) 2.
D) 1/2.
E) More information is needed to calculate the MRS.
4) The marginal rate of substitution (MRS) at point G equals
A) 4.
B) 8.
C) 2.
D) 1/2.
E) More information is needed to calculate the MRS.
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