Question : 31) Along an indifference curve, if the marginal rate of : 1241123

31) Along an indifference curve, if the marginal rate of substitution is 3, then the consumer is willing to

A) give up 1 unit of the good measured along the y-axis for 3 units of the good measured along the x-axis.

B) give up 3 units of the good measured along the y-axis for 1 unit of the good measured along the x-axis.

C) pay $3 for one unit of the good measured along the y-axis.

D) pay $3 for one unit of the good measured along the x-axis.

E) give up 3 units of the good measured along the y-axis for 1 unit of income, that is, $1 of income.

32) The marginal rate of substitution for the good on the horizontal axis is

A) the consumer surplus.

B) the same as the consumer’s budget line.

C) equal to the magnitude of the slope of the indifference curve.

D) equal to the magnitude of the slope of the consumer surplus curve.

E) equal to 1.0 if the indifference curves are linear.

33) In an indifference curve/budget line diagram, a consumer’s equilibrium consumption combination will occur

A) always inside the budget line.

B) always outside the budget line.

C) always on the budget line.

D) sometimes on and sometimes inside the budget line, depending on the indifference curves.

E) at the origin.

34) Which of the following is true if Clarice is at her consumer equilibrium?

i.Clarice is on her budget line.

ii.Clarice is on her highest attainable indifference curve.

iii.Clarice is dividing her budget equally across all goods.

A) i only

B) i and ii

C) i and iii

D) ii and iii

E) iii only

35) The indifference curve/budget line diagram concludes that Jim is definitely in equilibrium when he is

A) spending all his budget.

B) saving some of his budget.

C) consuming the combination of goods and services that is affordable and on the highest attainable indifference curve.

D) consuming a combination of goods and services that is on an indifference curve.

E) None of the above answers is correct.

36) A point where the budget line is just touching an indifference curve at one point is

A) the least affordable point.

B) the best affordable point.

C) on the lowest attainable indifference curve.

D) Both answers B and C are correct.

E) Both answers A and C are correct.

37) In the indifference curve/budget line framework, at the consumer equilibrium, the consumer

A) is on the budget line.

B) is on the highest attainable indifference curve.

C) has a marginal rate of substitution equal to the relative price of the goods.

D) Only answers A and B are correct.

E) Answers A, B, and C are correct.

38) In an indifference curve/budget line diagram, at the consumer equilibrium the slope of the budget line

A) equals the slope of the indifference curve.

B) is greater than the slope of the indifference curve.

C) is less than the slope of the indifference curve.

D) may be greater than, equal to, or less than the slope of the indifference curve.

E) has nothing to do with the equilibrium.

39) At the best affordable point,

A) the marginal rate of substitution reaches its minimum value.

B) relative prices reach their minimum value.

C) the marginal rate of substitution equals the relative price.

D) the marginal rate of substitution equals real income.

E) the marginal rate of substitution reaches its maximum value.

40) At the point where the budget line is just touching an indifference curve at one point,

A) the slope of the budget line is equal to the slope of the indifference curve.

B) the marginal rate of substitution equals the relative price.

C) the consumer can change his or her consumption and can move to a higher indifference curve.

D) Both answers A and B are correct.

E) Both answers B and C are correct.