Question : 41) A consumer in equilibrium when the A) consumer buying any : 1241124

41) A consumer is in equilibrium when the

A) consumer is buying any combination of goods and services on his or her budget line.

B) consumer is buying the combination of goods and services on the budget line and on the highest attainable indifference curve.

C) marginal rate of substitution is as small as possible.

D) marginal rate of substitution is as large as possible.

E) marginal rate of substitution exceeds the relative price of the two goods by as much as possible.

42) Luke enjoys eating tuna sashimi and drinking Pepsi. His consumer equilibrium occurs where his budget line

A) just touches the lowest indifference curve at one point.

B) just touches the highest indifference curve at one point.

C) touches every indifference curve.

D) is below every indifference curve.

E) More information about Luke’s budget is needed to determine his consumer equilibrium.

43) The point where an indifference curve just touches the budget line at one point

A) is the best affordable point.

B) is where the marginal rate of substitution exceeds the relative price by as much as possible.

C) is a point on the consumer’s supply of spending curve.

D) cannot be possible because indifference curves always cross the budget line at two points.

E) None of the above answers is correct.

44) In a budget line/indifference curve diagram, at the consumer’s equilibrium at the best affordable point,

A) any movement upward or downward on the budget line will move the consumer to a less preferred point.

B) any movement to the northeast to higher indifference curves moves the consumer to a less preferred point.

C) the slope of the budget line exceeds the marginal rate of substitution by as much as possible.

D) the budget line has a positive slope and the indifference curve has a negative slope.

E) the budget line has a negative slope and the indifference curve has a positive slope.

45) If a person consumes only two goods, which of the following is NOT necessary for a consumer to be at his or her best affordable point of consumption?

A) The consumer chooses a bundle of goods that lies on his or her budget line.

B) The consumer is on his or her highest attainable indifference curve.

C) The consumer chooses equal amounts of both goods.

D) The marginal rate of substitution between the two goods is equal to the relative price of those two goods.

E) The indifference curve is tangent to the budget line.

46) If a consumer’s marginal rate of substitution is greater than the relative price of the goods, the consumer is

A) at his or her best affordable point.

B) perhaps at his or her best affordable point.

C) not at his or her best affordable point and should move along his or her indifference curve to a higher budget line.

D) not at his or her best affordable point and should move along his or her budget line to a higher indifference curve.

E) More information is needed to determine if the consumer is or is not at his or her best affordable point.

47) At her best affordable point, Kris

i.is on her budget line.

ii.is on the highest attainable indifference curve.

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

A) i only

B) ii only

C) iii only

D) i and ii

E) i, ii, and iii

48) When Bo is at his best affordable consumption point, his marginal rate of substitution is

A) greater than the relative price.

B) equal to the relative price.

C) less than the relative price.

D) equal to one.

E) maximized.

49) A consumer’s demand for tuna can be found from an indifference curve diagram by doing which of the following?

A) observing what happens to the consumption of tuna for different income levels

B) finding where the budget line is tangent to an indifference curve for one price of tuna

C) allowing the price of tuna to change and observing the different best, affordable levels of tuna

D) changing the indifference curves and seeing the changes in the quantity of tuna the consumer demands

E) It is impossible to derive a demand curve from an indifference curve graph.

50) Using Gabriel’s budget line and his indifference curves between horseback riding lessons and baseball lessons, and then changing the prices of each activity holding his income constant, which of the following can be derived?

A) Gabriel’s demand curve for each activity

B) Gabriel’s supply curve for each activity

C) Gabriel’s marginal benefit for each activity

D) Gabriel’s net gain for each activity

E) Both answers A and B are correct.