Question :
53) When the relative price of computers falls, consumption possibilities : 1241151
53) When the relative price of computers falls, consumption possibilities ________ because ________.
A) will not change; people don’t need to buy multiple computers at one time
B) will not change; changes in technology will always lower computer prices
C) will change; consumers respond to lower relative prices by buying larger quantities of the good
D) will change; greater quantities of computers will be produced
E) None of the above answers is correct.
54) On a budget line, sub sandwiches are measured on the x-axis and sodas are measured on the y-axis. The price of a sub is $5 and the price of a soda is $1. If the price of a sub decreases to $4, the relative price of ________.
A) sub sandwiches falls and the budget line becomes less steep
B) sub sandwiches rises and the budget line becomes flatter
C) sodas falls and the budget line becomes flatter
D) both sub sandwiches and soda falls and the budget line shifts outward
E) sodas does not change and neither does the budget line
55) If the price of a soda is $1 and the price of a sub sandwich is $5, the relative price of a sub sandwich is ________ because ________.
A) 5 sodas; it costs 5 sodas to buy a sub
B) $5; 5 sodas will cost $5
C) 20 cents; $1 divided by $5 is 20 cents
D) 1/5; a sub costs 1/5 of a soda
E) None of the above answers is correct.
56) Over the past 10 years, the relative price of gasoline has ________. As a result, ________.
A) increased; consumers have found substitutes for gasoline and bought less gasoline
B) increased; the consumption possibilities for gasoline have increased
C) decreased; consumers have had an incentive to buy more gasoline
D) decreased; the relative prices of other goods have increased
E) not changed; the relative prices of other goods have fallen
57) A budget line shows the
A) limits to production possibilities.
B) limits to production opportunities.
C) slope of the demand curve.
D) limits to consumption possibilities.
E) way the demand curve shifts if the consumer’s budget changes.
58) A budget line
A) represents combinations of goods a consumer desires.
B) marks the boundary between what a consumer can afford and cannot afford.
C) has a positive slope.
D) is the same as the production possibilities frontier.
E) is the same as a demand curve.
59) Linda has $10 a month to spend on ice cream cones and chocolate bars. If the price of an ice cream cone is $2 a cone and the price of a chocolate bar is $1 a bar, which of the following is a point on Linda’s budget line?
A) 4 cones and 0 chocolate bars
B) 1 cone and 8 chocolate bars
C) 3 cones and 1 chocolate bar
D) 5 cones and 10 chocolate bars
E) 0 cones and 0 chocolate bars
60) If a budget line rotates inward and becomes steeper, then the
A) consumer’s budget decreased.
B) consumer’s budget increased.
C) price of one of the goods decreased.
D) price of one of the goods increased.
E) price of both of the goods must have decreased.
61) If the budget line rotates inward and becomes steeper, there is a
A) higher opportunity cost of the good measured on the x-axis.
B) lower opportunity cost of the good measured on the x-axis.
C) larger budget.
D) higher price for the good measured on the y-axis.
E) lower price for the good measured on the x-axis.
62) A relative price is the
A) price of a substitute.
B) price of a related good.
C) price of one good divided by the price of another.
D) absolute price of a good.
E) price of one good multiplied by the price of another.
63) If a consumer’s budget increases, the budget line
A) rotates outward and its slope changes.
B) rotates inward and its slope changes.
C) shifts outward and its slope does not change.
D) shifts inward and its slope does not change.
E) does not change.
64) Reb buys fishing lures and steaks. If his budget increases, the maximum number of fishing lures he can purchase ________ and the maximum number of steaks he can purchase ________.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) does not change; does not change
