Question : 101) Given a particular consumer’s indifference map, the further the : 1384191

101) Given a particular consumer’s indifference map, the further the indifference curve is from the origin

A) the lower the marginal rate of substitution.

B) the higher the marginal rate of substitution.

C) the lower the level of satisfaction.

D) the higher the level of satisfaction.

E) the more goods are included.

102) The marginal rate of substitution

A) always has a positive algebraic value.

B) is constant as one moves along a particular indifference curve.

C) is the amount of one good the consumer is willing to give up in exchange for another so as to keep total satisfaction unchanged.

D) is the amount of one good the consumer is willing to give up in exchange for another so as to keep total expenditure unchanged.

E) is equal to the price ratio on the budget line.

103) The marginal rate of substitution measures the tradeoff between the

A) prices of two goods along a budget line.

B) different values that two consumers place on a good.

C) amount of one good the consumer is willing to give up in exchange for another good along an indifference curve.

D) different indifference curves.

E) amount of one good the consumer is willing to purchase and its own price.

104) Suppose Arun consumes only 2 goods — books and CDs — and has a set of downward sloping indifference curves.  As Arun moves from one point to another on a particular indifference curve,

A) the combination of books and CDs will vary, but the level of utility remains constant.

B) the combination of books and CDs that Arun prefers will remain constant, but the level of satisfaction will vary.

C) the combination of books and CDs and Arun’s income level will remain constant.

D) Arun’s level of satisfaction will vary as the combinations of books and CDs varies.

E) Arun is consuming the same combination of goods, but with varying levels of income.

105) Indifference theory is based on the assumption that

A) consumers are not able to rank consumption bundles in order of preference.

B) consumers can always say which of two consumption bundles they prefer without having to say by how much they prefer it.

C) the consumer has equated the marginal utilities of all products, and is therefore indifferent between consumption bundles.

D) the consumer is able to quantify the difference in total utility received from two different consumption bundles.

E) the consumer receives the same utility and is therefore indifferent between any two consumption bundles.

106) If money income is reduced by half, and the prices of all goods consumed by the household are reduced by half, the household’s budget line will

A) not change.

B) shift inward.

C) shift outward.

D) become steeper.

E) become flatter.

107) An equal proportional increase in money income and all money prices will

A) shift the budget line to the left parallel to the original budget line.

B) shift the budget line to the right parallel to the original budget line.

C) leave the position of the budget line unchanged.

D) rotate the budget line inward from the vertical axis.

E) rotate the budget line inward from the horizontal axis.

108) Refer to Figure 6-8. The movement of the budget line from ab to ac could be caused by

A) an increase in money income.

B) an increase in the price of food.

C) an increase in the price of housing.

D) a decrease in the price of food.

E) a decrease in the price of housing.

109) Refer to Figure 6-8. The movement of the budget line from ab to db could be caused by

A) a decrease in money income.

B) an increase in the price of housing.

C) a decrease in the price of housing.

D) an increase in the price of food.

E) a decrease in the price of food.

110) Refer to Figure 6-8. The movement of the budget line from ab to ef could be caused by

A) a decrease in money income.

B) a decrease in the price of either food or housing.

C) an equal percentage decrease in the price of both food and housing.

D) an equal percentage increase in the price of both food and housing.

E) an increase in the price of either food or housing.