Question : 13.1   Consumption Possibilities 1) A budget line shows the A) quantities : 1241111

 

 

13.1   Consumption Possibilities

 

1) A budget line shows the

A) quantities of goods a buyer can purchase with given income and prices.

B) relationship between price and quantity demanded.

C) total utility a consumer realizes from consuming different quantities of a good.

D) quantities of consumption that maximizes marginal utility.

E) the prices of the two goods a buyer can purchase.

 

2) A consumption point inside the budget line

A) is unaffordable.

B) is possible to afford but has some unspent income.

C) shows that the consumer has chosen to spend all of his or her income on both products.

D) shows that the consumer spends income on only one of the goods.

E) is affordable and, because it is inside the budget line, means that all the person’s budget has been spent.

 

3) Which of the following statements is correct?

A) Consumers have the ability to buy everything they desire.

B) A consumer’s budget line shows the limits to what a consumer can buy.

C) A consumer’s budget line shows the goods with the highest marginal utilities.

D) Rich consumers are unaffected by prices.

E) A budget line changes only if the person’s budget changes.

4) Which of the following is shown by a budget line?

i.The combinations of goods a person can afford

ii.The production possibilities for a person

iii.The combinations of goods a person cannot afford

A) i only

B) i and ii

C) i and iii

D) ii and iii

E) ii only

 

5) The budget line is the boundary between

A) preferred and nonpreferred consumption combinations.

B) affordable and unaffordable consumption combinations.

C) goods and bads.

D) income and expenditure.

E) income and consumption.

 

6) The point where the budget line intersects the y-axis represents a combination of goods that contains

A) some of both goods.

B) only the good measured on the y-axis.

C) only the good measured on the x-axis.

D) no goods.

E) the quantity of the good measured on the y-axis that has zero marginal utility.

7) A budget line

A) shows the limits to what can be consumed.

B) has a slope equal to a relative price.

C) rotates or shifts only when the consumer’s budget changes.

D) Answers B and C are both correct.

E) Answers A and B are both correct.

 

8) Which of the following statements is correct?

A) The slope of the budget line shows the opportunity cost of the good measured along the x-axis.

B) Along the budget line, consuming more of one good implies consuming more of the other.

C) The slope of the budget line shows there is no tradeoff between the two goods because the consumer can buy each of them.

D) If the consumer’s budget increases, the budget line shifts leftward and its slope does not change.

E) None of the above answers is correct.

 

9) In order to draw Lucky’s budget line, we need to know

A) only Lucky’s budget.

B) only the prices of the goods Lucky consumes.

C) both Lucky’s budget and the prices of the goods Lucky consumes.

D) Lucky’s budget, the prices of the goods lucky consumes, and the utilities of the goods Lucky does not consume.

E) the utilities of the goods Lucky consumes.

10) Katie has $15. She likes M&M candies and Hershey’s white chocolate bars. M&M candies are $1.50 a pack and (the large) Hershey bars are $3.00 each. Katie can choose to buy

A) 4 Hershey bars and 2 packs of M&Ms.

B) 2 Hershey bars and 6 packs of M&Ms.

C) 5 Hershey bars and 10 packs of M&Ms.

D) Answers A and B are correct.

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