1) If bundles of goods A and B lie on the difference indifference curves, one can assume the individual

Select one:

a.prefers bundle A to bundle B.

b.prefers bundle B to bundle A.

c.enjoys bundle A and B equally.

d.does not prefers both bundle A and bundle B.

e.bundle A contains the same goods as bundle B.

f.none of the above is true.

2)If firms use inputs in fixed proportions, the two inputs are

Select one:

a.perfect complements

b.perfect substitutes

c.substitutes (but not perfect)

d.limited in supply

e.used as substitutes in production

f.complements (but not perfect)

3)A demand curve for goodxhelps understand

select one:

a.how the consumption of goodxvaries as price-consumption curve changes.

b.how the consumption of goodxvaries as the consumption of good changes.

c.how the consumer can choose as many units of goods x and maximize his utility.

d.how the consumption of goodxvaries as the consumer's income changes.

e.how the consumption of good x and y remains constant along the indifference curve

f.how the consumption of goodxvaries as the price of goodxchanges.

4)The income effect is

Select one:

a.the change in the amount of the good consumed as the price of the good changes holding income constant.

b.the change in the amount of the good consumed holding the level of output constant.

c.quite similar to income effect in consumer theory.

d.the change in the amount of the good consumed as the price of the good changes holding utility constant.

e.the change in the amount of the good consumed holding relative prices constant and changing the level of income.

f.the change in the amount of the good consumed holding the level of income constant.

5)Suppose the price ofAis $20 per unit, the price ofBis $10 per unit, and theconsumer's income is $1000 per month.The marginal rate of substitution is

Select one:

a.1000 = 10A + 20B

b.1000 = 20A + 10B

c.20A = 10B

d.1000 = A + B

e.1000 = 10A + B

f.Cannot be determined from above information

Question6

The theory of input choice

Select one:

a.describes how a firm chooses input bundle subject to production objective.

b.describes how a consumer allocates her limited income among available goods and services.

c.describes how a consumer allocates her limited preferences among available income levels.

d.describes how a consumer chooses between different income levels.

e.describes how a consumer chooses between given differences wages in income

8) The X-intercept of the isocost represents

Select one:

a.how much of good Y can be purchased if no good X is purchased and all income is spent.

b.how much of good X can be purchased if no good Y is purchased and all income is spent.

c.how much of capital can be purchased if no labour is purchased and all money is spent.

d.how much of labour can be purchased if no capital is purchased and all money is spent.

e.a and b.

f.b and c.

9) The point of tangency between isocost and isoquant curve represents

Select one:

a.complete satisfaction for the consumer.

b.constrained utility maximization for the consumer.

c.the least he or she can spend.

d.optimal input bundle for the producer.

e.the equivalence of prices the consumer pays.

f.the least he or she can spend.

10) If the wage rate increases, the isocost

Select one:

a.shifts outward in a parallel fashion.

b.shifts inward in a parallel fashion.

c.will not shift because input budget has remained constant.

d.rotates inwards about the X-intercept.

e.rotates outward about the Y-intercept.

f.none of the above are correct.