11)What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and Px = $10, Py = $20, X = 0, and M = 400?

10

20

5

0

12)A price increase causes a consumer's "real" income to:

increase.

decrease.

remain unchanged.

decrease or increase depending on the size of the price change.

13)If the price of good X increases, what will happen to the budget line?

It will have a parallel shift inward.

It will have a parallel shift outward.

It will become steeper.

It will become flatter.

14)The income effect isolates the change in the consumption of a good caused by the change in:

"real" income.

the relative prices of two goods.

consumer preferences.

None of the statements is correct.

15)If the price of a good Y falls, then the marginal rate of substitution between X and Y:

increases.

decreases.

remains the same.

depends on whether X and Y are normal or inferior goods, and we cannot tell without that information.

16)Suppose the utility function for a firm manager is U = + bQ, where Q is output, is profit, and b is a negative constant. How would the firm's output compare with what it would be if the manager's objective was to maximize profit?

It would be greater than the profit-maximizing output.

It would be less than the profit-maximizing output.

It would be the same as the profit-maximizing output.

None of the statements is correct.

17)If the slope of the budget line is steeper than the slope of the indifference curve, and X is on the horizontal axis:

the consumer is willing to give up more of good X to get an additional unit of good Y than is necessary under the current market prices.

MRS > PX/PY.

MRS = -PX/PY.

the consumer is willing to give up more of good Y to get an additional unit of good X than is necessary under the current market prices.

18)If the price of a good falls, then the equilibrium consumption of that good:

increases if it is an inferior good.

decreases if it is a normal good.

remains the same.

None of the statements is correct.

19)Kate's money income is $350, the price of X is $4, and the price of Y is $6. Given these prices and income, Kate buys 50 units of X and 25 units of Y. Call this combination of X and Y bundle J. At bundle J, Kate's MRS is 3. At bundle J, if Kate increases consumption of Y by 1 unit, how many units of X can she give up and still reach the same level of utility?

1

1/3

3

2/3

20)Ann's money income is $250, the price of X is $3, and the price of Y is $2. Given these prices and income, Ann buys 60 units of X and 35 units of Y. Call this combination of X and Y bundle J. At bundle J Ann's MRS is 2. Given these prices and income, what is Ann's equilibrium consumption of X?

X < 60

X = 60

X > 60