1.Suppose a cup of coffee at the campus coffee shop is $2. 50 and a cup of hot tea is $1. 25. Suppose

a student's beverage budget is $20 per week. What is the most cups of tea the student could buy?

Select one:

a. 20

b. 16

c. 10

d. 8

2.If an individual has a constant MRS of shoes for sneakers of 3/4 (that is, he or she is always willing

to give up 3 pairs of sneakers to get 4 pairs of shoes) then, if sneakers and shoes are equally costly, he

or she will

Select one:

a. buy only sneakers.

b. buy only shoes.

c. spend his or her income equally on sneakers and shoes.

d. wear sneakers only 3/4 of the time.

3.Suppose a teenager likes both rap music (R) and country music (C) with a set of preferences so

that U = C^1/2R^1/2. Which point (C, R) makes the teen the happiest?

Select one:

a. 9, 16

b. 36, 1

c. 49, 4

d. 100, 0

4.As an individual moves northwest along his or her indifference curve substituting more and more Y

for X, his or her MRS of X for Y for a convex curve

Select one:

a. increases.

b. decreases.

c. stays the same.

d. changes in a way that cannot be determined.

5.Suppose a cup of coffee at the campus coffee shop is $2. 50 and a cup of hot tea is $1. 25. Suppose

a student's beverage budget is $20 per week. What is the market tradeoff between coffee and tea?

Select one:

a. 1 coffee to 1 tea

b. 2 coffee to 1 tea

c. 1 coffee to 2 tea

d. 2 coffee to 2 tea

6.An increase in an individual's income without changing relative prices will

Select one:

a. rotate the budget constraint about the X-axis.

b. shift the indifference curves outward.

c. shift the budget constraint outward in a parallel way.

d. rotate the budget constraint about the Y axis.

7.The X-intercept of the budget constraint 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. total income divided by the price of X.

d. b and c.

8.For an individual who consumes only two goods, X and Y, the opportunity cost of consuming one

unit of X in terms of how much Y must be given up is reflected in

Select one:

a. the individual's marginal rate of consumption.

b. the slope of the individual's budget constraint.

c. the slope of the individual's indifference curve.

d. None of these.

9.If people like their goods in fixed proportions, the two goods are

Select one:

a. perfect substitutes

b. perfect complements

c. complements (but not perfect)

d. substitutes (but not perfect)

10.If a person's indifference curves can be represented as a straight line, the person views the goods

as

Select one:

a. perfect substitutes

b. perfect complements

c. complements (but not perfect)

d. substitutes (but not perfect)