2.A typical indifference curve...

A.shows that as a consumer has more of a good he or she is less willing to exchange it for one unit of another good.

B.shows all combinations of goods that give a consumer the same level of utility.

C.shifts out if income increases.

D.both b and c

9.Along an indifference curve

A.the ratio of the marginal utilities is constant.

B.the MRS is constant.

C.the price ratio is constant.

D.None of the above

12.If a consumer is choosing the bundle of goods that maximizes utility subject to a budget constraint, then the

A.rate at which the consumer is willing to substitute between goods is equal to the

market rate of exchange between goods.

B.rate at which income affects the utility-maximizing choice is equal for all goods.

C.ratio of marginal utility to price is equal for all goods.

D.both A and C

17.Why doesn't the consumer choose the combination at point B?

A.The marginal utility of Y exceeds the marginal utility of X.

B.The consumer is willing to give up more X for an additional unit of Y than must be given up given the relative prices of X and Y.

C.The marginal utility per dollar spent on Y exceeds the marginal utility per dollar spent on X.

D.both B and C

18.If the price of a good decreases, the substitution effect:

A.is positive since the quantity of the good increases.

B.shows the increase in the quantity of the good demanded, holding income

constant.

C.must be greater than the income effect.

D.shows the increase in the quantity of the good demanded, holding utility constant.

19.If the price of a good increases, the income effect:

A. reinforces the substitution effect if the good is normal.

B.offsets the substitution effect if the good is inferior.

C.shows the change in the quantity demanded of the good, income held constant.

D.A and B

Questions 14- 17 refer to the following figure: 160 Guo s'ly El V B 200 Quantity of X The consumer's income is $1,000. 14. Wha Font e prices of goods X and Y? A. = $8.25, PY = $10 B. PX = $5, PY = $6.25 C. PX = $200, PY = $160 D. PX = $6.25, PY = $5 15. What is the consumer's marginal rate of substitution in equilibrium? A) 0.5 B) 0.8 1.25 2.25 16. Why doesn't the consumer choose the combination of 60X and 112Y at point A? A. MRS is greater than Px / Py. B MRS is less than Px / Py. C. MUX is greater than MUy. D. MUx / Px is less than MUy / PY. 17. Why doesn't the consumer choose the combination at point B? A. The marginal utility of Y exceeds the marginal utility of X. B. The consumer is willing to give up more X for an additional unit of Y than must be given up given the relative prices of X and Y C. The marginal utility per dollar spent on Y exceeds the marginal utility per dollar spent on X. D. both B and CThe price of X is $30 and the price of Y is $60. I Y 30 2 g in 1 4 D o Unsot good x 21. IfUimighest level of utility the consumer can achieve, what is the consumer's income? A. $ 480 B. 35 600 C. $ 800 D. $1,200 E. $2,400 22. How many units of Y will the consumer choose if point A is the utility-maximizing choice? A. 8 B. 12 C. 16 D. 24 23. How many units of X will the consumer choose if point B is the utility-maximizing choice? A. 14 B. 24 C. 30 D. 32 24. An individual's demand curve for X: A. shows how the individual's preferences change as the price of X changes. shows how the utilitymaximizing choice of X changes as the price of X changes. B. C. shows that the income effect is always negative. D. both 13 and c