Q1.

Max chooses to purchase movie tickets and restaurant meals every week with his $100. The budget constraint for Max shows _____________ that is __________ and his _________ between movie and restaurant meal.

1. expenditure; he prefers; trade-off
2. consumption bundles; not affordable; trade-off
3. consumption bundles; affordable; trade-off
4. consumption bundles; affordable; best choice

Q2.

Max chooses to purchase movie tickets and restaurant meals every week with his $100. If the price of a movie ticket is $20 and the price of a restaurant meal is $25, then the slope of his budget constraint will be,

1. 1/5
2. -1/5
3. 4/5
4. -4/5

Q3.

An indifference curve shows,

1. expenditure bundles that the consumer can afford given the prices.
2. consumption bundles that give the consumer the same level of satisfaction
3. consumption bundles that give the consumer different level of satisfaction.
4. expenditure bundles that the consumer is least willing to make.

Q4.

Marginal rate of substitution(MRS) is the rate at which consumer is willing to trade one good for another. It must be true that:

1. MRS is the slope of an indifference curve in reference to a particular bundle of goods.
2. MRS is not the same along an indifference curve that is of usual shape.
3. MRS is same along an indifference curve that is of usual shape.
4. Both 1) and 2).

Q5.

The properties of indifference curves can be described as,

1. Lower indifference curves are less preferred than the higher indifference curves.
2. Indifference curves are downward sloping.
3. Indifference curves are parallel to each other.
4. All of the above.

Q6.

To describe the slope of an indifference curve, which of the following statements is true?

1. Slopes will vary along an usual indifference curve for to normal goods that an individual is purchasing
2. Slopes will be the same along an indifference curve for two perfect substitutes goods that an individual is purchasing
3. Slopes will be a right angle for each indifference curve for two perfect complement goods that an individual is purchasing
4. All of the above

Q7.

A consumer has preferences over two goods X and Y and satisfies the property of 'more is better'. If the consumer's income doubles and prices remain unchanged then which of the following statements is necessarilyfalse?

1. The demand for good X will increase
2. The demand for both goods will increase
3. The demand for good Y will decrease
4. The demand for both goods will decrease

Q8.

Suppose an individual has preferences over two goods---good X and good Y. If this individual is maximising their utility and pX=pYthen:

1. Goods X and Y will be consumed in equal quantities.
2. The marginal utility of good X must be equal to the marginal utility of good Y.
3. The marginal utility of good X must exceed the marginal utility of good Y.
4. The marginal utility of good Y must exceed the marginal utility of good X.

Q9.

Consider an individual with preferences over two goods.This consumer is maximising utility when:

1. They receive the same utility from each good.
2. They spend the same amount of money on each good.
3. The MRS is greater than the ratio of the prices of the two goods.
4. None of the above.

Q10.

Consider the following graph and state which one is not true: