Question 1

The direct effect of an increase in the price of a good will be to change the

Select one:

a. Marginal Utility

b. Marginal Rate of Transformation

c. Marginal Rate of Substitution

Q2. At the current consumption bundle, the marginal utility of hot dogs is 4 and the price per hot dog is $5. The marginal utility of cheese-covered nachos is 8 and the price per tray of nachos is $6. The consumer is on the budget line. Compared to the current consumption bundle the optimal bundle will contain

Select one:

a. More hot dogs and more cheese-covered nachos

b. More hot dogs and less cheese-covered nachos

c. Fewer hot dogs and more cheese-covered nachos

d. Fewer hot dogs and fewer cheese-covered nachos

Q3. A consumer has two elements in the consumption bundle, a composite good (Y) bought with income Y that is determined by the wage rate (w) times the hours of work per day (H) and leisure (N) defined as N=24-H. For tax revenue to increase by decreasing the marginal tax rate (w) it must be the case that:

Select one:

a. Leisure (N) is normal and the composite good (Y) is normal.

b. Leisure (N) is inferior and the composite good (Y) is inferior.

c. Leisure (N) is normal and the composite good (Y) is inferior.

d. Leisure (N) is inferior and the composite good (Y) is normal.

Q4. The Marginal Rate of Technical Substitution is the slope of the
Select one:
a. Isocost
b. Indifference curve
c. Long-run production function
d. Isoquant

Q5. The output resulting from the function of the doubled input bundle is larger than doubling the output of the original input bundle. I am experiencing
Select one:
a. Increasing Returns to Scale (IRS)
b. Constant Returns to Scale (CRS)
c. Decreasing Returns to Scale (DRS)