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Figure 21-32 The figure shows three indifference curves and a budget constraint for a consumer named Hannah. When young, Hannah works and earns income. When old, she is retired and earns no income. Figure 21-32 The figure shows three indifference curves and a budget constraint for a consumer named Hannah. When young, Hannah works and earns income. When old, she is retired and earns no income. -Refer to Figure 21-32. Which of the four labeled points is Hannah's optimum? -Refer to Figure 21-32. Which of the four labeled points is Hannah's optimum?

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Point B is...

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Figure 21-1 The downward­sloping line on the figure represents a consumer's budget constraint. Figure 21-1 The downward­sloping line on the figure represents a consumer's budget constraint. -Refer to Figure 21-1. If the price of a CD is $12, then the consumer's income amounts to A) $140. B) $180. C) $210. D) $240. -Refer to Figure 21-1. If the price of a CD is $12, then the consumer's income amounts to


A) $140.
B) $180.
C) $210.
D) $240.

E) A) and B)
F) A) and C)

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Figure 21-24 The figure shows three indifference curves and a budget constraint for a certain consumer named Steve. Figure 21-24 The figure shows three indifference curves and a budget constraint for a certain consumer named Steve. -Refer to Figure 21-24. If the price of a pound of pears is $3, then Steve's income is A) $12.00. B) $13.50. C) $16.20. D) $18.80. -Refer to Figure 21-24. If the price of a pound of pears is $3, then Steve's income is


A) $12.00.
B) $13.50.
C) $16.20.
D) $18.80.

E) None of the above
F) B) and C)

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Assume that a college student purchases only Ramen noodles and textbooks. If Ramen noodles are an inferior good and textbooks are a normal good, then the income effect associated with a decrease in the price of a textbook will result in


A) a decrease in the consumption of textbooks and a decrease in the consumption of Ramen noodles.
B) a decrease in the consumption of textbooks and an increase in the consumption of Ramen noodles.
C) an increase in the consumption of textbooks and an increase in the consumption of Ramen noodles.
D) an increase in the consumption of textbooks and a decrease in the consumption of Ramen noodles.

E) All of the above
F) B) and C)

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A family on a trip budgets $1,000 for meals and gasoline. If the price of a meal for the family is $50 and if gasoline costs $3.50 per gallon, then how many meals can the family buy if they buy 100 gallons of gasoline?


A) 13
B) 16
C) 19
D) 21

E) A) and C)
F) None of the above

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Which of the following is an example of a Giffen good?


A) fish in Japan
B) rice in the Chinese province of Hunan
C) pork in India
D) Both a and b are correct.

E) B) and C)
F) C) and D)

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Assume that a college student purchases only Ramen noodles and textbooks. If Ramen noodles are an inferior good and textbooks are a normal good, then the income effect associated with an increase in the price of a textbook will result in


A) a decrease in the consumption of textbooks and a decrease in the consumption of Ramen noodles.
B) a decrease in the consumption of textbooks and an increase in the consumption of Ramen noodles.
C) an increase in the consumption of textbooks and an increase in the consumption of Ramen noodles.
D) an increase in the consumption of textbooks and a decrease in the consumption of Ramen noodles.

E) C) and D)
F) A) and B)

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What does the slope of a budget constraint represent?

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The slope of a budget constrai...

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Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure could reflect a simultaneous decrease in the price of good X and increase in the price of good Y? (i) graph a (ii) graph b (iii) graph c (iv) graph d A) (ii) only B) (iii) only C) (ii) or (iv) only D) None of the above is correct. -Refer to Figure 21-3. Which of the graphs in the figure could reflect a simultaneous decrease in the price of good X and increase in the price of good Y? (i) graph a (ii) graph b (iii) graph c (iv) graph d


A) (ii) only
B) (iii) only
C) (ii) or (iv) only
D) None of the above is correct.

E) C) and D)
F) All of the above

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Figure 21-5 (a) (b) Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a) , what is the price of good X relative to the price of good Y (i.e., PX/PY) ? A) 1/3 B) 1/4 C) 3 D) 4 Figure 21-5 (a) (b) -Refer to Figure 21-5. In graph (a) , what is the price of good X relative to the price of good Y (i.e., PX/PY) ? A) 1/3 B) 1/4 C) 3 D) 4 -Refer to Figure 21-5. In graph (a) , what is the price of good X relative to the price of good Y (i.e., PX/PY) ?


A) 1/3
B) 1/4
C) 3
D) 4

E) C) and D)
F) All of the above

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A good is an inferior good if the consumer buys less of it when


A) his income rises.
B) the price of the good rises.
C) the price of a substitute good falls.
D) his income falls.

E) A) and D)
F) A) and B)

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Figure 21-20 The following graph illustrates a representative consumer's preferences for marshmallows and chocolate chip cookies: Figure 21-20 The following graph illustrates a representative consumer's preferences for marshmallows and chocolate chip cookies: -Refer to Figure 21-20. Assume that the consumer depicted the figure has an income of $50. Based on the information available in the graph, which of the following price-quantity combinations would be on her demand curve for chocolate chips if the price of marshmallows is $2.50? A) P=$2.50, Q=6 B) P=$2.50, Q=10 C) P=$5.00, Q=3 D) P=$5.00, Q=5 -Refer to Figure 21-20. Assume that the consumer depicted the figure has an income of $50. Based on the information available in the graph, which of the following price-quantity combinations would be on her demand curve for chocolate chips if the price of marshmallows is $2.50?


A) P=$2.50, Q=6
B) P=$2.50, Q=10
C) P=$5.00, Q=3
D) P=$5.00, Q=5

E) C) and D)
F) B) and C)

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Figure 21-31 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. Figure 21-31 The figure shows two indifference curves and two budget constraints for a consumer named Kevin. -Refer to Figure 21-31. Suppose Kevin is optimally purchasing 12 shirts and 28 sweaters, and he is spending $648 on shirts. What is the price of a sweater? -Refer to Figure 21-31. Suppose Kevin is optimally purchasing 12 shirts and 28 sweaters, and he is spending $648 on shirts. What is the price of a sweater?

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Given that Kevin is optimally purchasing...

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Figure 21-30 The graph shows two budget constraints for a consumer. Figure 21-30 The graph shows two budget constraints for a consumer. -Refer to Figure 21-30. Suppose the consumer's income is $90 and Budget Constraint A applies. What is the price of a light bulb? -Refer to Figure 21-30. Suppose the consumer's income is $90 and Budget Constraint A applies. What is the price of a light bulb?

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The price ...

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Figure 21-23 Figure 21-23 -Refer to Figure 21-23. When the price of X is $80, the price of Y is $20, and the consumer's income is $160, the consumer's optimal choice is D. Then the price of X decreases to $20. The income effect can be illustrated as the movement from A) D to E. B) D to C. C) C to E. D) E to D. -Refer to Figure 21-23. When the price of X is $80, the price of Y is $20, and the consumer's income is $160, the consumer's optimal choice is D. Then the price of X decreases to $20. The income effect can be illustrated as the movement from


A) D to E.
B) D to C.
C) C to E.
D) E to D.

E) B) and C)
F) A) and B)

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When a consumer spends less time enjoying leisure and more time working, she has


A) lower income and therefore cannot afford more consumption.
B) lower income and therefore can afford more consumption.
C) higher income and therefore cannot afford more consumption.
D) higher income and therefore can afford more consumption.

E) B) and D)
F) B) and C)

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If we observe that Jamie's budget constraint has moved outward, then we know for certain that


A) her income must have increased.
B) she will be indifferent between goods X and Y.
C) the price of one or both of the goods must have decreased.
D) she can reach a higher indifference curve.

E) A) and D)
F) C) and D)

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What are the two effects of a change in a price that a consumer experiences?


A) the income effect and the budget effect
B) the complement effect and the substitute effect
C) the price effect and the preference effect
D) the income effect and the substitution effect

E) C) and D)
F) B) and D)

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Giffen goods have positively-sloped demand curves because they are


A) inferior goods with no substitution effect.
B) normal goods with no substitution effect.
C) inferior goods for which the substitution effect outweighs the income effect.
D) inferior goods for which the income effect outweighs the substitution effect.

E) A) and C)
F) None of the above

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Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. Figure 21-3 In each case, the budget constraint moves from BC-1 to BC-2. -Refer to Figure 21-3. Which of the graphs in the figure reflects a decrease in the price of good Y only? A) graph a B) graph b C) graph c D) graph d -Refer to Figure 21-3. Which of the graphs in the figure reflects a decrease in the price of good Y only?


A) graph a
B) graph b
C) graph c
D) graph d

E) C) and D)
F) A) and D)

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