Principles Of Microeconomics 9th Edition By Karl E. Case – Test Bank

Overview

Multiple Choice

Harry tells you that he prefers Pepsi to Coke, Coke to 7‐UP, and 7‐UP to Pepsi. This violates what assumption made when analyzing consumer preferences?

That more is better.
That there is a diminishing marginal rate of substitution.
That consumers are rational.
That consumers are able to choose among all the combinations of goods and services
available.
Answer: C

Diff: 3
Topic: Appendix: Indifference Curves
Skill: Conceptual

A consumer satisfies the condition ________ when her indifference curve is just tangent to her budget constraint.
MUx = MUy
TUx = TUy
MUx/Px = MUy/Py
TUx/Px = TUy/Py
Answer: C

Diff: 1
Topic: Appendix: Indifference Curves
Skill: Fact

Assume Sally is initially in equilibrium and that X and Y are normal goods for her. Then the price of X rises. For Sally to move to a new equilibrium point her consumption of

X must remain constant, but her consumption of Y must increase.
X must decrease.
X must increase.
both X and Y must increase.
Answer: B

Diff: 2
Topic: Appendix: Indifference Curves
Skill: Analytic

An assumption underlying indifference curve analysis is that MUx/MUy ________ as more of X and less of Y is consumed.

increases
decreases
remains constant
always equals one
Answer: B

Diff: 2
Topic: Appendix: Indifference Curves
Skill: Analytic

Refer to Figure 6.14. Assume Ellen has two products available, pizza and hamburgers. Ellen must be compensated with more pizzas as she gives up more burgers. The curve in Panel

________ represents her indifference curve.
A
B
C
D
Answer: B

Diff: 3
Topic: Appendix: Indifference Curves
Skill: Conceptual

As you move up an indifference curve, the absolute value of the slope
increases.
decreases.
remains constant.
initially increases and then decreases.
Answer: A

Diff: 1
Topic: Appendix: Indifference Curves
Skill: Fact
Refer to Figure 6.16. The highest indifference curve depicted is the one on which point D lies. Why is Jason NOT maximizing his utility at point D?

He cannot afford point D.

His marginal utility per dollar spent on the last sandwich is greater than his marginal utility per dollar spent on his last hot dog.

His marginal utility per dollar spent on the last sandwich is less than his marginal utility per dollar spent on his last hot dog.

He is maximizing his utility at point C.
Answer: A

Diff: 2
Topic: Appendix: Indifference Curves
Skill: Conceptual

We derive the demand curve for X from indifference curves and a budget constraint by changing the

level of income.
price of X.
price of Y.
consumersʹ preferences.
Answer: B

Diff: 3
Topic: Appendix: Indifference Curves
Skill: Conceptual