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| 1 | |
A worker's total earnings for one day are $500. He receives a $100 fixed payment and consumes 16 hours of leisure. What is the hourly wage rate? |
| | A) | $10. |
| | B) | $28. |
| | C) | $50. |
| | D) | $8. |
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| 2 | |
A decrease in the price of good X will have what effect on the budget line on a normal X-Y graph? |
| | A) | Decrease the vertical intercept. |
| | B) | Increase the vertical intercept. |
| | C) | Decrease the horizontal intercept. |
| | D) | Increase the horizontal intercept. |
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| 3 | |
For a consumer equilibrium to occur, the |
| | A) | marginal utility per dollar spent on X and Y has to be equal. |
| | B) | marginal utility per dollar spent on X has to be greater than the marginal utility per dollar spent on Y. |
| | C) | market rate of substitution has to be equal to the marginal rate of substitution. |
| | D) | marginal utility per dollar spent on X has to be greater than the marginal utility per dollar spent on Y and market rate of substitution has to be equal to the marginal rate of substitution. |
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| 4 | |
Which of the following defines combinations of two or more goods that a consumer is exactly able to purchase? |
| | A) | Market rate of substitution. |
| | B) | Budget set. |
| | C) | Budget line. |
| | D) | Indifference curve. |
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| 5 | |
What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and Px = $20, Py = $16, X = 20, and M = 560? |
| | A) | 8. |
| | B) | 10. |
| | C) | 28. |
| | D) | None of the responses are correct. |
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| 6 | |
Given that income is $800 and PX = $10 and PY = $50, what is the market rate of substitution between goods X and Y? |
| | A) | -0.2. |
| | B) | -0.5. |
| | C) | -5. |
| | D) | None of the responses are correct. |
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| 7 | |
What will happen to the budget line, if the price of good X increases? |
| | A) | It will have a parallel shift inward. |
| | B) | It will have a parallel shift outward. |
| | C) | It will become steeper. |
| | D) | It will become flatter. |
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| 8 | |
Given a decrease in the price of good X, the substitution effect isolates the consumer's response to the |
| | A) | lower market rate of substitution. |
| | B) | higher market rate of substitution. |
| | C) | reduced real income. |
| | D) | increased real income. |
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| 9 | |
The difference between a change in price and a change in income is that a change in |
| | A) | price does affect the consumption of other goods while a change in income does not. |
| | B) | price will affect real income while a change in income will not affect real income. |
| | C) | income does not affect the slope of the budget line while a change in price does change the slope. |
| | D) | All of the responses are correct. |
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| 10 | |
The total earnings of a worker are represented by E = $240 + $14(24 - L), where E is earnings and L is the number of hours of leisure. How much will the worker earn if she takes 18 hours of leisure per day? |
| | A) | $84. |
| | B) | $196. |
| | C) | $324. |
| | D) | $364. |
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| 11 | |
Jill prefers a bundle of (2 apples, 3 oranges) to a bundle of (2 apples, 6 oranges), a bundle of (2 apples, 6 oranges) to a bundle of (2 apples, 4 bananas), and a bundle of (2 apples, 3 oranges) to a bundle of (2 apples, 4 bananas). Jill's preferences |
| | A) | are not complete. |
| | B) | are not transitive. |
| | C) | do not exhibit the "more is better" property. |
| | D) | are not transitive and do not exhibit the "more is better" property. |
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| 12 | |
12 Suppose earnings are given by E = $75 + $15(24 - L), where E is earnings and L is the hours of leisure. What is the price to the worker of consuming an additional hour of leisure? |
| | A) | $15. |
| | B) | $40. |
| | C) | $25. |
| | D) | $24. |
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| 13 | |
The maximum quantity of good X that can be purchased with a given income level is |
| | A) | M-PX. |
| | B) | M-PY. |
| | C) | M/X. |
| | D) | None of the responses are correct. |
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| 14 | |
Given that income is $540, the price of good Y is $10, and the price of good X is $60, the horizontal intercept of the budget line is |
| | A) | 0.11111. |
| | B) | 0.01851. |
| | C) | 9. |
| | D) | 54. |
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| 15 | |
Which property implies that consumers are capable of expressing a preference for, or indifference among, all bundles of goods? |
| | A) | Transitivity. |
| | B) | Diminishing marginal rate of substitution. |
| | C) | Completeness. |
| | D) | More-is-better. |
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