ECP3704 Exam 2 UPDATED ACTUAL
Exam Questions and CORRECT Answers
Joe prefers a three pack of soda to a six-pack. What properties does this preference violate?
Completeness
Transitivity
More is better
Diminishing MRS - CORRECT ANSWER - More is better
When the price of one good increases, the associated income effect is represented by a move
from one indifference curve to a
Lower indifference curve since real income is now higher
Lower indifference curve since real income is now lower
Higher indifference curve since real income is now higher
Higher indifference curve since real income is now lower - CORRECT ANSWER -
Lower indifference curve since real income is now lower
When the price of one good decreases, the associated substitution effect is represented by a
Move from one indifference to a higher indifference curve since real income is now higher
Move from one indifference to a lower indifference curve since real income is now lower
Move along a given indifference curve holding real income constant
Move along a given indifference curve since real income increases - CORRECT
ANSWER - Move along a given indifference curve holding real income constant
The substitution affect isolates the change in the consumption of a good caused by:
The lower "real" income
The change in the relative prices of two goods
The change in consumer preferences
, None of the statements associated with this question are correct - CORRECT ANSWER -
The change in the relative prices of two goods
Given that income is $750 and PX = $32 and PY = $8, what is the market rate of substitution
between goods X and Y?
-0.75
-3
-4
-25 - CORRECT ANSWER - -4
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 = $10, PY = $15, X = 30, and M = 600?
10
15
20
25 - CORRECT ANSWER - 20 M=PX(X) + PY(Y)
A cash gift causes the budget line to
Shift to the right in a parallel fashion
Shift to the left in a parallel fashion
Rotate clockwise
None of the statements associated with this question are correct - CORRECT ANSWER -
Shift to the right in a parallel fashion
Indifference curves further from the origin imply
A higher level of satisfaction
A lower level of satisfaction
The same level of satisfaction as any other curve
Exam Questions and CORRECT Answers
Joe prefers a three pack of soda to a six-pack. What properties does this preference violate?
Completeness
Transitivity
More is better
Diminishing MRS - CORRECT ANSWER - More is better
When the price of one good increases, the associated income effect is represented by a move
from one indifference curve to a
Lower indifference curve since real income is now higher
Lower indifference curve since real income is now lower
Higher indifference curve since real income is now higher
Higher indifference curve since real income is now lower - CORRECT ANSWER -
Lower indifference curve since real income is now lower
When the price of one good decreases, the associated substitution effect is represented by a
Move from one indifference to a higher indifference curve since real income is now higher
Move from one indifference to a lower indifference curve since real income is now lower
Move along a given indifference curve holding real income constant
Move along a given indifference curve since real income increases - CORRECT
ANSWER - Move along a given indifference curve holding real income constant
The substitution affect isolates the change in the consumption of a good caused by:
The lower "real" income
The change in the relative prices of two goods
The change in consumer preferences
, None of the statements associated with this question are correct - CORRECT ANSWER -
The change in the relative prices of two goods
Given that income is $750 and PX = $32 and PY = $8, what is the market rate of substitution
between goods X and Y?
-0.75
-3
-4
-25 - CORRECT ANSWER - -4
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 = $10, PY = $15, X = 30, and M = 600?
10
15
20
25 - CORRECT ANSWER - 20 M=PX(X) + PY(Y)
A cash gift causes the budget line to
Shift to the right in a parallel fashion
Shift to the left in a parallel fashion
Rotate clockwise
None of the statements associated with this question are correct - CORRECT ANSWER -
Shift to the right in a parallel fashion
Indifference curves further from the origin imply
A higher level of satisfaction
A lower level of satisfaction
The same level of satisfaction as any other curve
