Ecp3704 Exam 2 Part Two Questions
And Answers
Joe bprefers ba bthree bpack bof bsoda bto ba bsix-pack. bWhat bproperties bdoes bthis
bpreference bviolate?
bCompleteness b
bTransitivity b
bMore bis bbetter b
bDiminishing bMRS b- bcorrect banswers✔✔More bis bbetter
When bthe bprice bof bone bgood bincreases, bthe bassociated bincome beffect bis
brepresented bby ba bmove bfrom bone bindifference bcurve bto ba
bLower bindifference bcurve bsince breal bincome bis bnow bhigher b
bLower bindifference bcurve bsince breal bincome bis bnow blower b
bHigher bindifference bcurve bsince breal bincome bis bnow bhigher b
bHigher bindifference bcurve bsince breal bincome bis bnow blower b- bcorrect
banswers✔✔Lower bindifference bcurve bsince breal bincome bis bnow blower
When bthe bprice bof bone bgood bdecreases, bthe bassociated bsubstitution beffect bis
brepresented bby ba
Move bfrom bone bindifference bto ba bhigher bindifference bcurve bsince breal bincome bis
bnow bhigher
bMove bfrom bone bindifference bto ba blower bindifference bcurve bsince breal bincome bis
bnow blower
bMove balong ba bgiven bindifference bcurve bholding breal bincome bconstant b
bMove balong ba bgiven bindifference bcurve bsince breal bincome bincreases b- bcorrect
banswers✔✔Move balong ba bgiven bindifference bcurve bholding breal bincome bconstant
The bsubstitution baffect bisolates bthe bchange bin bthe bconsumption bof ba bgood bcaused
bby:
bThe blower b"real" bincome
bThe bchange bin bthe brelative bprices bof btwo bgoods b
bThe bchange bin bconsumer bpreferences b
bNone bof bthe bstatements bassociated bwith bthis bquestion bare bcorrect b- bcorrect
banswers✔✔The bchange bin bthe brelative bprices bof btwo bgoods
, Given bthat bincome bis b$750 band bPX b= b$32 band bPY b= b$8, bwhat bis bthe bmarket
brate bof bsubstitution bbetween bgoods bX band bY?
b-0.75 b
b-3 b
b-4 b
b-25 b- bcorrect banswers✔✔-4
What bis bthe bmaximum bamount bof bgood bY bthat bcan bbe bpurchased bif bX band bY bare
bthe bonly btwo bgoods bavailable bfor bpurchase band bPX b= b$10, bPY b= b$15, bX b= b30,
band bM b= b600?
b10 b
b15 b
b20 b
b25 b- bcorrect banswers✔✔20 bM=PX(X) b+ bPY(Y)
A bcash bgift bcauses bthe bbudget bline bto
bShift bto bthe bright bin ba bparallel bfashion b
bShift bto bthe bleft bin ba bparallel bfashion b
bRotate bclockwise b
bNone bof bthe bstatements bassociated bwith bthis bquestion bare bcorrect b- bcorrect
banswers✔✔Shift bto bthe bright bin ba bparallel bfashion
Indifference bcurves bfurther bfrom bthe borigin bimply
bA bhigher blevel bof bsatisfaction b
bA blower blevel bof bsatisfaction b
bThe bsame blevel bof bsatisfaction bas bany bother bcurve b
bNone bof bthe bstatements bassociated bwith bthis bquestion bare bcorrect b- bcorrect
banswers✔✔A bhigher blevel bof bsatisfaction
A≻B bmeans
bBundle bA bis bnot bpreferred bto bbundle bB b
bBundle bA bis bpreferred bto bbundle bB b
bBundle bA bis bequally bpreferred bto bbundle bB b
bBundle bA bis bgreater bthan bbundle bB b- bcorrect banswers✔✔Bundle bA bis bpreferred
bto bbundle bB
The bmarginal brate bof bsubstitution b(MRS) bdetermines bthe brate bat bwhich ba
bconsumer bis bwilling bto bsubstitute bbetween btwo bgoods bin border bto bachieve
bA bhigher blevel bof bsatisfaction b
bA blower blevel bof bsatisfaction b
bThe bsame blevel bof bsatisfaction b
bNone bof bthe bstatements bassociated bwith bthis bquestion bare bcorrect b- bcorrect
banswers✔✔The bsame blevel bof bsatisfaction
The bmaximum bquantity bof bgood bX bthat bis baffordable bis:
bM/PY b
And Answers
Joe bprefers ba bthree bpack bof bsoda bto ba bsix-pack. bWhat bproperties bdoes bthis
bpreference bviolate?
bCompleteness b
bTransitivity b
bMore bis bbetter b
bDiminishing bMRS b- bcorrect banswers✔✔More bis bbetter
When bthe bprice bof bone bgood bincreases, bthe bassociated bincome beffect bis
brepresented bby ba bmove bfrom bone bindifference bcurve bto ba
bLower bindifference bcurve bsince breal bincome bis bnow bhigher b
bLower bindifference bcurve bsince breal bincome bis bnow blower b
bHigher bindifference bcurve bsince breal bincome bis bnow bhigher b
bHigher bindifference bcurve bsince breal bincome bis bnow blower b- bcorrect
banswers✔✔Lower bindifference bcurve bsince breal bincome bis bnow blower
When bthe bprice bof bone bgood bdecreases, bthe bassociated bsubstitution beffect bis
brepresented bby ba
Move bfrom bone bindifference bto ba bhigher bindifference bcurve bsince breal bincome bis
bnow bhigher
bMove bfrom bone bindifference bto ba blower bindifference bcurve bsince breal bincome bis
bnow blower
bMove balong ba bgiven bindifference bcurve bholding breal bincome bconstant b
bMove balong ba bgiven bindifference bcurve bsince breal bincome bincreases b- bcorrect
banswers✔✔Move balong ba bgiven bindifference bcurve bholding breal bincome bconstant
The bsubstitution baffect bisolates bthe bchange bin bthe bconsumption bof ba bgood bcaused
bby:
bThe blower b"real" bincome
bThe bchange bin bthe brelative bprices bof btwo bgoods b
bThe bchange bin bconsumer bpreferences b
bNone bof bthe bstatements bassociated bwith bthis bquestion bare bcorrect b- bcorrect
banswers✔✔The bchange bin bthe brelative bprices bof btwo bgoods
, Given bthat bincome bis b$750 band bPX b= b$32 band bPY b= b$8, bwhat bis bthe bmarket
brate bof bsubstitution bbetween bgoods bX band bY?
b-0.75 b
b-3 b
b-4 b
b-25 b- bcorrect banswers✔✔-4
What bis bthe bmaximum bamount bof bgood bY bthat bcan bbe bpurchased bif bX band bY bare
bthe bonly btwo bgoods bavailable bfor bpurchase band bPX b= b$10, bPY b= b$15, bX b= b30,
band bM b= b600?
b10 b
b15 b
b20 b
b25 b- bcorrect banswers✔✔20 bM=PX(X) b+ bPY(Y)
A bcash bgift bcauses bthe bbudget bline bto
bShift bto bthe bright bin ba bparallel bfashion b
bShift bto bthe bleft bin ba bparallel bfashion b
bRotate bclockwise b
bNone bof bthe bstatements bassociated bwith bthis bquestion bare bcorrect b- bcorrect
banswers✔✔Shift bto bthe bright bin ba bparallel bfashion
Indifference bcurves bfurther bfrom bthe borigin bimply
bA bhigher blevel bof bsatisfaction b
bA blower blevel bof bsatisfaction b
bThe bsame blevel bof bsatisfaction bas bany bother bcurve b
bNone bof bthe bstatements bassociated bwith bthis bquestion bare bcorrect b- bcorrect
banswers✔✔A bhigher blevel bof bsatisfaction
A≻B bmeans
bBundle bA bis bnot bpreferred bto bbundle bB b
bBundle bA bis bpreferred bto bbundle bB b
bBundle bA bis bequally bpreferred bto bbundle bB b
bBundle bA bis bgreater bthan bbundle bB b- bcorrect banswers✔✔Bundle bA bis bpreferred
bto bbundle bB
The bmarginal brate bof bsubstitution b(MRS) bdetermines bthe brate bat bwhich ba
bconsumer bis bwilling bto bsubstitute bbetween btwo bgoods bin border bto bachieve
bA bhigher blevel bof bsatisfaction b
bA blower blevel bof bsatisfaction b
bThe bsame blevel bof bsatisfaction b
bNone bof bthe bstatements bassociated bwith bthis bquestion bare bcorrect b- bcorrect
banswers✔✔The bsame blevel bof bsatisfaction
The bmaximum bquantity bof bgood bX bthat bis baffordable bis:
bM/PY b
