TEST BANK FOR
Intermediate Microeconomics: A Modern Approach Ninth Edition
,CONTENTS
,CHAPTER 2 Budget Constraint
TRUE/FALSE 7. If there are two goods and the prices of both goods
rise, then the budget line must become steeper.
1. If there are two goods with positive prices and the
ANS: F DIF: 1
price of one good is reduced, while income and other
prices remain constant, then the size of the budget set 8. There are two goods. You know how much of good 1 a
is reduced. consumer can afford if she spends all of her income on
good 1. If you knew the ratio of the prices of the two
ANS: F DIF: 1
goods, then you could draw the consumer’s budget line
2. If good 1 is measured on the horizontal axis and good without any more information.
2 is measured on the vertical axis and if the price of
ANS: T DIF: 1
good 1 is p1 and the price of good 2 is p2, then the
slope of the budget line is −p2 /p1. 9. A consumer prefers more to less of every good. Her
income rises, and the price of one of the goods falls
ANS: F DIF: 1
while other prices stay constant. These changes must
3. If all prices are doubled and money income is left the have made her better off.
same, the budget set does not change because relative
ANS: T DIF: 1
prices do not change.
10. There are 3 goods. The price of good 1 is −1, the price
ANS: F DIF: 1
of good 2 is +1, and the price of good 3 is +2. It is
4. If there are two goods and if one good has a negative physically possible for a consumer to consume any
price and the other has a positive price, then the slope commodity bundle with nonnegative amounts of each
of the budget line will be positive. good. A consumer who has an income of 10 could
afford to consume some commodity bundles that
ANS: T DIF: 1
include 5 units of good 1 and 6 units of good 2.
5. If all prices double and income triples, then the budget
ANS: T DIF: 2
line will become steeper.
11. A decrease in income pivots the budget line around the
ANS: F DIF: 1
bundle initially consumed.
6. If good 1 is on the horizontal axis and good 2 is on the
ANS: F DIF: 1
vertical axis, then an increase in the price of good 1
will not change the horizontal intercept of the budget
line.
ANS: F DIF: 1
3
,
Intermediate Microeconomics: A Modern Approach Ninth Edition
,CONTENTS
,CHAPTER 2 Budget Constraint
TRUE/FALSE 7. If there are two goods and the prices of both goods
rise, then the budget line must become steeper.
1. If there are two goods with positive prices and the
ANS: F DIF: 1
price of one good is reduced, while income and other
prices remain constant, then the size of the budget set 8. There are two goods. You know how much of good 1 a
is reduced. consumer can afford if she spends all of her income on
good 1. If you knew the ratio of the prices of the two
ANS: F DIF: 1
goods, then you could draw the consumer’s budget line
2. If good 1 is measured on the horizontal axis and good without any more information.
2 is measured on the vertical axis and if the price of
ANS: T DIF: 1
good 1 is p1 and the price of good 2 is p2, then the
slope of the budget line is −p2 /p1. 9. A consumer prefers more to less of every good. Her
income rises, and the price of one of the goods falls
ANS: F DIF: 1
while other prices stay constant. These changes must
3. If all prices are doubled and money income is left the have made her better off.
same, the budget set does not change because relative
ANS: T DIF: 1
prices do not change.
10. There are 3 goods. The price of good 1 is −1, the price
ANS: F DIF: 1
of good 2 is +1, and the price of good 3 is +2. It is
4. If there are two goods and if one good has a negative physically possible for a consumer to consume any
price and the other has a positive price, then the slope commodity bundle with nonnegative amounts of each
of the budget line will be positive. good. A consumer who has an income of 10 could
afford to consume some commodity bundles that
ANS: T DIF: 1
include 5 units of good 1 and 6 units of good 2.
5. If all prices double and income triples, then the budget
ANS: T DIF: 2
line will become steeper.
11. A decrease in income pivots the budget line around the
ANS: F DIF: 1
bundle initially consumed.
6. If good 1 is on the horizontal axis and good 2 is on the
ANS: F DIF: 1
vertical axis, then an increase in the price of good 1
will not change the horizontal intercept of the budget
line.
ANS: F DIF: 1
3
,
