ECP3704 REVIEW UPDATED QUESTIONS AND
ANSWERS SURE A+
✔✔The marginal rate of substitution (MRS) determines the rate at which a consumer is
willing to substitute between two goods in order to achieve
A higher level of satisfaction
A lower level of satisfaction
The same level of satisfaction
None of the statements associated with this question are correct - ✔✔The same level
of satisfaction
✔✔The maximum quantity of good X that is affordable is:
M/PY
M/X
M/PX
PYY - ✔✔M/PX
✔✔What is the horizontal intercept of the budget line, given that M = $1,000, PX = $50,
and PY = $40?
2000.0
20.0
25.0
11.11 - ✔✔20.0
✔✔The maximum quantity of good Y that is affordable is:
M/PX
M/X
M/PY
M/Y - ✔✔M/PY
✔✔A price increase causes a consumer's "real" income to:
Decrease
, Increase
Remain unchanged
Vary along the budget line - ✔✔Decrease
✔✔The horizontal intercept of the budget line is:
-PX/PY
M/PX
M/PY
PYY - ✔✔M/PX
✔✔Sam Voter prefers Ronald to Joe, Joe to Gary, and Gary to Ronald. Sam's
preferences
Are consistent with our assumptions about consumer behavior
Indicate that he is a liberal
Are not complete
Are not transitive - ✔✔Are not transitive
✔✔The idea that a consumer is limited to selecting a bundle of goods that is affordable
is captured by the:
Budget constraint
Indifference curve
Consumer equilibrium
Price changes - ✔✔Budget constraint
✔✔If a consumer's income decreases, what will happen to the budget line?
It will shift outward
It will become steeper
It will become flatter
It will shift inward - ✔✔It will shift inward
✔✔The property that implies that indifference curves are convex to the origin is:
More is better
Completeness
Transitivity
Diminishing marginal rate of substitution - ✔✔Diminishing marginal rate of substitution
✔✔A situation where a consumer says he does not know his preference ordering for
bundles X and Y would violate the property of:
More is be better
Completeness
Substitutability
Complementarity - ✔✔Completeness
✔✔Economies of scale exist whenever long-run average costs
ANSWERS SURE A+
✔✔The marginal rate of substitution (MRS) determines the rate at which a consumer is
willing to substitute between two goods in order to achieve
A higher level of satisfaction
A lower level of satisfaction
The same level of satisfaction
None of the statements associated with this question are correct - ✔✔The same level
of satisfaction
✔✔The maximum quantity of good X that is affordable is:
M/PY
M/X
M/PX
PYY - ✔✔M/PX
✔✔What is the horizontal intercept of the budget line, given that M = $1,000, PX = $50,
and PY = $40?
2000.0
20.0
25.0
11.11 - ✔✔20.0
✔✔The maximum quantity of good Y that is affordable is:
M/PX
M/X
M/PY
M/Y - ✔✔M/PY
✔✔A price increase causes a consumer's "real" income to:
Decrease
, Increase
Remain unchanged
Vary along the budget line - ✔✔Decrease
✔✔The horizontal intercept of the budget line is:
-PX/PY
M/PX
M/PY
PYY - ✔✔M/PX
✔✔Sam Voter prefers Ronald to Joe, Joe to Gary, and Gary to Ronald. Sam's
preferences
Are consistent with our assumptions about consumer behavior
Indicate that he is a liberal
Are not complete
Are not transitive - ✔✔Are not transitive
✔✔The idea that a consumer is limited to selecting a bundle of goods that is affordable
is captured by the:
Budget constraint
Indifference curve
Consumer equilibrium
Price changes - ✔✔Budget constraint
✔✔If a consumer's income decreases, what will happen to the budget line?
It will shift outward
It will become steeper
It will become flatter
It will shift inward - ✔✔It will shift inward
✔✔The property that implies that indifference curves are convex to the origin is:
More is better
Completeness
Transitivity
Diminishing marginal rate of substitution - ✔✔Diminishing marginal rate of substitution
✔✔A situation where a consumer says he does not know his preference ordering for
bundles X and Y would violate the property of:
More is be better
Completeness
Substitutability
Complementarity - ✔✔Completeness
✔✔Economies of scale exist whenever long-run average costs
