BNAD 301 Midterm Exam with Questions and Answers

BNAD 301 Midterm Exam with Questions and Answers David's indifference curves are flatter than Alison's indifference curves. They have the same amount of income and pay the same prices for the two goods X and Y, and their optimal bundles are interior solutions. If Y is measured on the vertical axis, at their optimal bundles: A. David's marginal rate of substitution is higher than Alison's marginal rate of substitution B. Alison's marginal rate of substitution is higher than David's marginal rate of substitution C. David and Alison have the same marginal rate of substitution D. David's optimal bundle contains less of good Y than Alison's optimal bundle ANSWER C. David and Alison have the same marginal rate of substitution Evan and Lisa are consumers of apples and oranges. Evan's indifference curves are relatively straight, while Lisa's indifference curves are sharply curved. Apples and oranges are: A. Complements for Evan and substitutes for Lisa B. Complements for both Evan and Lisa C. Substitutes for both Evan and Lisa D. Substitutes for Evan and complements for Lisa ANSWER D. Substitutes for Evan and complements for Lisa If utility is maximized subject to the budget constraint at the consumer's current bundle A: A. Every other bundle on the indifference curve that contains A is unaffordable B. Other bundles on the indifference curve that contain A cost less than A does. C. The marginal rate of substitution exceeds the ratio of prices at A. D. The consumer would not prefer to have more of good X than she currently holds. ANSWER A. Every other bundle on the indifference curve that contains A is unaffordable