Test Bank
Intermediate Microeconomics
A Modern Approach, 9th Edition
by Hal R. Varian All Chapters Fully Covered
,CHAPTER 2: Budget Constraint
f f f
TRUE/FALSE
1. Ifftherefareftwofgoodsfwithfpositivefpricesfandfthefpricefoffonefgoodfisfreduced,fwhilefincomefandf oth
erfpricesfremainfconstant,fthenfthefsizefoffthefbudgetfsetfisfreduced.
ANS:ff F DIF: 1
2. Iffgoodf1fisfmeasuredfonfthefhorizontalfaxisfandfgoodf2fisfmeasuredfonfthefverticalfaxisfandfiffthef pric
efoffgoodf1fisfp1f andfthefpricefoffgoodf2fisfp2,fthenfthefslopefoffthefbudgetflinefisf p2/p1.
ANS:ff F DIF: 1
3. Iffallfpricesfarefdoubledfandfmoneyfincomefisfleftfthefsame,fthefbudgetfsetfdoesfnotfchangefbecausef r
elativefpricesfdofnotfchange.
ANS:ff F DIF: 1
4. Ifftherefareftwofgoodsfandfiffonefgoodfhasfafnegativefpricefandfthefotherfhasfafpositivefprice,fthenfthef slo
pefoffthefbudgetflinefwillfbefpositive.
ANS:ff T DIF: 1
5. Iffallfpricesfdoublefandfincomeftriples,fthenfthefbudgetflinefwillfbecomefsteeper.f A
NS:ff F DIF: 1
6. Iffgoodf1fisfonfthefhorizontalfaxisfandfgoodf2fisfonfthefverticalfaxis,fthenfanfincreasefinfthefpricefoff goodf
1fwillfnotfchangefthefhorizontalfinterceptfoffthefbudgetfline.
ANS:ff F DIF: 1
7. Ifftherefareftwofgoodsfandfthefpricesfoffbothfgoodsfrise,fthenfthefbudgetflinefmustfbecomefsteeper.f A
NS:ff F DIF: 1
8. Therefareftwofgoods.fYoufknowfhowfmuchfoffgoodf1fafconsumerfcanfaffordfiffshefspendsfallfoffherf inco
mefonfgoodf1.fIffyoufknewfthefratiofoffthefpricesfofftheftwofgoods,fthenfyoufcouldfdrawfthef consumer’sf
budgetflinefwithoutfanyfmorefinformation.
ANS:ff T DIF: 1
, 9. Afconsumerfprefersfmoreftoflessfoffeveryfgood.fHerfincomefrises,fandfthefpricefoffonefoffthefgoodsf fall
sfwhilefotherfpricesfstayfconstant.fThesefchangesfmustfhavefmadefherfbetterfoff.
ANS:ff T DIF: 1
10. Therefaref3fgoods.fThefpricefoffgoodf1fisf 1,fthefpricefoffgoodf2fisf 1,fandfthefpricefoffgoodf3fisf 2.fItf isfphysi
callyfpossiblefforfafconsumerftofconsumefanyfcommodityfbundlefwithfnonnegativefamountsfoff eachfgoo
d.fAfconsumerfwhofhasfanfincomefoff10fcouldfaffordftofconsumefsomefcommodityfbundlesf thatfincludef5
funitsfoffgoodf1fandf6funitsfoffgoodf2.
ANS:ff T DIF: 2
11. Afdecreasefinfincomefpivotsfthefbudgetflinefaroundfthefbundlefinitiallyfconsumed.f A
NS:ff F DIF: 1
MULTIPLEfCHOICE
1. Iffshefspendsfallfoffherfincomefonfbreadfruitsfandfmelons,fNataliefcanfjustfaffordf9fbreadfruitsfandf10f me
lonsfperfday.fShefcouldfalsofusefherfentirefbudgetftofbuyf3fbreadfruitsfandf12fmelonsfperfday.fThef pricefo
ffbreadfruitsfisf8fyenfeach.fHowfmuchfisfNatalie’sfincomefperfday?
a. 313fyen
b. 317fyen
c. 309fyen
d. 303fyen
e. Nonefoffthefabove.
ANS:ff E DIF: 1
2. Iffshefspendsfallfoffherfincomefonfuglifruitsfandfbreadfruits,fMariafcanfjustfaffordf11fuglifruitsfandf4f bread
fruitsfperfday.fShefcouldfalsofusefherfentirefbudgetftofbuyf3fuglifruitsfandf8fbreadfruitsfperfday.f Thefpricef
offuglifruitsfisf6fpesosfeach.fHowfmuchfisfMaria’sfincomefperfday?
a. 115fpesos
b. 105fpesos
c. 114fpesos
d. 119fpesos
e. Nonefoffthefabove.
ANS:ff C DIF: 1
3. HaroldflivesfonfDoritosfandfseafoodfsalads.fThefpricefoffDoritosfisf1fdollarfperfbagfandfthefpricefoff seafoo
dfsaladsfisf2fdollarsfeach.fHaroldfallowsfhimselfftofspendfnofmorefthanf11fdollarsfafdayfonffood.f Hefalsofr
estrictsfhisfconsumptionftof6,500fcaloriesfperfday.fTherefaref1,500fcaloriesfinfafbagfoffDoritosf andf500fca
loriesfinfafseafoodfsalad.fIffhefspendsfhisfentirefmoneyfbudgetfeachfdayfandfconsumesfnof morefcaloriesft
hanfhisfcalorieflimit,fhefcanfconsumefupfto
a. 3fbagsfoffDoritosfperfdayfbutfnofmore.
b. 1fbagfoffDoritosfperfdayfbutfnofmore.
c. 4fseafoodfsaladsfperfdayfbutfnofmore.
d. 4fbagsfoffDoritosfperfdayfbutfnofmore.
e. Nonefoffthefabove.
ANS:ff A DIF: 2
, 4. Quincyflivesfonfpretzelsfandfseafoodfsalads.fThefpricefoffpretzelsfisf1fdollarfperfbagfandfthefpricefoff sea
foodfsaladsfisf2fdollarsfeach.fQuincyfallowsfhimselfftofspendfnofmorefthanf14fdollarsfafdayfonf food.fHef
alsofrestrictsfhisfconsumptionftof3,400fcaloriesfperfday.fTherefaref600fcaloriesfinfafbagfoff pretzelsfandf
200fcaloriesfinfafseafoodfsalad.fIffhefspendsfhisfentirefmoneyfbudgetfeachfdayfandf consumesfnofmoref
caloriesfthanfhisfcalorieflimit,fhefcanfconsumefupfto
a. 2fbagsfoffpretzelsfperfdayfbutfnofmore.
b. 5fseafoodfsaladsfperfdayfbutfnofmore.
c. 4fbagsfoffpretzelsfperfdayfbutfnofmore.
d. 5fbagsfoffpretzelsfperfdayfbutfnofmore.
e. Nonefoffthefabove.
ANS:ff C DIF: 2
5. Clarafspendsfherfentirefbudgetfandfconsumesf5funitsfoffxfandf13funitsfoffy.fThefpricefoffxfisftwicefthef pric
efoffy.fHerfincomefdoublesfandfthefpricefoffyfdoubles,fbutfthefpricefoffxfstaysfthefsame.fIffshef continuesft
ofbuyf13funitsfoffy,fwhatfisftheflargestfnumberfoffunitsfoffxfthatfshefcanfafford?
a. 10
b. 5
c. 12
d. 14
e. Therefisfnotfenoughfinformationftofsay.
ANS:ff A DIF: 1
6. Mariafspendsfherfentirefbudgetfandfconsumesf5funitsfoffxfandf6funitsfoffy.fThefpricefoffxfisftwicefthef pric
efoffy.fHerfincomefdoublesfandfthefpricefoffyfdoubles,fbutfthefpricefoffxfstaysfthefsame.fIffshef continuesf
tofbuyf6funitsfoffy,fwhatfisftheflargestfnumberfoffunitsfoffxfthatfshefcanfafford?
a. 12
b. 10
c. 14
d. 5
e. Therefisfnotfenoughfinformationftofsay.
ANS:ff B DIF: 1
7. Infyearf1,fthefpricefoffgoodfxfwasf$3,fthefpricefoffgoodfyfwasf$2,fandfincomefwasf$90.fInfyearf2,fthef pricefoff
xfwasf$9,fthefpricefoffgoodfyfwasf$6,fandfincomefwasf$90.fOnfafgraphfwithfxfonfthefhorizontalf axisfandfyfon
fthefvertical,fthefnewfbudgetflinefis
a. flatterfthanfthefoldfonefandfliesfbelowfit.
b. flatterfthanfthefoldfonefandfliesfabovefit.
c. steeperfthanfthefoldfonefandfliesfbelowfit.
d. steeperfthanfthefoldfonefandfliesfabovefit.
e. Nonefoffthefabove.
ANS:ff E DIF: 1
8. Infyearf1,fthefpricefoffgoodfxfwasf$4,fthefpricefoffgoodfyfwasf$1,fandfincomefwasf$70.fInfyearf2,fthef pricefoff
xfwasf$9,fthefpricefoffgoodfyfwasf$2,fandfincomefwasf$70.fOnfafgraphfwithfxfonfthefhorizontalf axisfandfyfon
fthefvertical,fthefnewfbudgetflinefis
a. steeperfthanfthefoldfonefandfliesfbelowfit.
b. steeperfthanfthefoldfonefandfliesfabovefit.
c. flatterfthanfthefoldfonefandfliesfbelowfit.
Intermediate Microeconomics
A Modern Approach, 9th Edition
by Hal R. Varian All Chapters Fully Covered
,CHAPTER 2: Budget Constraint
f f f
TRUE/FALSE
1. Ifftherefareftwofgoodsfwithfpositivefpricesfandfthefpricefoffonefgoodfisfreduced,fwhilefincomefandf oth
erfpricesfremainfconstant,fthenfthefsizefoffthefbudgetfsetfisfreduced.
ANS:ff F DIF: 1
2. Iffgoodf1fisfmeasuredfonfthefhorizontalfaxisfandfgoodf2fisfmeasuredfonfthefverticalfaxisfandfiffthef pric
efoffgoodf1fisfp1f andfthefpricefoffgoodf2fisfp2,fthenfthefslopefoffthefbudgetflinefisf p2/p1.
ANS:ff F DIF: 1
3. Iffallfpricesfarefdoubledfandfmoneyfincomefisfleftfthefsame,fthefbudgetfsetfdoesfnotfchangefbecausef r
elativefpricesfdofnotfchange.
ANS:ff F DIF: 1
4. Ifftherefareftwofgoodsfandfiffonefgoodfhasfafnegativefpricefandfthefotherfhasfafpositivefprice,fthenfthef slo
pefoffthefbudgetflinefwillfbefpositive.
ANS:ff T DIF: 1
5. Iffallfpricesfdoublefandfincomeftriples,fthenfthefbudgetflinefwillfbecomefsteeper.f A
NS:ff F DIF: 1
6. Iffgoodf1fisfonfthefhorizontalfaxisfandfgoodf2fisfonfthefverticalfaxis,fthenfanfincreasefinfthefpricefoff goodf
1fwillfnotfchangefthefhorizontalfinterceptfoffthefbudgetfline.
ANS:ff F DIF: 1
7. Ifftherefareftwofgoodsfandfthefpricesfoffbothfgoodsfrise,fthenfthefbudgetflinefmustfbecomefsteeper.f A
NS:ff F DIF: 1
8. Therefareftwofgoods.fYoufknowfhowfmuchfoffgoodf1fafconsumerfcanfaffordfiffshefspendsfallfoffherf inco
mefonfgoodf1.fIffyoufknewfthefratiofoffthefpricesfofftheftwofgoods,fthenfyoufcouldfdrawfthef consumer’sf
budgetflinefwithoutfanyfmorefinformation.
ANS:ff T DIF: 1
, 9. Afconsumerfprefersfmoreftoflessfoffeveryfgood.fHerfincomefrises,fandfthefpricefoffonefoffthefgoodsf fall
sfwhilefotherfpricesfstayfconstant.fThesefchangesfmustfhavefmadefherfbetterfoff.
ANS:ff T DIF: 1
10. Therefaref3fgoods.fThefpricefoffgoodf1fisf 1,fthefpricefoffgoodf2fisf 1,fandfthefpricefoffgoodf3fisf 2.fItf isfphysi
callyfpossiblefforfafconsumerftofconsumefanyfcommodityfbundlefwithfnonnegativefamountsfoff eachfgoo
d.fAfconsumerfwhofhasfanfincomefoff10fcouldfaffordftofconsumefsomefcommodityfbundlesf thatfincludef5
funitsfoffgoodf1fandf6funitsfoffgoodf2.
ANS:ff T DIF: 2
11. Afdecreasefinfincomefpivotsfthefbudgetflinefaroundfthefbundlefinitiallyfconsumed.f A
NS:ff F DIF: 1
MULTIPLEfCHOICE
1. Iffshefspendsfallfoffherfincomefonfbreadfruitsfandfmelons,fNataliefcanfjustfaffordf9fbreadfruitsfandf10f me
lonsfperfday.fShefcouldfalsofusefherfentirefbudgetftofbuyf3fbreadfruitsfandf12fmelonsfperfday.fThef pricefo
ffbreadfruitsfisf8fyenfeach.fHowfmuchfisfNatalie’sfincomefperfday?
a. 313fyen
b. 317fyen
c. 309fyen
d. 303fyen
e. Nonefoffthefabove.
ANS:ff E DIF: 1
2. Iffshefspendsfallfoffherfincomefonfuglifruitsfandfbreadfruits,fMariafcanfjustfaffordf11fuglifruitsfandf4f bread
fruitsfperfday.fShefcouldfalsofusefherfentirefbudgetftofbuyf3fuglifruitsfandf8fbreadfruitsfperfday.f Thefpricef
offuglifruitsfisf6fpesosfeach.fHowfmuchfisfMaria’sfincomefperfday?
a. 115fpesos
b. 105fpesos
c. 114fpesos
d. 119fpesos
e. Nonefoffthefabove.
ANS:ff C DIF: 1
3. HaroldflivesfonfDoritosfandfseafoodfsalads.fThefpricefoffDoritosfisf1fdollarfperfbagfandfthefpricefoff seafoo
dfsaladsfisf2fdollarsfeach.fHaroldfallowsfhimselfftofspendfnofmorefthanf11fdollarsfafdayfonffood.f Hefalsofr
estrictsfhisfconsumptionftof6,500fcaloriesfperfday.fTherefaref1,500fcaloriesfinfafbagfoffDoritosf andf500fca
loriesfinfafseafoodfsalad.fIffhefspendsfhisfentirefmoneyfbudgetfeachfdayfandfconsumesfnof morefcaloriesft
hanfhisfcalorieflimit,fhefcanfconsumefupfto
a. 3fbagsfoffDoritosfperfdayfbutfnofmore.
b. 1fbagfoffDoritosfperfdayfbutfnofmore.
c. 4fseafoodfsaladsfperfdayfbutfnofmore.
d. 4fbagsfoffDoritosfperfdayfbutfnofmore.
e. Nonefoffthefabove.
ANS:ff A DIF: 2
, 4. Quincyflivesfonfpretzelsfandfseafoodfsalads.fThefpricefoffpretzelsfisf1fdollarfperfbagfandfthefpricefoff sea
foodfsaladsfisf2fdollarsfeach.fQuincyfallowsfhimselfftofspendfnofmorefthanf14fdollarsfafdayfonf food.fHef
alsofrestrictsfhisfconsumptionftof3,400fcaloriesfperfday.fTherefaref600fcaloriesfinfafbagfoff pretzelsfandf
200fcaloriesfinfafseafoodfsalad.fIffhefspendsfhisfentirefmoneyfbudgetfeachfdayfandf consumesfnofmoref
caloriesfthanfhisfcalorieflimit,fhefcanfconsumefupfto
a. 2fbagsfoffpretzelsfperfdayfbutfnofmore.
b. 5fseafoodfsaladsfperfdayfbutfnofmore.
c. 4fbagsfoffpretzelsfperfdayfbutfnofmore.
d. 5fbagsfoffpretzelsfperfdayfbutfnofmore.
e. Nonefoffthefabove.
ANS:ff C DIF: 2
5. Clarafspendsfherfentirefbudgetfandfconsumesf5funitsfoffxfandf13funitsfoffy.fThefpricefoffxfisftwicefthef pric
efoffy.fHerfincomefdoublesfandfthefpricefoffyfdoubles,fbutfthefpricefoffxfstaysfthefsame.fIffshef continuesft
ofbuyf13funitsfoffy,fwhatfisftheflargestfnumberfoffunitsfoffxfthatfshefcanfafford?
a. 10
b. 5
c. 12
d. 14
e. Therefisfnotfenoughfinformationftofsay.
ANS:ff A DIF: 1
6. Mariafspendsfherfentirefbudgetfandfconsumesf5funitsfoffxfandf6funitsfoffy.fThefpricefoffxfisftwicefthef pric
efoffy.fHerfincomefdoublesfandfthefpricefoffyfdoubles,fbutfthefpricefoffxfstaysfthefsame.fIffshef continuesf
tofbuyf6funitsfoffy,fwhatfisftheflargestfnumberfoffunitsfoffxfthatfshefcanfafford?
a. 12
b. 10
c. 14
d. 5
e. Therefisfnotfenoughfinformationftofsay.
ANS:ff B DIF: 1
7. Infyearf1,fthefpricefoffgoodfxfwasf$3,fthefpricefoffgoodfyfwasf$2,fandfincomefwasf$90.fInfyearf2,fthef pricefoff
xfwasf$9,fthefpricefoffgoodfyfwasf$6,fandfincomefwasf$90.fOnfafgraphfwithfxfonfthefhorizontalf axisfandfyfon
fthefvertical,fthefnewfbudgetflinefis
a. flatterfthanfthefoldfonefandfliesfbelowfit.
b. flatterfthanfthefoldfonefandfliesfabovefit.
c. steeperfthanfthefoldfonefandfliesfbelowfit.
d. steeperfthanfthefoldfonefandfliesfabovefit.
e. Nonefoffthefabove.
ANS:ff E DIF: 1
8. Infyearf1,fthefpricefoffgoodfxfwasf$4,fthefpricefoffgoodfyfwasf$1,fandfincomefwasf$70.fInfyearf2,fthef pricefoff
xfwasf$9,fthefpricefoffgoodfyfwasf$2,fandfincomefwasf$70.fOnfafgraphfwithfxfonfthefhorizontalf axisfandfyfon
fthefvertical,fthefnewfbudgetflinefis
a. steeperfthanfthefoldfonefandfliesfbelowfit.
b. steeperfthanfthefoldfonefandfliesfabovefit.
c. flatterfthanfthefoldfonefandfliesfbelowfit.
