, CHAPTER,.2 Budget Constraint ,.
TRUE/FALSE 7. If,.there,.are,.two,.goods,.and,.the,.prices,.of,.both,.go
ods,.rise,,.then,.the,.budget,.line,.must,.become,.stee
1. If,.there,.are,.two,.goods,.with,.positive,.prices,.and,.the per.
,.price,.of,.one,.good,.is,.reduced,,.while,.income,.and,.o
ANS:,.F, . , . DIF:,.1
ther,.prices,.remain,.constant,,.then,.the,.size,.of,.the,.bu
dget,.set,.is,.reduced. 8. There,.are,.two,.goods.,.You,.know,.how,.much,.of,.good,.
1,.a,.consumer,.can,.afford,.if,.she,.spends,.all,.of,.her,.inc
ANS:,.F, . , . DIF:,.1
ome,.on,.good,.1.,.If,.you,.knew,.the,.ratio,.of,.the,.prices,
2. If,.good,.1,.is,.measured,.on,.the,.horizontal,.axis,.and,.g .of,.the,.two,.goods,,.then ,.you,.could,.draw,.the,.consume
ood,.2,.is,.measured,.on,.the,.vertical,.axis,.and,.if,.the,.p r’s,.budget,.line,.without,.any,.more,.information.
rice,.of,.good,.1,.is,.p1, . and,.the,.price,.of,.good,.2,.is,.p2,
ANS:,.T, . , . DIF:,.1
,.then ,.the,.slope,.of,.the,.budget,.line,.is,.−p2,./p1.
9. A,.consumer,.prefers,.more,.to,.less,.of,.every,.good.,.
ANS:,.F, . , . DIF:,.1
Her,.income,.rises,,.and,.the,.price,.of,.one,.of,.the,.goo
3. If,.all,.prices,.are,.doubled,.and,.money,.income,.is,.left,. ds,.falls,.while,.other,.prices,.stay,.constant.,.These,.cha
the,.same,,.the,.budget,.set,.does,.not,.change,.because,.r nges,.must,.have,.made,.her,.better,.off.
elative,.prices,.do,.not,.change.
ANS:,.T, . , . DIF:,.1
ANS:,.F, . , . DIF:,.1
10. There,.are,.3,.goods.,.The,.price,.of,.good,.1,.is,.−1,,.the,.p
4. If,.there,.are,.two,.goods,.and,.if,.one,.good,.has,.a,.nega rice,.of,.good,.2,.is,.+1,,.and,.the,.price,.of,.good,.3,.is,.+2
tive,.price,.and,.the,.other,.has,.a,.positive,.price,,.then,.t .,.It,.is,.physically,.possible,.for,.a,.consumer,.to,.consu
he,.slope,.of,.the,.budget,.line,.will,.be,.positive. me,.any,.commodity,.bundle,.with,.nonnegative,.amoun
ts,.of,.each,.good.,.A,.consumer,.who,.has,.an,.income,.o
ANS:,.T, . , . DIF:,.1
f,.10,.could,.afford,.to,.consume,.some,.commodity,.bun
5. If,.all,.prices,.double,.and,.income,.triples,,.then,.the,.bud dles,.that,.include,.5,.units,.of,.good,.1,.and,.6,.units,.of,.
get,.line,.will,.become,.steeper. good,.2.
ANS:,.F, . , . DIF:,.1 ANS:,.T, . , . DIF:,.2
6. If,.good,.1,.is,.on,.the,.horizontal,.axis,.and,.good,.2,.is,.o 11. A,.decrease,.in,.income,.pivots,.the,.budget,.line,.around,.
n,.the,.vertical,.axis,,.then,.an,.increase,.in,.the,.price,.of,. the,.bundle,.initially,.consumed.
good,.1,.will,.not,.change,.the,.horizontal,.intercept,.of,.t
ANS:,.F, . , . DIF:,.1
he,.budget,.line.
ANS:,.F, . , . DIF:,.1
3
,
, 4 | Chapter 4
MULTIPLE,.CHOICE a. 2,.bags,.of,.pretzels,.per,.day,.but,.no,.more.
b. 5,.seafood,.salads,.per,.day,.but,.no,.more.
1. If,.she,.spends,.all,.of,.her,.income,.on,.breadfruits,.and,. c. 4,.bags,.of,.pretzels,.per,.day,.but,.no,.more.
mel- d. 5,.bags,.of,.pretzels,.per,.day,.but,.no,.more.
,.ons,,.Natalie,.can ,.just,.afford,.9,.breadfruits,.and,.10,.m e. None,.of,.the,.above
el-
.,.ANS:,.C, . DIF:,.2
,.ons,.per ,.day.,.She,.could,.also,.use,.her ,.entire,.budget,.to,.
buy,.3,.breadfruits,.and,.12,.melons,.per,.day.,.The,.price,. 5. Clara,.spends,.her,.entire,.budget,.and,.consumes,.5,.units,.of
of,.breadfruits,.is,.8,.yen,.each.,.How,.much,.is,.Natalie’s, x,.and,.13,.units,.of,.y.,.The,.price,.of,.x,.is,.twice,.the,.price,.of
.income,.per ,.day? y.,.Her,.income,.doubles,.and,.the,.price,.of,.y,.doubles,,.b
a. 313,.yen ut,.the,.price,.of,.x,.stays,.the,.same.,.If,.she,.continues,.to,.b
b. 317,.yen uy,.13,.units,.of,.y,,.what,.is,.the,.largest,.number,.of,.units,
c. 309,.yen .of,.x,.that,.she,.can ,.afford?
d. 303,.yen a. 10
e. None,.of,.the,.above b. 5
c. 12
.,.ANS:,.E, . DIF:,.1
d. 14
2. If,.she,.spends,.all,.of,.her,.income,.on,.uglifruits,.and,.bre e. There,.is,.not,.enough,.information,.to,.sa
ad-
y. ,.ANS:,.A, . DIF:,.1
,.fruits,,.Maria,.can ,.just,.afford,.11,.uglifruits,.and,.4,.bre
ad- 6. Maria,.spends,.her,.entire,.budget,.and,.consumes,.5,.unit
,.fruits,.per ,.day.,.She,.could,.also,.use,.her ,.entire,.budget, s, . of,.x,.and,.6,.units,.of,.y.,.The,.price,.of,.x,.is,.twice,.the,.
.to,.buy,.3,.uglifruits,.and,.8,.breadfruits,.per ,.day.,.The,.p price,.of
rice,.of,.uglifruits,.is,.6,.pesos,.each.,.How,.much,.is,.Maria y.,.Her,.income,.doubles,.and,.the,.price,.of,.y,.doubles,,.
’s,.income,.per,.day? but,.the,.price,.of,.x,.stays,.the,.same.,.If,.she,.continues
a. 115,.pesos ,.to,.buy,.6,.units,.of,.y,,.what,.is,.the,.largest,.number ,.o
b. 105,.pesos f,.units,.of,.x,.that,.she,.can,.afford?
c. 114,.pesos a. 12
d. 119,.pesos b. 10
e. None,.of,.the,.above c. 14
d. 5
.,.ANS:,.C, . DIF:,.1
e. There,.is,.not,.enough,.information,.to,.sa
3. Harold,.lives,.on,.Doritos,.and,.seafood,.salads.,.The,.pric
y. ,.ANS:,.B, . DIF:,.1
e,.of,.Doritos,.is,.1,.dollar,.per,.bag,.and,.the,.price,.of,.sea
food,.salads,.is,.2,.dollars,.each.,.Harold,.allows,.himself,. 7. In,.year,.1,,.the,.price,.of,.good,.x,.was,.$3,,.the,.price,.of,.
to,.spend,.no,.more,.than,.11,.dollars,.a,.day,.on,.food.,.He, good,.y,.was,.$2,,.and,.income,.was,.$90.,.In,.year,.2,,.the,.
.also,.restricts,.his,.consumption ,.to,.6,500,.calories,.per ,. price,.of,.x,.was,.$9,,.the,.price,.of,.good,.y,.was,.$6,,.and,.
day.,.There,.are,.1,500,.calories,.in,.a,.bag,.of,.Doritos,.an income,.was
d,.500,.calories,.in,.a,.seafood,.salad.,.If,.he,.spends,.his,.e $90.,.On,.a,.graph,.with,.x,.on,.the,.horizontal,.axis,.and,.y,.
ntire,.money,.budget,.each,.day,.and,.consumes,.no,.more on,.the,.vertical,,.the,.new,.budget,.line,.is
,.calories,.than ,.his,.calo- a. flatter,.than,.the,.old,.one,.and,.lies,.below,.it.
,.rie,.limit,,.he,.can ,.consume,.up,.to b. flatter,.than,.the,.old,.one,.and,.lies,.above,.it.
a. 3,.bags,.of,.Doritos,.per,.day,.but,.no,.more. c. steeper,.than,.the,.old,.one,.and,.lies,.below,.it.
b. 1,.bag,.of,.Doritos,.per,.day,.but,.no,.more. d. steeper,.than,.the,.old,.one,.and,.lies,.above,.it.
c. 4,.seafood,.salads,.per,.day,.but,.no,.more. e. None,.of,.the,.above
d. 4,.bags,.of,.Doritos,.per,.day,.but,.no,.more.
.,.ANS:,.E, . DIF:,.1
e. None,.of,.the,.above
8. In,.year,.1,,.the,.price,.of,.good,.x,.was,.$4,,.the,.price,.of,.g
.,.ANS:,.A, . DIF:,.2
ood,.y,.was,.$1,,.and,.income,.was,.$70.,.In,.year,.2,,.the,.p
4. Quincy,.lives,.on,.pretzels,.and,.seafood,.salads.,.The,.pri rice,.of,.x,.was,.$9,,.the,.price,.of,.good,.y,.was,.$2,,.and,.i
ce,.of,.pretzels,.is,.1,.dollar,.per,.bag,.and,.the,.price,.of,.s ncome,.was
eafood,.salads,.is,.2,.dollars,.each.,.Quincy,.allows,.hims $70.,.On,.a,.graph,.with,.x,.on,.the,.horizontal,.axis,.and,.y,.
elf,.to, . spend,.no,.more,.than,.14,.dollars,.a,.day,.on,.foo on,.the,.vertical,,.the,.new,.budget,.line,.is
d.,.He,.also,.restricts,.his,.consumption,.to,.3,400,.calorie a. steeper,.than,.the,.old,.one,.and,.lies,.below,.it.
s,.per,.day.,.There,.are,.600,.calories,.in,.a,.bag,.of,.pretzel b. steeper,.than,.the,.old,.one,.and,.lies,.above,.it.
s,.and,.200,.cal- c. flatter,.than,.the,.old,.one,.and,.lies,.below,.it.
,.ories,.in ,.a,.seafood,.salad.,.If,.he,.spends,.his,.entire,.mo
ney,.budget,.each,.day,.and,.consumes,.no,.more,.calorie
s,.than,.his,.calorie,.limit,,.he,.can,.consume,.up,.to
TRUE/FALSE 7. If,.there,.are,.two,.goods,.and,.the,.prices,.of,.both,.go
ods,.rise,,.then,.the,.budget,.line,.must,.become,.stee
1. If,.there,.are,.two,.goods,.with,.positive,.prices,.and,.the per.
,.price,.of,.one,.good,.is,.reduced,,.while,.income,.and,.o
ANS:,.F, . , . DIF:,.1
ther,.prices,.remain,.constant,,.then,.the,.size,.of,.the,.bu
dget,.set,.is,.reduced. 8. There,.are,.two,.goods.,.You,.know,.how,.much,.of,.good,.
1,.a,.consumer,.can,.afford,.if,.she,.spends,.all,.of,.her,.inc
ANS:,.F, . , . DIF:,.1
ome,.on,.good,.1.,.If,.you,.knew,.the,.ratio,.of,.the,.prices,
2. If,.good,.1,.is,.measured,.on,.the,.horizontal,.axis,.and,.g .of,.the,.two,.goods,,.then ,.you,.could,.draw,.the,.consume
ood,.2,.is,.measured,.on,.the,.vertical,.axis,.and,.if,.the,.p r’s,.budget,.line,.without,.any,.more,.information.
rice,.of,.good,.1,.is,.p1, . and,.the,.price,.of,.good,.2,.is,.p2,
ANS:,.T, . , . DIF:,.1
,.then ,.the,.slope,.of,.the,.budget,.line,.is,.−p2,./p1.
9. A,.consumer,.prefers,.more,.to,.less,.of,.every,.good.,.
ANS:,.F, . , . DIF:,.1
Her,.income,.rises,,.and,.the,.price,.of,.one,.of,.the,.goo
3. If,.all,.prices,.are,.doubled,.and,.money,.income,.is,.left,. ds,.falls,.while,.other,.prices,.stay,.constant.,.These,.cha
the,.same,,.the,.budget,.set,.does,.not,.change,.because,.r nges,.must,.have,.made,.her,.better,.off.
elative,.prices,.do,.not,.change.
ANS:,.T, . , . DIF:,.1
ANS:,.F, . , . DIF:,.1
10. There,.are,.3,.goods.,.The,.price,.of,.good,.1,.is,.−1,,.the,.p
4. If,.there,.are,.two,.goods,.and,.if,.one,.good,.has,.a,.nega rice,.of,.good,.2,.is,.+1,,.and,.the,.price,.of,.good,.3,.is,.+2
tive,.price,.and,.the,.other,.has,.a,.positive,.price,,.then,.t .,.It,.is,.physically,.possible,.for,.a,.consumer,.to,.consu
he,.slope,.of,.the,.budget,.line,.will,.be,.positive. me,.any,.commodity,.bundle,.with,.nonnegative,.amoun
ts,.of,.each,.good.,.A,.consumer,.who,.has,.an,.income,.o
ANS:,.T, . , . DIF:,.1
f,.10,.could,.afford,.to,.consume,.some,.commodity,.bun
5. If,.all,.prices,.double,.and,.income,.triples,,.then,.the,.bud dles,.that,.include,.5,.units,.of,.good,.1,.and,.6,.units,.of,.
get,.line,.will,.become,.steeper. good,.2.
ANS:,.F, . , . DIF:,.1 ANS:,.T, . , . DIF:,.2
6. If,.good,.1,.is,.on,.the,.horizontal,.axis,.and,.good,.2,.is,.o 11. A,.decrease,.in,.income,.pivots,.the,.budget,.line,.around,.
n,.the,.vertical,.axis,,.then,.an,.increase,.in,.the,.price,.of,. the,.bundle,.initially,.consumed.
good,.1,.will,.not,.change,.the,.horizontal,.intercept,.of,.t
ANS:,.F, . , . DIF:,.1
he,.budget,.line.
ANS:,.F, . , . DIF:,.1
3
,
, 4 | Chapter 4
MULTIPLE,.CHOICE a. 2,.bags,.of,.pretzels,.per,.day,.but,.no,.more.
b. 5,.seafood,.salads,.per,.day,.but,.no,.more.
1. If,.she,.spends,.all,.of,.her,.income,.on,.breadfruits,.and,. c. 4,.bags,.of,.pretzels,.per,.day,.but,.no,.more.
mel- d. 5,.bags,.of,.pretzels,.per,.day,.but,.no,.more.
,.ons,,.Natalie,.can ,.just,.afford,.9,.breadfruits,.and,.10,.m e. None,.of,.the,.above
el-
.,.ANS:,.C, . DIF:,.2
,.ons,.per ,.day.,.She,.could,.also,.use,.her ,.entire,.budget,.to,.
buy,.3,.breadfruits,.and,.12,.melons,.per,.day.,.The,.price,. 5. Clara,.spends,.her,.entire,.budget,.and,.consumes,.5,.units,.of
of,.breadfruits,.is,.8,.yen,.each.,.How,.much,.is,.Natalie’s, x,.and,.13,.units,.of,.y.,.The,.price,.of,.x,.is,.twice,.the,.price,.of
.income,.per ,.day? y.,.Her,.income,.doubles,.and,.the,.price,.of,.y,.doubles,,.b
a. 313,.yen ut,.the,.price,.of,.x,.stays,.the,.same.,.If,.she,.continues,.to,.b
b. 317,.yen uy,.13,.units,.of,.y,,.what,.is,.the,.largest,.number,.of,.units,
c. 309,.yen .of,.x,.that,.she,.can ,.afford?
d. 303,.yen a. 10
e. None,.of,.the,.above b. 5
c. 12
.,.ANS:,.E, . DIF:,.1
d. 14
2. If,.she,.spends,.all,.of,.her,.income,.on,.uglifruits,.and,.bre e. There,.is,.not,.enough,.information,.to,.sa
ad-
y. ,.ANS:,.A, . DIF:,.1
,.fruits,,.Maria,.can ,.just,.afford,.11,.uglifruits,.and,.4,.bre
ad- 6. Maria,.spends,.her,.entire,.budget,.and,.consumes,.5,.unit
,.fruits,.per ,.day.,.She,.could,.also,.use,.her ,.entire,.budget, s, . of,.x,.and,.6,.units,.of,.y.,.The,.price,.of,.x,.is,.twice,.the,.
.to,.buy,.3,.uglifruits,.and,.8,.breadfruits,.per ,.day.,.The,.p price,.of
rice,.of,.uglifruits,.is,.6,.pesos,.each.,.How,.much,.is,.Maria y.,.Her,.income,.doubles,.and,.the,.price,.of,.y,.doubles,,.
’s,.income,.per,.day? but,.the,.price,.of,.x,.stays,.the,.same.,.If,.she,.continues
a. 115,.pesos ,.to,.buy,.6,.units,.of,.y,,.what,.is,.the,.largest,.number ,.o
b. 105,.pesos f,.units,.of,.x,.that,.she,.can,.afford?
c. 114,.pesos a. 12
d. 119,.pesos b. 10
e. None,.of,.the,.above c. 14
d. 5
.,.ANS:,.C, . DIF:,.1
e. There,.is,.not,.enough,.information,.to,.sa
3. Harold,.lives,.on,.Doritos,.and,.seafood,.salads.,.The,.pric
y. ,.ANS:,.B, . DIF:,.1
e,.of,.Doritos,.is,.1,.dollar,.per,.bag,.and,.the,.price,.of,.sea
food,.salads,.is,.2,.dollars,.each.,.Harold,.allows,.himself,. 7. In,.year,.1,,.the,.price,.of,.good,.x,.was,.$3,,.the,.price,.of,.
to,.spend,.no,.more,.than,.11,.dollars,.a,.day,.on,.food.,.He, good,.y,.was,.$2,,.and,.income,.was,.$90.,.In,.year,.2,,.the,.
.also,.restricts,.his,.consumption ,.to,.6,500,.calories,.per ,. price,.of,.x,.was,.$9,,.the,.price,.of,.good,.y,.was,.$6,,.and,.
day.,.There,.are,.1,500,.calories,.in,.a,.bag,.of,.Doritos,.an income,.was
d,.500,.calories,.in,.a,.seafood,.salad.,.If,.he,.spends,.his,.e $90.,.On,.a,.graph,.with,.x,.on,.the,.horizontal,.axis,.and,.y,.
ntire,.money,.budget,.each,.day,.and,.consumes,.no,.more on,.the,.vertical,,.the,.new,.budget,.line,.is
,.calories,.than ,.his,.calo- a. flatter,.than,.the,.old,.one,.and,.lies,.below,.it.
,.rie,.limit,,.he,.can ,.consume,.up,.to b. flatter,.than,.the,.old,.one,.and,.lies,.above,.it.
a. 3,.bags,.of,.Doritos,.per,.day,.but,.no,.more. c. steeper,.than,.the,.old,.one,.and,.lies,.below,.it.
b. 1,.bag,.of,.Doritos,.per,.day,.but,.no,.more. d. steeper,.than,.the,.old,.one,.and,.lies,.above,.it.
c. 4,.seafood,.salads,.per,.day,.but,.no,.more. e. None,.of,.the,.above
d. 4,.bags,.of,.Doritos,.per,.day,.but,.no,.more.
.,.ANS:,.E, . DIF:,.1
e. None,.of,.the,.above
8. In,.year,.1,,.the,.price,.of,.good,.x,.was,.$4,,.the,.price,.of,.g
.,.ANS:,.A, . DIF:,.2
ood,.y,.was,.$1,,.and,.income,.was,.$70.,.In,.year,.2,,.the,.p
4. Quincy,.lives,.on,.pretzels,.and,.seafood,.salads.,.The,.pri rice,.of,.x,.was,.$9,,.the,.price,.of,.good,.y,.was,.$2,,.and,.i
ce,.of,.pretzels,.is,.1,.dollar,.per,.bag,.and,.the,.price,.of,.s ncome,.was
eafood,.salads,.is,.2,.dollars,.each.,.Quincy,.allows,.hims $70.,.On,.a,.graph,.with,.x,.on,.the,.horizontal,.axis,.and,.y,.
elf,.to, . spend,.no,.more,.than,.14,.dollars,.a,.day,.on,.foo on,.the,.vertical,,.the,.new,.budget,.line,.is
d.,.He,.also,.restricts,.his,.consumption,.to,.3,400,.calorie a. steeper,.than,.the,.old,.one,.and,.lies,.below,.it.
s,.per,.day.,.There,.are,.600,.calories,.in,.a,.bag,.of,.pretzel b. steeper,.than,.the,.old,.one,.and,.lies,.above,.it.
s,.and,.200,.cal- c. flatter,.than,.the,.old,.one,.and,.lies,.below,.it.
,.ories,.in ,.a,.seafood,.salad.,.If,.he,.spends,.his,.entire,.mo
ney,.budget,.each,.day,.and,.consumes,.no,.more,.calorie
s,.than,.his,.calorie,.limit,,.he,.can,.consume,.up,.to
