pretest - EFN 422 Pre test This list of questions is to...

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EFN 422 – Pre test This list of questions is to help you prepare for the mid-term exam 1. When the price of a good increases, the substitution effect must lead the agent to consume more. a. Yes b. No 2.An assumption on consumer preferences that implies that, if any two bundles in the consumption possibility set are chosen, then agents will be able to rank them is called 3.A locus of bundles in the consumption set for a consumer, all of which are equally preferred, is called a(n) a. difference curve b. budget line c. indifference curve 4.Because of the convexity assumption and the fact that indifference curves farther from the origin contain higher levels of utility, indifference curves a. are bowed out from the origin b. are bowed in toward the origin c. all pass through the origin 5. Refer to the above Figure. The indifference curves violate the a. selfishness assumption b. convexity of preferences c. rationality principle
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