Unformatted text preview: Chapter 2 Budget Constraint TrueFalse
Topic: Budget Constraint
Correct Responses: 90
Correct Answer: False Di culty: 1
Discrimination Index: 10 2.1 If there are two goods with positive prices and the price of one good is reduced, while income
and other prices remain constant, then the size of the budget set is reduced.
Topic: Budget Constraint
Correct Responses: 76
Correct Answer: False Di culty: 1
Discrimination Index: 24 2.2 If good 1 is measured on the horizontal axis and good 2 is measured on the vertical axis, and if the price of good 1 is p1 and the price of good 2 is p2 ; then the slope of the budget line is ,p2 =p1. Topic: Budget Constraint
Correct Responses: 91
Correct Answer: False Di culty: 1
Discrimination Index: 13 2.3 If all prices are doubled and money income is left the same, the budget set does not change
because relative prices don't change.
Topic: Budget Constraint
Correct Responses: 93
Correct Answer: True Di culty: 1
Discrimination Index: 21 2.4 If there are two goods, and if one good has a negative price and the other has a positive
price, then the slope of the budget line will be positive.
Topic: Budget Constraint
Correct Responses: 94
Correct Answer: False Di culty: 1
Discrimination Index: 12 2.5 If all prices double and income triples, then the budget line will become steeper. CHAPTER 2 Budget Constraint
Topic: Budget Constraint
Correct Responses: 95
Correct Answer: False 2 Di culty: 1
Discrimination Index: 13 2.6 If Good 1 is on the horizontal axis and Good 2 is on the vertical axis, then an increase in the
price of Good 1 will not change the horizontal intercept of the budget line.
Topic: Budget Constraint
Correct Responses: 98
Correct Answer: False Di culty: 1
Discrimination Index: 1 2.7 If there are two goods and the prices of both goods rise, then the budget line must become
steeper. Topic: Budget Constraint
Correct Responses: 97
Correct Answer: True Di culty: 1
Discrimination Index: 0 2.8 There are two goods. You know how much of good 1 a consumer can a ord if she spends all of her income on good 1. If you know the ratio of the prices of the two goods, then you could draw
the consumer's budget line without any more information.
Topic: Budget Constraint
Correct Responses: 91
Correct Answer: True Di culty: 1
Discrimination Index: 0 2.9 A consumer prefers more to less of every good. Her income rises, and the price of one of the
goods falls while other prices stay constant. These changes must have made her better o .
Topic: Budget Constraint
Correct Responses: 0
Correct Answer: True Di culty: 2
Discrimination Index: 0 2.10 There are 3 goods. The price of good 1 is ,1; the price of good 2 is +1; and the price of good 3 is +2. It is physically possible for a consumer to consume any commodity bundle with
nonnegative amounts of each good. A consumer who has income of 10 could a ord to consume
some commodity bundles that include 5 units of good 1 and 6 units of good 2.
Topic: Budget Constraint
Correct Responses: 80
Correct Answer: False Di culty: 1
Discrimination Index: 49 2.11 A decrease in income pivots the budget line around the bundle initially consumed. Multiple Choice Topic: Budget Constraint
Correct Responses: 97
Correct Answer: A Budget Constraint Di culty: 1
Discrimination Index: 6 2.1
If she spends all of her income on lemons and tangerines, Isabella can just a ord 30 lemons and
8 tangerines per day. She could also use her entire budget to buy 6 lemons and 14 tangerines per
day. The price of lemons is 6 guineas each. How much is Isabella's income per day?
a 372 guineas
b 377 guineas
c 371 guineas
d 363 guineas
e None of the above. Topic: Budget Constraint
Correct Responses: 97
Correct Answer: A Di culty: 1
Discrimination Index: 6 2.2
If she spends all of her income on uglifruit and breadfruits, Maria can just a ord 11 uglifruit
and 4 breadfruits per day. She could also use her entire budget to buy 3 uglifruit and 8 breadfruits
per day. The price of uglifruit is 6 pesos each. How much is Maria's income per day?
a 115 pesos
b 119 pesos
c 114 pesos
d 105 pesos
e None of the above. CHAPTER 2 Budget Constraint
Topic: Budget Constraint
Correct Responses: 0
Correct Answer: A 4 Di culty: 2
Discrimination Index: 0 2.3 Matt lives on popcorn and seafood salads. The price of popcorn is 1 dollar per bag and the
price of seafood salads is 2 dollars each. Matt allows himself to spend no more than 13 dollars a
day on food. He also restricts his consumption to 5,500 calories per day. There are 1,000 calories
in a bag of popcorn and 500 calories in a seafood salad. If he spends his entire money budget each
day and consumes no more calories than his calorie limit:
a he can consume up to 3 bags of popcorn per day, but no more.
b he can consume up to 1 bags of popcorn per day, butno more.
c he can consume up to 5 seafood salads per day, but no more.
d he can consume up to 4 bags of popcorn per day, but no more.
e None of the above. Topic: Budget Constraint
Correct Responses: 0
Correct Answer: A Di culty: 2
Discrimination Index: 0 2.4 Quincy lives on ding dongs and seafood salads. The price of ding dongs is 1 dollar per bag and the price of seafood salads is 4 dollars each. Quincy allows himself to spend no more than 23
dollars a day on food. He also restricts his consumption to 3,300 calories per day. There are 600
calories in a bag of ding dongs and 300 calories in a seafood salad. If he spends his entire money
budget each day and consumes no more calories than his calorie limit:
a he can consume up to 3 bags of ding dongs per day, but no more.
b he can consume up to 1 bags of ding dongs per day, butno more.
c he can consume up to 5 seafood salads per day, but no more.
d he can consume up to 4 bags of ding dongs per day, but no more.
e None of the above. MULTIPLE CHOICE
Topic: Budget Constraint
Correct Responses: 88
Correct Answer: A 5 Di culty: 1
Discrimination Index: 20 2.5 Teresa spends her entire budget and consumes 6 units of x and 20 units of y. The price of x is twice the price of y. Her income doubles and the price of y doubles, but the price of x stays the
same. If she continues to buy 20 units of y; what is the largest number of units of x that she can
a ord?
a 12
b 6
c 14
d 16
e There is not enough information to say.
Topic: Budget Constraint
Correct Responses: 88
Correct Answer: A Di culty: 1
Discrimination Index: 20 2.6 Linda spends her entire budget and consumes 15 units of x and 19 units of y. The price of x is twice the price of y. Her income doubles and the price of y doubles, but the price of x stays the
same. If she continues to buy 19 units of y; what is the largest number of units of x that she can
a ord?
a 30
b 15
c 32
d 34
e There is not enough information to say.
Topic: Budget Constraint
Correct Responses: 50
Correct Answer: C Di culty: 1
Discrimination Index: 50 2.7 In year 1, the price of good x was 1, the price of good y was 1, and income was 30. In year
2, the price of x was 6, the price of good y was 5, and income was 30. On a graph with x on the
horizontal axis and y on the vertical, the new budget line is:
a atter than the old one and lies below it.
b atter than the old one and lies above it.
c steeper than the old one and lies below it.
d steeper than the old one and lies above it.
e none of the above. CHAPTER 2 Budget Constraint
Topic: Budget Constraint
Correct Responses: 50
Correct Answer: C 6 Di culty: 1
Discrimination Index: 50 2.8 In year 1, the price of good x was 4, the price of good y was 2, and income was 60. In year
2, the price of x was 17, the price of good y was 8, and income was 60. On a graph with x on the
horizontal axis and y on the vertical, the new budget line is:
a atter than the old one and lies below it.
b atter than the old one and lies above it.
c steeper than the old one and lies below it.
d steeper than the old one and lies above it.
e none of the above. Topic: Budget Constraint
Correct Responses: 35
Correct Answer: D Di culty: 1
Discrimination Index: 8 2.9
If she spends her entire budget, Vanessa can a ord 47 apricots and 10 cherries. She can also just
a ord 20 apricots and 19 cherries. The price of apricots is 18 cents. What is the price of cherries
in cents?
a 64
b 3
c 21
d 54
e None of the above. MULTIPLE CHOICE
Topic: Budget Constraint
Correct Responses: 35
Correct Answer: D 7 Di culty: 1
Discrimination Index: 8 2.10
If she spends her entire budget, Heidi can a ord 39 peaches and 12 pears. She can also just a ord
24 peaches and 17 pears. The price of peaches is 9 cents. What is the price of pears in cents?
a 37
b 3
c 12
d 27
e None of the above.
Topic: Budget Constraint
Correct Responses: 100
Correct Answer: B Di culty: 1
Discrimination Index: 0 2.11 Heidi thrives on two goods: bananas and apples. The cost of bananas is 30 marks each and
the cost of apples is 15 marks each. If her income is 210 marks, how many bananas can she buy if
she spends all of her income on bananas?
a 5
b 7
c 14
d 10
e None of the above
Topic: Budget Constraint
Correct Responses: 100
Correct Answer: B Di culty: 1
Discrimination Index: 0 2.12 Teresa thrives on two goods: mangos and melons. The cost of mangos is 30 yen each and
the cost of melons is 15 yen each. If her income is 180 yen, how many mangos can she buy if she
spends all of her income on mangos?
a 4
b 6
c 12
d 9
e None of the above CHAPTER 2 Budget Constraint
Topic: Budget Constraint
Correct Responses: 76
Correct Answer: B 8 Di culty: 1
Discrimination Index: 34 2.13 Yoram spends his entire income on 11 sacks of acorns and 5 crates of butternuts. The price
of acorns is 4 dollars per sack and his income is 94 dollars. He can just a ord a commodity bundle
with A sacks of acorns and B crates of butternuts which satis es the budget equation:
a 4A + 12B = 94.
b 8A + 20B = 188.
c 6A + 10B = 94.
d 4A + 14B = 96.
e None of the above.
Topic: Budget Constraint
Correct Responses: 76
Correct Answer: B Di culty: 1
Discrimination Index: 34 2.14 Eduardo spends his entire income on 12 sacks of acorns and 2 crates of butternuts. The
price of acorns is 2 dollars per sack and his income is 34 dollars. He can just a ord a commodity
bundle with A sacks of acorns and B crates of butternuts which satis es the budget equation:
a 2A + 7B = 34.
b 4A + 10B = 68.
c 4A + 5B = 34.
d 2A + 9B = 36.
e None of the above.
Topic: Budget Constraint
Correct Responses: 99
Correct Answer: C Di culty: 1
Discrimination Index: 5 2.15 Harry thrives on two goods, paperback novels and bananas. The cost of paperback novels
is 4 dollars each and the cost of bananas is 3 dollars per bunch.If Harry spent all of his income on
bananas, he could a ord 12 bunches of bananas per week. How many paperback novels could he
buy if he spent all of his income on paperback novels?
a 36
b 48
c 9
d 16
e None of the above. MULTIPLE CHOICE
Topic: Budget Constraint
Correct Responses: 92
Correct Answer: E 9 Di culty: 1
Discrimination Index: 25 2.16 Suppose that the prices of good x and good y both double, and income triples. On a graph
where the budget line is drawn with x on the horizontal axis and y on the vertical axis:
a the budget line becomes steeper and shifts inward.
b the budget line becomes atter and shifts outward.
c the budget line becomes atter and shifts inward.
d the new budget line is parallel to the old budget line and lies below it.
e None of the above.
Topic: Budget Constraint
Correct Responses: 96
Correct Answer: D Di culty: 1
Discrimination Index: 18 2.17 Suppose that the price of good x triples and the price of good y doubles while income
remains constant. On a graph where the budget line is drawn with x on the horizontal axis and y
on the vertical axis, the new budget line:
a is atter than the old one and lies below it.
b is atter than the old one and lies above it.
c crosses the old budget line.
d is steeper than the old one and lies below it.
e is steeper than the old one and lies above it.
Topic: Budget Constraint
Correct Responses: 0
Correct Answer: C Di culty: 3
Discrimination Index: 0 2.18 While traveling abroad, Tammy spent all of the money in her purse to buy 5 plates of
spaghetti and 6 oysters. Spaghetti costs 8 units of the local currency per plate and she had 82 units
of currency in her purse. If s denotes the number of plates of spaghetti and o denotes the number
of oysters purchased, the set of commodity bundles that she could just a ord with the money in
her purse is described by the equation:
a 82 + 6o = 82.
b 6s + 8o = 82.
c 8s + 7o = 82.
d 5s + 6o = 82.
e There is not enough information to determine the answer. CHAPTER 2 Budget Constraint
Topic: Budget Constraint
Correct Responses: 0
Correct Answer: B 10 Di culty: 2
Discrimination Index: 0 2.19 Billy Bob wants to gain some weight so that he can play football. Billy eats only milkshakes and spinach. Milkshakes cost him $1 each and spinach costs $2 per serving. A milkshake has 850
calories and a serving of spinach has 200 calories. Billy Bob never spends more than $20 a day on
food and he always consumes at least 8000 calories per day. Which of the following is necessarily
true?
a Billy Bob consumes at least 9 milkshakes a day.
b Billy Bob never consumes more than 6 servings of spinach a day.
c Billy Bob never consumes positive amounts of both goods.
d Billy Bob consumes only milkshakes.
e None of the above. Topic: Budget Constraint
Correct Responses: 81
Correct Answer: D Di culty: 2
Discrimination Index: 21 2.20 Lars consumes only potatoes and herring. When the price of potatoes was 9 crowns per sack and the price of herring was 5 crowns per crock, he spent his entire income to buy 5 sacks of
potatoes and 10 crocks of herring per month. Now the government subsidizes potatoes. Market
prices haven't changed, but consumers get a subsidy of 5 crowns for every sack of potatoes consumed. To pay for this subsidy, the government introduced an income tax. Lars pays an income
tax of 20 crowns per month. If s is the number of sacks of potatoes and c is the number of crocks
of herring, what is Lars's NEW budget equation?
a 9s + 5c = 100.
b 14s + 5c = 95.
c 4s + 5c = 95.
d 4s + 5c = 75.
e 14s + 5c = 120. MULTIPLE CHOICE
Topic: Budget Constraint
Correct Responses: 95
Correct Answer: C 11 Di culty: 1
Discrimination Index: 17 2.21 If you spent your entire income, you could a ord either 4 units of x and 8 units of y or 8
units of x and 4 units of y. If you spent your entire income on x; how many units of x could you buy?
a 20
b 17
c 12
d There is not enough information to determine the amount of x.
e None of the above. Topic: Budget Constraint
Correct Responses: 95
Correct Answer: C Di culty: 1
Discrimination Index: 17 2.22 If you spent your entire income, you could a ord either 5 units of x and 15 units of y or 15
units of x and 5 units of y. If you spent your entire income on x; how many units of x could you buy?
a 35
b 24
c 20
d There is not enough information to determine the amount of x.
e None of the above. Topic: Budget Constraint
Correct Responses: 95
Correct Answer: C Di culty: 1
Discrimination Index: 10 2.23 Bella's budget line for x and y depends on all of the following except:
a the amount of money she has to spend on x and y.
b the price of x.
c her preferences between x and y.
d the price of y.
e none of the above. CHAPTER 2 Budget Constraint
Topic: Budget Constraint
Correct Responses: 94
Correct Answer: D 12 Di culty: 1
Discrimination Index: 26 2.24 Your budget constraint for the two goods A and B is 12A + 4B = I where I is your income. You are currently consuming more than 45 units of B . In order to get 5 more units of A, how many
units of B would you have to give up?
a 0.33
b 0.07
c 3
d 15
e None of the above. Topic: Budget Constraint
Correct Responses: 94
Correct Answer: D Di culty: 1
Discrimination Index: 26 2.25 Your budget constraint for the two goods A and B is 6A + 3B = I where I is your income. You are currently consuming more than 12 units of B . In order to get 2 more units of A, how many
units of B would you have to give up?
a 0.50
b 0.25
c 2
d 4
e None of the above. MULTIPLE CHOICE
Topic: Budget Constraint
Correct Responses: 70
Correct Answer: A 13 Di culty: 2
Discrimination Index: 32 2.26 Young Alasdair loves lollipops and hates oatmeal. To induce him to eat enough oatmeal and to restrain him from eating too many lollipops, his mum pays him 10 pence for every quart
of oatmeal that he eats. The only way that he can get lollipops is to buy them at the sweet shop,
where lollipops cost 5 pence each. Besides what he earns from eating oatmeal, Alasdair gets an
allowance of 10 pence per week. If Alasdair consumes only oatmeal and lollipops and if his consumption bundles are graphed with quarts of oatmeal on the horizontal axis and lollipops on the
vertical axis, then Alasdair's budget line:
a has a slope of 2.
b has a slope of less than ,2.
c has a slope of ,2.
d has a slope of 1=2.
e has a slope greater than 2. Topic: Budget Constraint
Correct Responses: 41
Correct Answer: C Di culty: 2
Discrimination Index: 30 2.27 The Chuzzlewits have an income of $m per week. Let x be food and let y be all other goods.
Let px be the price of food and py be the price of other goods. They can use food stamps to buy
food at a price of px 1 , s for up to x* units of food per week. If they buy more food than x*, they
have to pay the full price, px for additional units. Their weekly income is greater than px 1 , sx.
The maximum amount of food that they can buy per week is:
a x +m=px
b m + x=px
c m=px + sx
d m=1 , spx
e m + px =1 , spx CHAPTER 2 Budget Constraint
Topic: Budget Constraint
Correct Responses: 100
Correct Answer: C 14 Di culty: 1
Discrimination Index: 0 2.28 Edmund must pay $6 each for punk rock video casettes, V . If Edmund is paid $24 per sack
for accepting garbage, G; and if his relatives send him an allowance of $192, then his budget line is
described by the equation:
a 6V = 24G.
b 6V + 24G = 192.
c 6V , 24G = 192.
d 6V = 192 , G.
e None of the above.
Topic: Budget Constraint
Correct Responses: 100
Correct Answer: C Di culty: 1
Discrimination Index: 0 2.29 Edmund must pay $6 each for punk rock video casettes, V . If Edmund is paid $24 per sack
for accepting garbage, G; and if his relatives send him an allowance of $168, then his budget line is
described by the equation:
a 6V = 24G.
b 6V + 24G = 168.
c 6V , 24G = 168.
d 6V = 168 , G.
e None of the above.
Topic: Budget Constraint
Correct Responses: 0
Correct Answer: C Di culty: 0
Discrimination Index: 0 2.30 If you have an income of $40 to spend, if commodity 1 costs $4 per unit, and commodity 2
costs $20 per unit, then the equation for your budget line can be written as:
a x1=4 + x2 =20 = 40.
b x1 + x2 =24 = 40.
c x1 + 5x2 = 10.
d 5x1 + 21x2 = 41.
e 24x1 + x2 = 40. MULTIPLE CHOICE
Topic: Budget Constraint
Correct Responses: 0
Correct Answer: C 15 Di culty: 0
Discrimination Index: 0 2.31 If you have an income of $36 to spend, if commodity 1 costs $4 per unit, and commodity 2
costs $12 per unit, then the equation for your budget line can be written as:
a x1=4 + x2 =12 = 36.
b x1 + x2 =16 = 36.
c x1 + 3x2 = 9.
d 5x1 + 13x2 = 37.
e 16x1 + x2 = 36. Topic: Budget Constraint
Correct Responses: 85
Correct Answer: A Di culty: 1
Discrimination Index: 20 2.32 If you could exactly a ord either 5 units of x and 17 units of y; or 8 units of x and 5 units
of y; then if you spent all of your income on y; how many units of y could you buy?
a 37
b 25
c 49
d 13
e None of the above. Topic: Budget Constraint
Correct Responses: 85
Correct Answer: A Di culty: 1
Discrimination Index: 20 2.33 If you could exactly a ord e...
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 Spring '07
 Babcock
 The Wealth of Nations, Correct Answer, Correct Responses, discrimination index, Di culty

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