Pre-Test Chap 07 e18 - Pre-Test Chap 07 e18 Student 1 You...

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Pre-Test Chap 07 e18 Student: ___________________________________________________________________________ 1. You can drive from Kansas City to St. Louis in five hours. You can fly between both cities in two hours. The price of an airline ticket is $150. The cost of driving between the cities is $50. About what hourly wage would make the "full" cost of driving equal the "full" cost of flying, where "full" cost includes the value of time? A. $17 B. $21 C. $29 D. $33 2. Given the indifference curve and budget line above, this individual: A. Prefers B to A but B costs more B. Prefers B to A and they cost the same C. Is indifferent between A and B but A costs less D. Is indifferent between A and B and they cost the same The table shows an indifference curve schedule for several combinations of X and Y. 3. Refer to the above table. In moving from combination a to e, the marginal rate of substitution of X for Y: A. Increases B. Decreases C. Stays the same D. Decreases and then increases
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A. Zero B. Negative C. Positive, but decreasing D. Less than the total utility 5. In a topographic map, each line represents a particular elevation above sea level, and in an indifference map each line represents a particular level of: A. Total utility B. Marginal utility C. The income effect D. The substitution effect 6. A consumer makes purchases of an existing product X such that the marginal utility is 10 and the price is $5. The consumer also tries a new product Y and at the current level of consumption it has a marginal utility of 8 and a price of $1. The utility-maximizing rule suggests that this consumer should: A. Increase consumption of product X and decrease consumption of product Y B. Increase consumption of product X and increase consumption of product Y C. Increase consumption of product Y and decrease consumption of product X D. Decrease consumption of product Y and decrease consumption of product X 7. The utility of a specific product: A. Is determined by consumer income B. Is determined by the price of the product C. Varies from person to person using the product D. Is constant from person to person using the product 8. Refer to the above graphs. Which pairs of budget constraints represent an increase in the price of X and a decrease in the price of Y? A. Graph A
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This note was uploaded on 05/23/2010 for the course ECON 101 taught by Professor Keep during the Spring '10 term at Glendale Community College.

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Pre-Test Chap 07 e18 - Pre-Test Chap 07 e18 Student 1 You...

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