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# Ch5 - Ch5 Student 1 If Mary prefers bananas to plums and...

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Ch5 Student: ___________________________________________________________________________ 1. If Mary prefers bananas to plums and plums to peaches, but is indifferent between bananas and oranges, she A. prefers oranges to peaches. B. prefers plums to oranges. C. is indifferent between oranges and plums. D. is indifferent between oranges and peaches. 2. A typical indifference curve A. shows all combinations of goods that give a consumer the same level of utility. B. shows that as a consumer has more of a good he is less willing to exchange it for one unit of another good. C. shifts out if income increases. D. both a and b E. all of the above 3. The rate at which a consumer is ABLE to substitute one good for another is determined by A. the indifference map. B. the marginal rate of substitution. C. the consumer's income. D. the ratio of the prices of the goods. 4. A utility function A. shows the relation between prices and a consumer's utility. B. shows the relation between income and a consumer's utility. C. shows the relation between the amount of goods consumed and a consumer's utility. D. all of the above E. none of the above 5. Along an indifference curve A. the MRS is constant. B. the ratio of the marginal utilities is constant. C. the price ratio is constant. D. all of the above E. none of the above 6. The slope of an indifference curve shows A. the change in utility from an additional unit of the good. B. the rate at which the consumer is able to substitute one good in the market. C. is equal to the price ratio at all points. D. is the rate at which the consumer is willing to exchange one good for another, utility held constant. E. all of the above

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7. Which of the following assumptions is(are) NOT made in consumer behavior theory? A. Consumers can rank all bundles of goods. B. Consumers can measure the utility they get from all bundles of goods. C. Consumers have complete information. D. both a and b E. None of the above are assumptions made in consumer behavior theory. 8. Suppose that 2 units of X and 8 units of Y give a consumer the same satisfaction as 4 units of X and 2 units of Y . Then A. the consumer is willing to give up 3 units of Y to obtain 1 more unit of X . B. the consumer is willing to give up 1 unit of Y to obtain 3 more units of X . C. the marginal rate of substitution of X for Y is 3. D. both a and c E. both b and c 9. Alexandra consumes only caviar and champagne, but she does have a limited income of \$400. Her current consumption choice is 5 ounces of caviar, at a price of \$50 per ounce, and 6 bottles of champagne, at \$25 each. The last ounce of caviar added 100 units to Alexandra's total utility, while the last bottle of champagne added 75 units. If Alexandra chooses 4 ounces of caviar and 8 bottles of champagne instead: A. her total utility will increase by 150 units B. her total utility will decrease by 150 units C. her total utility will increase by 100 units D. her total utility will decrease by 100 units E. her total utility will increase by 50 units
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Ch5 - Ch5 Student 1 If Mary prefers bananas to plums and...

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