chapter 21 - Chapter 21 The Theory of Consumer Choice...

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Unformatted text preview: Chapter 21 The Theory of Consumer Choice TRUE/FALSE 1. The theory of consumer choice illustrates that people face tradeoffs, which is one of the Ten Principles of Economics . ANS: T DIF: 1 REF: 21-0 NAT: Analytic LOC: Utility and consumer choice TOP: Consumer choice MSC: Definitional 2. A consumers budget constraint for goods X and Y is determined by how much the consumer likes good X relative to good Y. ANS: F DIF: 2 REF: 21-1 NAT: Analytic LOC: Utility and consumer choice TOP: Budget constraint MSC: Definitional 3. The slope of the budget constraint reveals the relative price of good X compared to good Y. ANS: T DIF: 2 REF: 21-1 NAT: Analytic LOC: Utility and consumer choice TOP: Budget constraint MSC: Applicative 4. A budget constraint illustrates bundles that a consumer prefers equally, while an indifference curve illustrates bundles that are equally affordable to a consumer. ANS: F DIF: 2 REF: 21-1 | 21-2 NAT: Analytic LOC: Utility and consumer choice TOP: Budget constraint MSC: Applicative 5. For a typical consumer, most indifference curves are bowed inward. ANS: T DIF: 1 REF: 21-2 NAT: Analytic LOC: Utility and consumer choice TOP: Indifference curves MSC: Interpretive 6. For a typical consumer, most indifference curves are downward sloping. ANS: T DIF: 1 REF: 21-2 NAT: Analytic LOC: Utility and consumer choice TOP: Indifference curves MSC: Interpretive 7. For a typical consumer, indifference curves can intersect if they satisfy the property of transitivity. ANS: F DIF: 2 REF: 21-2 NAT: Analytic LOC: Utility and consumer choice TOP: Indifference curves MSC: Interpretive 8. When two goods are perfect complements, the indifference curves are right angles. ANS: T DIF: 1 REF: 21-2 NAT: Analytic LOC: Utility and consumer choice TOP: Perfect complements MSC: Interpretive 9. The indifference curves for left shoes and right shoes are right angles. ANS: T DIF: 1 REF: 21-2 NAT: Analytic LOC: Utility and consumer choice TOP: Perfect complements MSC: Applicative 10. The indifference curves for perfect substitutes are straight lines. ANS: T DIF: 1 REF: 21-2 NAT: Analytic LOC: Utility and consumer choice TOP: Perfect substitutes MSC: Applicative 126 Chapter 21/The Theory of Consumer Choice 127 11. The indifference curves for nickels and dimes are straight lines. ANS: T DIF: 1 REF: 21-2 NAT: Analytic LOC: Utility and consumer choice TOP: Perfect substitutes MSC: Applicative 12. When two goods are perfect substitutes, the indifference curves are right angles. ANS: F DIF: 1 REF: 21-2 NAT: Analytic LOC: Utility and consumer choice TOP: Perfect complements | Perfect substitutes MSC: Interpretive 13. If goods A and B are perfect substitutes, then the marginal rate of substitution of good A for good B is constant....
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This note was uploaded on 11/09/2011 for the course ECON Econ taught by Professor Morris during the Spring '10 term at City Colleges of Chicago.

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chapter 21 - Chapter 21 The Theory of Consumer Choice...

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