ch9 possibilities,preferences and choices testbank

ch9 possibilities,preferences and choices testbank - C h a...

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275 8 POSSIBILITIES, PREFERENCES, AND CHOICES ± Consumption Possibilities Topic: Consumption Possibilities, Budget Line Skill: Recognition 1) Budget lines are drawn on a diagram with the A) price of the good on the vertical axis and its quantity on the horizontal axis. B) price of one good on the vertical axis and the price of another good on the horizontal axis. C) quantity of the good on the vertical axis and its price on the horizontal axis. D) quantity of one good on the vertical axis and the quantity of another good on the horizontal axis. Answer: D Topic: Consumption Possibilities, Budget Line Skill: Recognition 2) Consumption choices are limited by A) the person’s preferences for goods and services. B) the person’s income and the prices of goods. C) the marginal utility of the next unit. D) only prices and the person’s preferences. Answer: B Topic: Consumption Possibilities, Budget Line Skill: Recognition 3) A household’s consumption choices are limited by A) prices and preferences. B) income and preferences. C) prices and income. D) prices, preferences, and income. Answer: C Topic: Consumption Possibilities, Budget Line Skill: Conceptual 4) The variables that determine a household’s budget line are A) its preferences and income. B) its preferences and prices. C) prices and income. D) None of the above are correct. Answer: C Topic: Consumption Possibilities, Budget Line Skill: Recognition 5) A budget line shows the A) consumption possibilities of a consumer at a given level of income and prices. B) complete set of preferences for a household at various incomes. C) consumption possibilities for several sets of rela- tive prices at a level of income. D) rate at which consumers wish to substitute one good for another. Answer: A Topic: Consumption Possibilities, Budget Line Skill: Analytical 6) All points below the budget line are A) inferior to every point on the budget line. B) preferred to every point on the budget line. C) affordable. D) unaffordable. Answer: C Topic: Consumption Possibilities, Budget Line Skill: Analytical 7) All points above the budget line are A) inferior to every point on the budget line. B) preferred to every point on the budget line. C) attainable. D) unattainable. Answer: D Topic: Consumption Possibilities, Budget Line Skill: Conceptual 8) As you move along a given budget line, A) prices and real income both decrease. B) prices fall and real income is constant. C) real income decreases and prices are constant. D) prices and real income are constant. Answer: D Chapter
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276 CHAPTER 8 Topic: Consumption Possibilities, Budget Line Skill: Conceptual 9) Matt’s allowance is $20 per month. In order to determine his budget line, you also need to know A) his indifference curve. B)
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ch9 possibilities,preferences and choices testbank - C h a...

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