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Multiple Choice Quiz
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1

The originator of the concept of consumer indifference curves is
A)John Maynard Keynes.
B)John Stuart Mills.
C)Francis Y. Edgeworth.
D)David Ricardo.
2

Indifference curves closer to the origin represent
A)higher levels of welfare.
B)lower levels of welfare.
C)unattainable combinations of goods.
D)none of the above.
3

In constructing indifference curves,
A)the concept of cardinal utility is assumed.
B)the marginal rate of substitution is assumed to be increasing.
C)consumers are assumed to have transitivity in their preferences.
D)all of the above.
E)b and c only.
4

The budget constraint line
A)represents combinations of X and Y that can be purchased with a given set of prices and a given income level.
B)is downward-sloping, since purchasing more of good X necessarily means purchasing less of good Y (assuming a fixed level of income).
C)would be steeper the higher the price of good X is relative to the price of good Y.
D)all of the above
E)b and c only.
5

If, when all inputs are doubled, we observe that output triples, the production function exhibits
A)increasing returns to scale.
B)decreasing returns to scale.
C)constant returns to scale.
D)a diminishing marginal rate of substitution.
6

Consumer equilibrium is attained
A)where the budget constraint line is just tangent to the highest possible indifference curve.
B)where MUX/MUY = PX/PY.
C)where producer equilibrium is attained.
D)when a and b are both correct.
7

The situation in which MUX/MUY > PX/PY is __________; by switching a dollar's expenditure from good Y to good X, the consumer would __________.
A)an equilibrium; increase her total utility
B)not an equilibrium; increase her total utility
C)an equilibrium; decrease her total utility
D)not an equilibrium; decrease her total utility
8

Production isoquants
A)are upward sloping.
B)cannot intersect.
C)can intersect.
D)a and b.
E)a and c.
9

If relative factor prices (w/r) are lower in industry X as compared with industry Y, we would expect that industry
A)Y is probably unionized and industry X is probably not.
B)X uses relatively capital-intensive production techniques.
C)Y uses relatively capital-intensive production techniques.
D)X must be relatively capital abundant.
10

If the production possibilities frontier is a straight line, opportunity costs
A)increase as we increase the production of good X.
B)decrease as we increase the production of good X.
C)are constant as we increase the production of good X.
D)are zero.





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