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| 1 | |
A worker's total earnings for one day are $220. He receives a $60 fixed payment and consumes 16 hours of leisure. What is the hourly wage rate? |
| | A) | $10. |
| | B) | $28. |
| | C) | $20. |
| | D) | $8. |
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| 2 | |
An increase in the price of good Y will have what effect on the budget line on a normal X-Y graph? |
| | A) | Decrease the vertical intercept. |
| | B) | Increase the vertical intercept. |
| | C) | Decrease the horizontal intercept. |
| | D) | Increase the horizontal intercept. |
| | E) | None of the above. |
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| 3 | |
For a consumer equilibrium to occur, the |
| | A) | market rate of substitution has to be greater than the marginal rate of substitution. |
| | B) | market rate of substitution has to be less than the marginal rate of substitution. |
| | C) | market rate of substitution has to be equal to the marginal rate of substitution. |
| | D) | Consumer equilibrium can occur in any of the above scenarios. |
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| 4 | |
Which of the following defines combinations of two or more goods that give a consumer the same level of satisfaction? |
| | A) | Market rate of substitution. |
| | B) | Budget set. |
| | C) | Budget line. |
| | D) | Indifference curve. |
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| 5 | |
What is the maximum amount of good X that can be purchased if X and Y are the only two goods available for purchase and Px = $20, Py = $18, Y = 20, and M = 560? |
| | A) | 8. |
| | B) | 10. |
| | C) | 28. |
| | D) | None of the above. |
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| 6 | |
Given that income is $600 and PX = $20 and PY = $30, what is the market rate of substitution between goods X and Y? |
| | A) | -0.67. |
| | B) | -1.5. |
| | C) | -12. |
| | D) | None of the above. |
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| 7 | |
What will happen to the budget line, if the price of good Y decreases? |
| | A) | It will have a parallel shift inward. |
| | B) | It will have a parallel shift outward. |
| | C) | It will become steeper. |
| | D) | It will become flatter. |
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| 8 | |
Given an increase in the price of good X, the substitution effect isolates the consumer's response to the |
| | A) | lower market rate of substitution. |
| | B) | higher market rate of substitution |
| | C) | reduced real income. |
| | D) | increased real income. |
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| 9 | |
The difference between a change in price and a change in income is that |
| | A) | a change in price does not affect the consumption of other goods while a change in income does. |
| | B) | a change in income does not affect the slope of the budget line while a change in price does change the slope. |
| | C) | a change in price will affect real income while a change in income will not affect real income. |
| | D) | All of the above. |
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| 10 | |
Which property implies that consumers are capable of expressing a preference for, or indifference among, all bundles of goods? |
| | A) | Transitivity. |
| | B) | Diminishing marginal rate of substitution. |
| | C) | Completeness. |
| | D) | More-is-better. |
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| 11 | |
The total earnings of a worker are represented by E = $280 + $14(24 – L), where E is earnings and L is the number of hours of leisure. How much will the worker earn if she takes 18 hours of leisure per day? |
| | A) | $84. |
| | B) | $196. |
| | C) | $532. |
| | D) | $364. |
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| 12 | |
Jill prefers apples to oranges, oranges to bananas, and bananas to apples. Jill's preferences |
| | A) | are not complete. |
| | B) | are not transitive. |
| | C) | are consistent with our assumptions about consumer behavior. |
| | D) | Both a and b. |
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| 13 | |
Suppose earnings are given by E = $40 + $25(24 – L), where E is earnings and L is the hours of leisure. What is the price to the worker of consuming an additional hour of leisure? |
| | A) | $15. |
| | B) | $40. |
| | C) | $25. |
| | D) | $24. |
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| 14 | |
The maximum quantity of good Y that can be purchased with a given income level is |
| | A) | M-PY. |
| | B) | M-PX. |
| | C) | M/Y. |
| | D) | M/PY. |
| | E) | None of the above. |
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| 15 | |
Given that income is $600, the price of good Y is $30, and the price of good X is $50, the horizontal intercept of the budget line is |
| | A) | 12. |
| | B) | 20. |
| | C) | 7.5. |
| | D) | 300. |
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