Quiz 1 Flashcards
Economists usually do not favor subsidies on specific products or in-kind payments to help low income people. This is because:
the poor person could have increased utility if the same money used to subsidize a product would be given to them to use as they choose
Bundles that lie above the indifference curve are preferred to bundles that lie below. This is an example of:
more is better
“Your college has three meal plans. One if for 21 meals a week, another for 14 and a third offers only 7. You don’t know the price yet but you are certain
the 21 would be best. However, your second choice would be to take only the 7 meal plan and if you had to pick a third choice it would be the 14 emal plan. This preference pattern doesn’t fit the indifference curve assumption of:”
transitivity
The “composite good” refers to:
income not spent on good X in a two-dimensional graphical presentation
The graph of the budget line below has dollars on the vertical axis and food on the horizontal axis. Which statement is false?
the distance OA shows the amount of money spent on OD amount of food
If food is on the vertical axis and shelter on the horizontal axis, the slope of the budget line is given by:
-Ps/Pf
An increase in income with no changes in the price of either good will cause
an outward shift of the budget curve
If the price If the price of a good shown on the vertical axis of a budget graph is cut in half and the price of the good on the horizontal axis is cut by 75%, then the budget constraint shifts
left and becomes steeper
Which is true of the two budget lines drawn below?
Line B and Line A have the same nominal income
According to the rational choice model, cash grants are preferred to food stamps because:
they enhance consumer choice
If the consumer’s budget constraint is given by 10F + 5S = 100 where F is food and S is shelter, how much food can he buy if he purchases 2 units of shelter?
9
Suppose the budget constraint is given by 200P + 50S = 400, where P is pizza and S is spinach. If the prices of S and P increase by 10% each then the budget curve will shift to the
left with the same slope
The indifference curves for nickels and dimes will be
a straight line with negative slope
Say Anna chooses between partying and studying. Suppose her indifference curves satisfy all the assumptions about consumer theory but she also liked studying a lot more than partying. If the price of studying increased, then Anna would consume:
less studying and more partying
If the consumer’s budget constraint is given by 4P + 2B = 50 where P is pizza and B is burgers, the following bundles of pizza and burger would be on the budget constraint:
P=2 B=21
