I have Quiz for 25 multiple choice questions. "The answers provided last time had 7 wrong answers" ..Please help to find a expert resource for completing the quiz
Start time : Feb 19, 11 AM (EST)..Duration : 30 min
1. Which of the following is NOT an assumption regarding people's preferences in the theory of consumer behavior? A) Preferences are complete. B) Preferences are transitive. C) Consumers prefer more of a good to less. D) All of the above are basic assumptions about consumer preferences. Solution: Option D 2. If a market basket is changed by adding more of at least one good, then rational consumers will: A) rank the market basket more highly after the change. B) more likely prefer a different market basket. C) rank the market basket as being just as desirable as before. D) be unable to decide whether the first market basket is preferred to the second or vice versa. E) have indifference curves that cross. Solution: Option A 3. The assumption that preferences are complete: A) means that a consumer will spend her entire income. B) is unnecessary, as long as transitivity is assumed. C) recognizes that there may be pairs of market baskets that cannot be compared. D) means that the consumer can compare any two market baskets of goods and determine that either one is preferred to the other or that she is indifferent between them. Solution: Option D 4. Which of the following will NOT cause a shift in the supply of gasoline? A) An increase in the wage rate of refinery workers B) A decrease in the price of gasoline C) An improvement in oil refining technology D) A decrease in the price of crude oil Solution: Option A---Wrong B 5. The slope of an indifference curve reveals: A) that preferences are complete. B) the marginal rate of substitution of one good for another good. C) the ratio of market prices. D) that preferences are transitive. E) none of the above Solution: Option B Alvin's preferences for good X and good Y are shown in the diagram below. 6. Based on the above figure, it can be inferred that: A) Alvin does not consider good X as "good." B) Alvin will never purchase any of good Y. C) Alvin regards good X and good Y as perfect substitutes. D) Alvin regards good X and good Y as perfect complements. E) none of the above Solution: Option C Wrong D 7. Which of the following is true about the indifference curve where one commodity (such as pollution) is "bad"? A) It has a negative slope. B) It has a positive slope. C) It is horizontal. D) It is vertical. Solution: Option D wrong B 8. Envision a graph with meat on the horizontal axis and vegetables on the vertical axis. A strict vegetarian, someone who would not consider consuming meat, would have indifference curves that are: A) vertical lines. B) horizontal lines. C) diagonal straight lines. D) right angles. E) upward sloping. Solution: Option B 9. Suppose your utility function for food (F) and clothing (C) is U(F,C) = F + 4C. If you reduce your clothing consumption by 2 units, how much do you have to increase your food consumption in order to maintain the same utility level? A) 2 units B) 4 units C) 6 units D) 8 units Solution: Option D 10. If indifference curves are concave to the origin, which assumption on preferences is violated? A) Diminishing marginal rates of substitution B) Transitivity of preferences C) More is preferred to less D) Completeness Solution: Option A 11. Which of the following is NOT an assumption regarding people's preferences in the theory of consumer behavior? A) Preferences are complete. B) Preferences are transitive. C) Consumers prefer more of a good to less. D) All of the above are basic assumptions about consumer preferences. Solution: Option D 12. An upward sloping indifference curve defined over two goods violates which of the following assumptions from the theory of consumer behavior? A) transitivity. B) preferences are complete. C) more is preferred to less. D) all of the above E) none of the above Solution: Option C 13. Kublai loves Chinese food including American Chinese dishes. Two popular Chinese dishes are General Tso’ Chicken (GTC) and spicy Sichuan wontons (SW). If Kublai’s utility function looks like U = (GTC)(SSW), what kind of preferences does Kublai have over the two dishes, GTC and SSW? A) The dishes are perfect substitutes for Kublai. B) The dishes are perfect complements for him. C) Kublai loves GTC but is neutral towards SSW. D) Kublai has Cobb Douglas preferences over GTC and SSW. Solution: Option D 14. A curve that represents all combinations of market baskets that provide the same level of utility to a consumer is called: A) a budget line. B) an isoquant. C) an indifference curve. D) a demand curve. E) none of the above Solution: Option C 15. What is the relationship between the two goods, X and Y? A) The two goods are substitutes B) The two goods are complements C) The two goods can be either substitute or complement D) We don’t have sufficient information to answer this question. Solution: Option A (Reference to Alvin’s preferences) Wrong D 16. Which of the following claims is true at each point along a price-consumption curve? A) Utility is maximized but income is not all spent. B) All income is spent, but utility is not maximized. C) Utility is maximized, and all income is spent. D) The level of utility is constant. Solution: Option C 17. Which of the following is true regarding utility along a price-consumption curve? A) It is constant. B) It changes from point to point. C) It changes only if income changes. D) It changes only for normal goods. Solution: Option B 18. When the income-consumption curve has a positive slope throughout its entire length, we can conclude that A) both goods are inferior. B) both goods are normal. C) the good on the vertical (y) axis is inferior. D) the good on the horizontal (x) axis is inferior. Solution: Option A Wrong B Reference: For questions 19 to 25, refer to the information given below about Mr. Thomas O'Malley's preferences: Mr. Thomas O’Malley has a utility function given by U = 6X +2Y where X and Y are two consumption goods. The price of X is $2 and the price of Y is $1. Mr. O’Malley has $12 to spend on the two goods. 19. What is Mr. O’Malley’s budget equation? a. 12 = 6X+2Y b. 12 = 6X + Y c. 12 = 2X + 2Y d. 12 = 2X + Y Solution: If he considers option b. his budget will not permit since the price will go to $13. If he considers option a. again his budget won’t permit since the price will go to $14. He doesn’t derive equal satisfaction hence he will not even consider option c because the price will be $6 and he is left with some amount of money. Again, if he considers option d. the price will be $5 which will again leave him with some amount of money. There isn’t any correct option. The correct budget equation will be 5X + 2Y or 6X + 0Y. Wrong D 20. What type of preferences does Mr. O’Malley have over X and Y? a. The utility function exhibits Cobb Douglas preferences b. The utility function exhibits that goods are perfect complements for the consumer. c. The utility function exhibits that the goods are perfect substitutes for the consumer. d. The consumer has lexicographic preferences for the two goods. Solution: Mr. O’ Malley will have lexicographic preferences because he will choose the bundle that will give him maximum X and no matter how much Y is it. Lexicographic preferences describe comparative preferences where a consumer prefers any amount of one good to any amount of another. Hence option d. is the correct one. Wrong C 21. What is the marginal utility of X? a. 2 b. 6 c. 3 d. 1/6 Solution: Option b. is the correct answer. Marginal Utility means the satisfaction derived from an additional unit of a product. As per Mr. O’ Malley his utility from product X is 6 and hence is marginal utility is also 6. 22. What is the marginal utility of Y? a. 2 b. 6 c. 3 d. 1/6 Solution: Option a. is the correct answer since as per the utility function given by Mr. O’ Malley, the satisfaction derived from consuming product Y is 2 and hence the marginal utility means benefit derived from consuming product Y is 2. 23. What is Mr. O’Malley’s marginal rate of substitution? a. 2 b. 1/2 c. 1/3 d. 3 Solution: Option d. is correct. Marginal rate of substitution is calculated by MUX / MUY. As per the utility equation given, Marginal utility of product X is 6 and Marginal utility of product Y is 2. 24. What is the slope of Mr. O’ Malley’s budget line? a. 2 b. ½ c. 1/3 d. 3 Solution: Option a. is the correct answer. Slope of budget line can be calculated using the formula PX / PY. As per the question, price of product X is $2 and price of product Y is $1. 25. If Mr. O’Malley wants to maximize his utility from consumption of X and Y, given his budget of $12, which combination of goods should he choose? a. X = 6, Y = 0 b. X = 3, Y = 3 c. X = 0, Y = 12 d. X = 6, Y = 2 Solution: Option a. will be the correct answer since the utility derived from product X is much more than product Y. If he wants to maximise his utility from consumption, option d will exceed his budget, option b. will not lead to full utilization of his money. Option c doesn’t has any product X which he derives more satisfaction than product y. References Jennifer Lombardo (2022) Study.com. Available at https://study.com/academy/lesson/consumer-preferences-choice-in-economics.html (Accessed February 8, 2022) Study Pug. Available at https://www.studypug.com/micro-econ-help/preferences-and-indifference-curves (Accessed February 8, 2022) Economics Help. https://www.economicshelp.org/blog/glossary/indifference-curves/ (Accessed February 8, 2022) Francisco Jose Espinosa (2011) Demonstrations Wolfram. Available at https://demonstrations.wolfram.com/CobbDouglasUtilityFunction/ (Accessed February 8, 2022) 1 Introduction to The Economic Theory of Production Z