ECO 2301
Sec 002
Fall 2011
K. Becker
QUIZ #15
Solutions
Choose the best answer to each of the following questions
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) In an indifference curve/budget line diagram, a consumer will select the combination of goods
1) _______
that is on the budget line and for which the
A) slope of the indifference curve is greater than the relative price of the two goods.
B) marginal rate of substitution between two goods is equal to the relative price of the two
goods.
C) marginal rate of substitution between two goods is greater than the relative price of the two
goods.
D) slope of the indifference curve is less than the relative price of the two goods.
2) Samara's income is $30 a month and she spends all of it on music downloads and gasoline. The
price of a music download is $1.50 and the price of a gallon of gasoline is $3. At Samara's best
affordable point, her marginal rate of substitution is ________ per gallon of gasoline
A) 0.5 of a download
B) 1.5 downloads
D) 2 downloads
C) 1 download
2) _______
3) Your weekly budget for gasoline and movie rentals is $45.00. Referring to the figure above, what
is the price per gallon of gasoline?
A) $1.50
B) $1.00
C) $1.25
D) $1.75
3) _______
4) Your weekly budget for gasoline and movie rentals is $45.00. Referring to the figure above, what
is the price per movie rental?
A) $3.00
B) $2.50
C) $2.00
D) $2.25
4) _______
5) The above figure shows your budget line and indifference curves. What quantities of gasoline
and movie rentals would you choose?
A) 20 gallons of gasoline and 5 movie rentals
B) 25 gallons of gasoline and 15 movie rentals
C) 15 gallons of gasoline and 8 movie rentals
D) 10 gasoline and 10 movie rentals
5) _______