ECO 2301
Sec 002
Spring 2015
K. Becker
QUIZ #12
Wednesday, April 15th
Solutions
1. The marginal rate of substitution is
A. The absolute value of the indifference curve
B. The tradeoff rate between the two goods under consideration at any particular point
C. The total utility derived at any point
D. The rate at which the consumer increases utility
2. Joe prefers a three-pack of soda to a six-pack. What properties does this preference violate?
A. Completeness
B. Transitivity
C. More is better
D. Diminishing MRS
3. If the price of good X is $10 and the price of good Y is $5, how much of good X will the
consumer purchase if her income is $15?
A. 0
B. 2
C. 3
D. Cannot tell based on the above information.
4. Consumers adjust their purchasing behavior so that:
A. they purchase as many scarce resources as possible.
B. marginal rate of substitution is maximized.
C. marginal rate of substitution is minimized.
D. the ratio of prices they pay equals their marginal rate of substitution.
5. The slope of the budget line represents:
A. the marginal rate of substitution.
B. the market rate of substitution.
C. the budget rate of substitution.
D. the opportunity rate of substitution.
6. At the equilibrium consumption bundle, which of the following holds?
A. MRSX,Y = PX/PY.
B. MRSX,Y = -PX/PY.
C. MRSX,Y = -PY/PX.
D. MRSX,Y = PY/PX.
7. Ann's money income is $250, the price of X is $3, and the price of Y is $2. Given these prices
and income, Ann buys 60 units of X and 35 units of Y. Call this combination of X and Y bundle
J. At bundle J Ann's MRS is 2. Given these prices and income, what is Ann's equilibrium
consumption of X?
A. X < 60
B. X = 60
C. X > 60
D. None of the statements is correct.