Indifference Curves

Practice Quiz

1.

Refer to the figure below. What happens when the consumer buys 3 units of good X and 4 units of good
Y?

Utility is maximized, although the consumer may not have exhausted her entire income.
Utility could increase by buying more of good X and less of good Y.
Utility could increase by buying more of good Y and less of good X.
The utility-maximizing rule holds, and the combination of goods chosen is the optimal combination.

2.

Refer to the figure below. What is the marginal rate of substitution?

The slope of the indifference curve.

The slope of the budget line.
The budget line.
The ratio of the prices of goods X and Y.

3.

Refer to the figure below. What explains the moves in the budget lines in graph A and B, respectively?

Both moves are explained by changes in income.

Both moves can be explained by changes in the price of X.
The move in graph A is caused by changes in income, and the move in graph B is caused by
changes in the price of X.
The move in graph A is caused by changes in the price of X, and in graph B by changes in income.

4.

Refer to the figure below. Suppose that the price of good Y equals $2. How much is the income of the
consumer?

There is insufficient information to answer the question.

$10.
$20.
$30.

5.

Refer to the figure below. Suppose that the income of the consumer equals $20. Use the information in the
graph to determine the price of good Y (Py) and the price of good X (Px).

There is insufficient information to answer the question.

Py = $2; Px = $4.
Py = $2; Px = $3.
Py = $20; Px = $12.

6.

Refer to the figure below. In the theory of consumer behavior, which point is preferred to the others?

Point h is preferred.
Points f and e along the indifference curve are preferred to points h and g.
Point g is preferred.
All points are equally preferred.

7.

Refer to the figure below. At which point or points does the consumer reach equilibrium?

At point e or at point j.
At a point inside the curves, such as point i.
At point e only.
At point j only.

8.

Refer to the figure below. Based on the information in the graph, the ability of the consumer to reach a
higher utility, from 165 utils to 180 utils, could have been caused by:

An increase in income.
A decrease in the price of one good.
A change in the preferences of the consumer.
All of the above.

9.

Assume there are two goods, X and Y. Good Y is measured on the vertical axis and the intercept of the
budget line equals 10. The price of good Y (Py) equals $5, and the price of good X (Px) equals $10.
The income of the consumer equals:
$10.
$25.
$50.
An undetermined amount. There isn't enough information given.

10.

Assume there are two goods, X and Y. Good Y is measured on the vertical axis and the intercept of the
budget line equals 10. The price of good Y (Py) equals $5, and the price of good X (Px) equals $10.
The slope of the budget line in question equals:
10.
+5.
5.
2.

11.

Assume there are two goods, X and Y. Good Y is measured on the vertical axis and the intercept of the
budget line equals 10. The price of good Y (Py) equals $5, and the price of good X (Px) equals $10.
The expression for the income equation equals:
50 = 10X + 5Y.
10 = 5 - 2X.
Y = 10 - 2X.
Y = 5 - _X.

12.

Assume there are two goods, X and Y. Good Y is measured on the vertical axis and the intercept of the
budget line equals 10. The price of good Y (Py) equals $5, and the price of good X (Px) equals $10.
The expression for the budget line equals:
50 = 10X + 5Y.
10 = 5 - 2X.
Y = 10 - 2X.
Y = 5 - _X.

13.

Assume there are two goods, X and Y. Good Y is measured on the vertical axis and the intercept of the
budget line equals 10. The price of good Y (Py) equals $5, and the price of good X (Px) equals $10.
After the consumer buys 5 units of good Y, how many units (or parts of a unit) of good X would she be
able to buy?
0.5.
2.
2.5.
5.