p I ho fe r erence Difficulty: 1 %o Correct Ee:85 Discrimination Index: 23 Correct Answer: B 3.1 Fanny consumes goods z and y. Her indifference curves are bed by t he fo k=a +7). Hig her Values of k correspond to better indifference curVes. Which of t he following (a) Fanny likes good y and hates good a (b) Fanny prefers bundle(8, 9)to bundle(9, 8) Fanny prefers bundle(9, 5)to bundle (5, 9) (d) Fanny likes good a and hates good y (e) More than one of the above st atements are true ferences Difficulty: 1 Correct Respons Discrimination Index: 23 Correct answer: B 3.2 Heidi consumes goods and ind iffe rence curves are descri bed by t he formula y Ha +6). Hig her Values of k correspond to better indifference cur hich of t he follow ing a)Heidi likes good y and hates good x (b) Heidi prefers bundle(1/, 15) to bundle(15, 17 refers bundle(9, 8)to bundle(8, 9) likes good a and hates good y ( e) More than one of the above st atements are true Pet erence Difficulty: 1 Correct Responses: 67 Discrimination Index: 14 Correct Answer: D 3. 3 Georges indifference curVes are circles, all of w hich are centered at (18, 2/). Of any two ind ifference circles, he would rat her be on t he inner one t han t he outer one. Whic h of t he follo wing (a)George's preferences are not complete (c) 6)to(14,17) (d) George prefers(16, 19)to(23, 26) (e) More than one of the above st atements are true
Multiple Choice Preferences Topic: Preferences Diculty: 1 % Correct Responses: 85 Discrimination Index: 23 Correct Answer: B 3.1 Fanny consumes goods x and y. Her indi erence curves are described by the formula y = k=(x + 7). Higher values of k correspond to better indi erence curves. Which of the following is true? (a) Fanny likes good y and hates good x. (b) Fanny prefers bundle (8; 9) to bundle (9; 8). (c) Fanny prefers bundle (9; 5) to bundle (5; 9). (d) Fanny likes good x and hates good y. (e) More than one of the above statements are true. Topic: Preferences Diculty: 1 % Correct Responses: 85 Discrimination Index: 23 Correct Answer: B 3.2 Heidi consumes goods x and y. Her indi erence curves are described by the formula y = k=(x + 6). Higher values of k correspond to better indi erence curves. Which of the following is true? (a) Heidi likes good y and hates good x. (b) Heidi prefers bundle (10; 15) to bundle (15; 10). (c) Heidi prefers bundle (9; 8) to bundle (8; 9). (d) Heidi likes good x and hates good y. (e) More than one of the above statements are true. Topic: Preferences Diculty: 1 % Correct Responses: 67 Discrimination Index: 14 Correct Answer: D 3.3 George's indi erence curves are circles, all of which are centered at (18; 20). Of any two indi erence circles, he would rather be on the inner one than the outer one. Which of the following is true? (a) George's preferences are not complete. (b) George prefers (24; 26) to (14; 17). (c) George pref ers(14; 26) to (14; 17). (d) George prefers (16; 19) to (23; 26). (e) More than one of the above statements are true
MULTIPLE CHOICE Topic: Preferences Difficulty: 1 y Correct Responses: 67 Discrimination Index: 14 Correct Answer: D 3.4 Yoram's indi fference curves are circles, all of which are centered at (12, 19). Of any two in difference circles, he would rat her be on the inner one than the outer one. Which of the following (a) Yoram's preferences are not complete (b) Yor am prefers(18, 25)to(8, 16) (c) Yoram pref ers(8, 25)to(8, 16) (d) Yor am prefers(8, 17)to(18, 28) e)more than one of the above st atements are true Topic: Pre ferences %o Cor Responses: 0 Discriminat ion Index: 0 rrect Answer: B 3.5 Manuel consumes only apples and bananas. He prefers more apples to less, but he gets tired of bananas. If he consumes fewer than 17 bananas per week, he thinks that one banana is a perfect bstitute for ple. B hi ole for each ba that he consumes. The indifference curve that passes through the consumption bundle with 25 ap ples and 26 b also passes t hrough the bundle wit h A apples and 1l bananas, where a eq ual (e) None of the above
MULTIPLE CHOICE 27 Topic: Preferences Diculty: 1 % Correct Responses: 67 Discrimination Index: 14 Correct Answer: D 3.4 Yoram's indi erence curves are circles, all of which are centered at (12; 19). Of any two indi erence circles, he would rather be on the inner one than the outer one. Which of the following is true? (a) Yoram's preferences are not complete. (b) Yoram prefers (18; 25) to (8; 16). (c) Yoram pref ers(8; 25) to (8; 16). (d) Yoram prefers (8; 17) to (18; 28). (e) More than one of the above statements are true. Topic: Preferences Diculty: 1 % Correct Responses: 0 Discrimination Index: 0 Correct Answer: B 3.5 Manuel consumes only apples and bananas. He prefers more apples to less, but he gets tired of bananas. If he consumes fewer than 17 bananas per week, he thinks that one banana is a perfect substitute for one apple. But you would have to pay him one apple for each banana beyond 17 that he consumes. The indi erence curve that passes through the consumption bundle with 25 apples and 26 bananas also passes through the bundle with A apples and 11 bananas, where A equals: (a) 21 (b) 22 (c) 24 (d) 26 (e) None of the above
CHA PTER 3 Prefer ences Topic: Preferences Difficulty: 1 Correct Responses: 0 Discrimination Index: 0 Correct answer: B 3.6 Wil bur cons um es only apples and bananas. He prefers m ore apples to less, but he gets tired of bananas. If he consum es few er than 18 banan as per week, he thinks that one banana is a perfec subs titute for one apple. but you w ould have to pay him one apple for each banana bey ond 18 that he consum es. The indifference curve that p asses through the cons um p tion bundle with 27 ap ples and 30 banan as also passes through the bundle w ith a apples and 13 bananas, w here a eq uals: (d)28 (e) None of t he a boVe Topic: Preferences Difficulty: 1 9 Correct Resporses: 75 Discrimination Index: 50 Correct Answer: E 3.7 If two goods are both desira ble and preferences are convex, then (b)indifference "curVes"must be straight lines (c)if two bundles are indiferent, t hen an average of t he two bundles is worse t han eit her one arginal rate of substitution is constant along indifference curves (e) Topic: Preferences Difficulty: 2 9 Correct Responses Discrimination index Cor swer: B 3.8 If there are only two goods, if m ore of good 1 is alw ay s preferred to less, and if less of good ys preferred to (a) indifference curves slope do (e) None of t he a boVe
CHAPTER 3 Preferences 28 Topic: Preferences Diculty: 1 % Correct Responses: 0 Discrimination Index: 0 Correct Answer: B 3.6 Wilbur consumes only apples and bananas. He prefers more apples to less, but he gets tired of bananas. If he consumes fewer than 18 bananas per week, he thinks that one banana is a perfect substitute for one apple. But you would have to pay him one apple for each banana beyond 18 that he consumes. The indi erence curve that passes through the consumption bundle with 27 apples and 30 bananas also passes through the bundle with A apples and 13 bananas, where A equals: (a) 17 (b) 20 (c) 26 (d) 28 (e) None of the above. Topic: Preferences Diculty: 1 % Correct Responses: 75 Discrimination Index: 50 Correct Answer: E 3.7 If two goods are both desirable and preferences are convex, then: (a) there must be a kink in the indi erence curves. (b) indi erence "curves" must be straight lines. (c) if two bundles are indi erent, then an average of the two bundles is worse than either one. (d) the marginal rate of substitution is constant along indi erence curves (e) None of the above. Topic: Preferences Diculty: 2 % Correct Responses: 53 Discrimination Index: 34 Correct Answer: B 3.8 If there are only two goods, if more of good 1 is always preferred to less, and if less of good 2 is always preferred to more, then: (a) indi erence curves slope downwards. (b) indi erence curves slope upwards. (c) indi erence curves may cross. (d) indi erence curves could take the form of ellipses. (e) None of the above
MULTIPLE CHOICE Topic: Preferences Difficulty: 2 o Correct Responses: 75 Discriminat ion Index: 29 Correct Answer: D 3.9 If two goods are perfect complements (a) there is a bliss point and the indifference curves surround this point (b)cons umers will only buy the cheaper of the two goods (c) indi fference curves have a positive slope ( d)None of the above Topic: Preferences Difficulty: 2 Discriminat ion Index: 0 3.10 The rel ation"is preferred to" between commodity bundles is just one example of a binary lation. Anot her ex ample is the rel ation" "is a full brot her of "defi ned over the set of all human beings. Let x Ry mean person z is a full brother of person y (a) The relation R is reflexive, transitive, and complete (b)The relation R is transitive and complete but not reflexive (c)The relation R is transitive but not complete or reflexive (d) The relation R is complete but not tr ansitive or reflexive (e) The relation R is neither reflexive, transitive, nor complete Difficulty: 1 orrect Res Discriminat ion Ind 3.11 Preferences are said to be monotonic if: (a) all goods must be consumed in fixed propor (b) all goods are perfect substitutes (c) more is alw ays preferred to less (d) there is diminishing marginal rate of substitution (e) None of the above
MULTIPLE CHOICE 29 Topic: Preferences Diculty: 2 % Correct Responses: 75 Discrimination Index: 29 Correct Answer: D 3.9 If two goods are perfect complements: (a) there is a bliss point and the indi erence curves surround this point. (b) consumers will only buy the cheaper of the two goods. (c) indi erence curves have a positive slope. (d) None of the above. Topic: Preferences Diculty: 2 % Correct Responses: 0 Discrimination Index: 0 Correct Answer: C 3.10 The relation \is preferred to" between commodity bundles is just one example of a binary relation. Another example is the relation \is a full brother of " de ned over the set of all human beings. Let xRy mean person x is a full brother of person y. (a) The relation R is re exive, transitive, and complete. (b) The relation R is transitive and complete but not re exive. (c) The relation R is transitive but not complete or re exive. (d) The relation R is complete but not transitive or re exive. (e) The relation R is neither re exive, transitive, nor complete. Topic: Preferences Diculty: 1 % Correct Responses: 61 Discrimination Index: 20 Correct Answer: C 3.11 Preferences are said to be monotonic if: (a) all goods must be consumed in xed proportions. (b) all goods are perfect substitutes. (c) more is always preferred to less. (d) there is diminishing marginal rate of substitution. (e) None of the above
CHAPTER 3 Preferences Topic: Preferences Difficulty: 3 y Correct Responses: 8 Correct Answer: C 3.12 Toby Tal kalot su bscri bes to a local phone service that charges a fixed fee of $10 per mont h Id allows him to pl ace as many local phone calls as he likes without furt her charge. Let Good be an aggregate of commodities ot her than local phone use and let good 2 be local phone use (Measure Good 1 on the horizont al axis and Good 2 on the vertical axis. On Monday, To by didnt use the telephone at all From this we can conclude that the slope m of his indiffer rence curve a the consumption bundle he chose on Monday was (b)less than or equal to O (d) greater than or equal to 0 (e) negati Topic: Preferences Difficulty: 3 Correct Answer: B 3.13 Professor Goodheart s colleague Dr. Kremepuff gives 3 midterm exams. He drops the lowest and gives each st udent her average score on the ot her two exams. Polly Sigh is t aki ng his course and has a 60 on her first exam. Let r2 be her score on the second exam and z3 be her score on the third exam. If we draw her indifference curves for scores on the second and third ex ams wit h 2 represent ed by the horizont al axis and I3 represented by the vertical axis, then her indifference 50.701 (b)three line segments, one vertical, one horizontal, and one running from(70, 60) to(60, 70) unning from(0, 120)to(120, 0) (d) three line segments, one vertical, one horizontal, and one running from(70, 50)to(50, 70) with its poi nt at (50, 70)
CHAPTER 3 Preferences 30 Topic: Preferences Diculty: 3 % Correct Responses: 8 Discrimination Index: 0 Correct Answer: C 3.12 Toby Talkalot subscribes to a local phone service that charges a xed fee of $10 per month and allows him to place as many local phone calls as he likes without further charge. Let Good 1 be an aggregate of commodities other than local phone use and let Good 2 be local phone use. (Measure Good 1 on the horizontal axis and Good 2 on the vertical axis.) On Monday, Toby didn't use the telephone at all. From this we can conclude that the slope m of his indi erence curve at the consumption bundle he chose on Monday was: (a) positive. (b) less than or equal to 0. (c) 0. (d) greater than or equal to 0. (e) negative. Topic: Preferences Diculty: 3 % Correct Responses: 22 Discrimination Index: 26 Correct Answer: B 3.13 Professor Goodheart's colleague Dr. Kremepu gives 3 midterm exams. He drops the lowest and gives each student her average score on the other two exams. Polly Sigh is taking his course and has a 60 on her rst exam. Let x2 be her score on the second exam and x3 be her score on the third exam. If we draw her indi erence curves for scores on the second and third exams with x2 represented by the horizontal axis and x3 represented by the vertical axis, then her indi erence curve through the point (x2; x3) = (50; 70) is: (a) L-shaped with a kink where x2 = x3. (b) three line segments, one vertical, one horizontal, and one running from (70; 60) to (60; 70). (c) a straight line, running from (0; 120) to (120; 0). (d) three line segments, one vertical, one horizontal, and one running from (70; 50) to (50; 70). (e) a V-shaped curve with its point at (50; 70)