Business Economic

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1. The theory of consumer choice provides the foundation for understanding a. the structure of a firm. b. the profitability of a firm. c. a firm 's product demand. d. a firm 's product supply. ANS: C PTS: 1 DIF: 1 REF: 21-0 TOP: Consumer choice MSC: Definitional 2. The theory of consumer choice examines a. the determination of output in competitive markets. b. the tradeoffs inherent in decisions made by consumers. c. how consumers select inputs into manufacturing production processes. d. the determination of prices in competitive markets. ANS: B PTS: 1 DIF: 1 REF: 21-0 TOP: Consumer choice MSC: Definitional 3. Consider two goods, books and hamburgers. The slope of the consumer 's budget constraint is measured by the a. consumer 's income…show more content…
Refer to Figure 21-1. A consumer that chooses to spend all of her income could be at which point(s) on the budget constraint? a. A b. E c. B, C, or D d. A, B, C, or D ANS: C PTS: 1 DIF: 1 REF: 21-1 TOP: Budget constraint MSC: Applicative 14. Refer to Figure 21-1. All of the points identified in the figure represent possible consumption options with the exception of a. A b. E c. A and E d. None. All points are possible consumption options. ANS: B PTS: 1 DIF: 2 REF: 21-1 TOP: Budget constraint MSC: Applicative Figure 21-2 15. Refer to Figure 21-2. Which of the graphs in the figure reflects a decrease in the price of good X only? a. graph (a) b. graph (b) c. graph (c) d. graph (d) ANS: B PTS: 1 DIF: 2 REF: 21-1 TOP: Budget constraint MSC: Analytical 16. Refer to Figure 21-2. Which of the graphs in the figure reflects an increase in the price of good Y only? a. graph (a) b. graph (b) c. graph (c) d. graph (d) ANS: C PTS: 1 DIF: 2 REF: 21-1 TOP: Budget constraint MSC: Analytical 17. Refer to Figure 21-2. Which of the graphs in the figure could reflect a decrease in the prices of both goods? a. graph (a) b. graph (b) c. graph (c) d. graph (d) ANS: D PTS: 1 DIF: 2 REF: 21-1 TOP: Budget constraint MSC: Analytical 18. The slope of the budget constraint is determined by the a. relative price of the goods measured on the axes. b. relative price of the goods measured on the axes and the consumer’s income.
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