Question 1

Suppose that Agatha in Problem 10 had $495 to spend on tickets for her trip.She needs to travel a total of 1,500 miles.Suppose that the price of first-class tickets is $.40 per mile and the price of second-class tickets is $.10 per mile.How many miles will she travel by second class?

Accepted Answer

A)   500
B)   350
C)   450
D)   175
E)   116.67F) None of the above
G) B) and E) B

Question 2

Goods 1 and 2 are perfect complements,and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1.If a consumer has an income of $200 and if the price of good 2 changes from $4 to $5,while the price of good 1 stays at $1,then the income effect of the price change

Accepted Answer

A)   does not change demand for good 1.
B)   is exactly twice as strong as the substitution effect.
C)   is 5 times as strong as the substitution effect.
D)   accounts for the entire change in demand.
E)   is 4 times as strong as the substitution effect.F) B) and E)
G) B) and D)

Question 3

In Problem 1,Charlie's utility function is xAxB.The price of apples used to be $1,the price of bananas used to be $2,and his income used to be $40.If the price of apples increased to $7 and the price of bananas stayed constant,the substitution effect on Charlie's apple consumption would reduce his consumption by

Accepted Answer

A)   6 apples.
B)   13.57 apples.
C)   8.57 apples.
D)   17.14 apples.
E)   None of the above.F) A) and B)
G) A) and C)

Question 4

Neville,in Problem 2,has a friend named Edmund.Edmund has the same demand function for claret as Neville,namely q = .02m - 2p,where m is income and p is price.Edmund's income is $9,000 and he initially had to pay a price of $50 per bottle of claret.The price of claret rose to $60.The substitution effect of the price change

Accepted Answer

A)   reduced his demand by 36.
B)   increased his demand by 20.
C)   reduced his demand by 4.
D)   reduced his demand by 20.
E)   reduced his demand by 14.F) C) and D)
G) B) and C)

Question 5

Neville,in Problem 2,has a friend named Marmaduke.Marmaduke has the same demand function for claret as Neville,namely q = .02m - 2p,where m is income and p is price.Marmaduke's income is $8,000 and he initially had to pay a price of $40 per bottle of claret.The price of claret rose to $80.The substitution effect of the price change

Accepted Answer

A)   reduced his demand by 80.
B)   increased his demand by 80.
C)   reduced his demand by 16.
D)   reduced his demand by 144.
E)   reduced his demand by 26.F) A) and B)
G) None of the above

Question 6

Goods 1 and 2 are perfect complements,and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1.If a consumer has an income of $120 and if the price of good 2 changes from $3 to $4,while the price of good 1 stays at $1,then the income effect of the price change

Accepted Answer

A)   is 4 times as strong as the substitution effect.
B)   does not change demand for good 1.
C)   is exactly twice as strong as the substitution effect.
D)   accounts for the entire change in demand.
E)   is 3 times as strong as the substitution effect.F) A) and E)
G) B) and E)

Question 7

Neville,in Problem 2,has a friend named Oswald.Oswald has the same demand function for claret as Neville,namely q = .02m - 2p,where m is income and p is price.Oswald's income is $5,500 and he initially had to pay a price of $40 per bottle of claret.The price of claret rose to $70.The substitution effect of the price change

Accepted Answer

A)   reduced his demand by 42.
B)   reduced his demand by 60.
C)   increased his demand by 60.
D)   reduced his demand by 78.
E)   reduced his demand by 52.F) A) and C)
G) A) and B)

Question 8

Goods 1 and 2 are perfect complements,and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1.If a consumer has an income of $300 and if the price of good 2 changes from $5 to $6,while the price of good 1 stays at $1,then the income effect of the price change

Accepted Answer

A)   is exactly twice as strong as the substitution effect.
B)   accounts for the entire change in demand.
C)   does not change demand for good 1.
D)   is 6 times as strong as the substitution effect.
E)   is 5 times as strong as the substitution effect.F) A) and C)
G) None of the above B

Question 9

In Problem 4,Maude thinks delphiniums and hollyhocks are perfect substitutes,one for one.If delphiniums currently cost $3 per unit and hollyhocks cost $4 per unit and if the price of delphiniums rises to $6 per unit,

Accepted Answer

A)   the income effect of the change in demand for delphiniums will be bigger than the substitution effect.
B)   there will be no change in the demand for hollyhocks.
C)   the entire change in demand for delphiniums will be due to the substitution effect.
D)   1/3 of the change in demand will be due to the income effect.
E)   2/3 of the change in demand will be due to the income effect.F) A) and C)
G) C) and D)

Question 10

In Problem 1,Charlie's utility function is xAxB.The price of apples used to be $1,the price of bananas used to be $2,and his income used to be $40.If the price of apples increased to $4 and the price of bananas stayed constant,the substitution effect on Charlie's apple consumption would reduce his consumption by

Accepted Answer

A)   15 apples.
B)   3 apples.
C)   7.50 apples.
D)   12.50 apples.
E)   None of the above.F) C) and E)
G) B) and C) C

Question 11

In Problem 1,Charlie's utility function is xAxB.The price of apples used to be $1,the price of bananas used to be $2,and his income used to be $40.If the price of apples increased to $5 and the price of bananas stayed constant,the substitution effect on Charlie's apple consumption would reduce his consumption by

Accepted Answer

A)   8 apples.
B)   13 apples.
C)   16 apples.
D)   4 apples.
E)   None of the above.F) A) and D)
G) A) and C)

Question 12

In Problem 4,Maude thinks delphiniums and hollyhocks are perfect substitutes,one for one.If delphiniums currently cost $4 per unit and hollyhocks cost $5 per unit and if the price of delphiniums rises to $7 per unit,

Accepted Answer

A)   the entire change in demand for delphiniums will be due to the substitution effect.
B)   1/3 of the change in demand will be due to the income effect.
C)   the income effect of the change in demand for delphiniums will be bigger than the substitution effect.
D)   there will be no change in the demand for hollyhocks.
E)   2/3 of the change in demand will be due to the income effect.F) B) and C)
G) A) and E)

Question 13

Goods 1 and 2 are perfect complements,and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1.If a consumer has an income of $720 and if the price of good 2 changes from $8 to $9,while the price of good 1 stays at $1,then the income effect of the price change

Accepted Answer

A)   is 9 times as strong as the substitution effect.
B)   does not change demand for good 1.
C)   accounts for the entire change in demand.
D)   is exactly twice as strong as the substitution effect.
E)   is 8 times as strong as the substitution effect.F) B) and E)
G) B) and D)

Question 14

Suppose that Agatha in Problem 10 had $270 to spend on tickets for her trip.She needs to travel a total of 1,500 miles.Suppose that the price of first-class tickets is $.30 per mile and the price of second-class tickets is $.10 per mile.How many miles will she travel by second class?

Accepted Answer

A)   1,000
B)   450
C)   1,050
D)   900
E)   300F) A) and C)
G) None of the above

Question 15

In Problem 1,Charlie's utility function is xAxB.The price of apples used to be $1 per unit,and the price of bananas $2 per unit.His income was $40 per day.If the price of apples increased to $1.25 and the price of bananas fell to $.25,then in order to be able to just afford his old bundle,Charlie would have to have a daily income of

Accepted Answer

A)   $13.75.
B)   $41.25.
C)   $27.50.
D)   $56.
E)   $110.F) A) and D)
G) A) and B)

Question 16

Suppose that Agatha in Problem 10 had $465 to spend on tickets for her trip.She needs to travel a total of 1,500 miles.Suppose that the price of first-class tickets is $.40 per mile and the price of second-class tickets is $.10 per mile.How many miles will she travel by second class?

Accepted Answer

A)   450
B)   600
C)   225
D)   550
E)   150F) A) and E)
G) B) and E)

Question 17

In Problem 1,Charlie's utility function is xAxB.The price of apples used to be $1 per unit,and the price of bananas $2 per unit.His income was $40 per day.If the price of apples increased to $1.75 and the price of bananas fell to $.25,then in order to be able to just afford his old bundle,Charlie would have to have a daily income of

Accepted Answer

A)   $76.
B)   $18.75.
C)   $56.25.
D)   $37.50.
E)   $150.F) B) and D)
G) A) and B)

Question 18

Suppose that Agatha in Problem 10 had $360 to spend on tickets for her trip.She needs to travel a total of 1,500 miles.Suppose that the price of first-class tickets is $.40 per mile and the price of second-class tickets is $.10 per mile.How many miles will she travel by second class?

Accepted Answer

A)   400
B)   900
C)   950
D)   800
E)   266.67F) A) and B)
G) B) and C)

Question 19

In Problem 4,Maude thinks delphiniums and hollyhocks are perfect substitutes,one for one.If delphiniums currently cost $5 per unit and hollyhocks cost $6 per unit and if the price of delphiniums rises to $9 per unit,

Accepted Answer

A)   the income effect of the change in demand for delphiniums will be bigger than the substitution effect.
B)   1/4 of the change in demand will be due to the income effect.
C)   there will be no change in the demand for hollyhocks.
D)   the entire change in demand for delphiniums will be due to the substitution effect.
E)   3/4 of the change in demand will be due to the income effect.F) C) and D)
G) D) and E)

Question 20

Neville,in Problem 2,has a friend named Colin.Colin has the same demand function for claret as Neville,namely q = .02m - 2p,where m is income and p is price.Colin's income is $7,500 and he initially had to pay a price of $40 per bottle of claret.The price of claret rose to $80.The substitution effect of the price change

Accepted Answer

A)   reduced his demand by 80.
B)   reduced his demand by 24.
C)   increased his demand by 80.
D)   reduced his demand by 136.
E)   reduced his demand by 34.F) D) and E)
G) B) and C)

Exam 8:Slutsky Equation-Part B

Suppose that Agatha in Problem 10 had $495 to spend on tickets for her trip.She needs to travel a total of 1,500 miles.Suppose that the price of first-class tickets is $.40 per mile and the price of second-class tickets is $.10 per mile.How many miles will she travel by second class?

Correct Answer
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B

Goods 1 and 2 are perfect complements,and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1.If a consumer has an income of $200 and if the price of good 2 changes from $4 to $5,while the price of good 1 stays at $1,then the income effect of the price change

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Goods 1 and 2 are perfect complements,and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1.If a consumer has an income of $120 and if the price of good 2 changes from $3 to $4,while the price of good 1 stays at $1,then the income effect of the price change

Correct Answer
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Correct Answer
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Goods 1 and 2 are perfect complements,and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1.If a consumer has an income of $300 and if the price of good 2 changes from $5 to $6,while the price of good 1 stays at $1,then the income effect of the price change

Correct Answer
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B

In Problem 4,Maude thinks delphiniums and hollyhocks are perfect substitutes,one for one.If delphiniums currently cost $3 per unit and hollyhocks cost $4 per unit and if the price of delphiniums rises to $6 per unit,

Correct Answer
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Correct Answer
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C

Correct Answer
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In Problem 4,Maude thinks delphiniums and hollyhocks are perfect substitutes,one for one.If delphiniums currently cost $4 per unit and hollyhocks cost $5 per unit and if the price of delphiniums rises to $7 per unit,

Correct Answer
verified

Goods 1 and 2 are perfect complements,and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1.If a consumer has an income of $720 and if the price of good 2 changes from $8 to $9,while the price of good 1 stays at $1,then the income effect of the price change

Correct Answer
verified

Suppose that Agatha in Problem 10 had $270 to spend on tickets for her trip.She needs to travel a total of 1,500 miles.Suppose that the price of first-class tickets is $.30 per mile and the price of second-class tickets is $.10 per mile.How many miles will she travel by second class?

Correct Answer
verified

Correct Answer
verified

Suppose that Agatha in Problem 10 had $465 to spend on tickets for her trip.She needs to travel a total of 1,500 miles.Suppose that the price of first-class tickets is $.40 per mile and the price of second-class tickets is $.10 per mile.How many miles will she travel by second class?

Correct Answer
verified

Correct Answer
verified

Suppose that Agatha in Problem 10 had $360 to spend on tickets for her trip.She needs to travel a total of 1,500 miles.Suppose that the price of first-class tickets is $.40 per mile and the price of second-class tickets is $.10 per mile.How many miles will she travel by second class?

Correct Answer
verified

In Problem 4,Maude thinks delphiniums and hollyhocks are perfect substitutes,one for one.If delphiniums currently cost $5 per unit and hollyhocks cost $6 per unit and if the price of delphiniums rises to $9 per unit,

Correct Answer
verified

Correct Answer
verified

Exam 8:Slutsky Equation-Part B

Suppose that Agatha in Problem 10 had $495 to spend on tickets for her trip.She needs to travel a total of 1,500 miles.Suppose that the price of first-class tickets is $.40 per mile and the price of second-class tickets is $.10 per mile.How many miles will she travel by second class?

Correct AnswerverifiedB

Goods 1 and 2 are perfect complements,and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1.If a consumer has an income of $200 and if the price of good 2 changes from $4 to $5,while the price of good 1 stays at $1,then the income effect of the price change

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Goods 1 and 2 are perfect complements,and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1.If a consumer has an income of $120 and if the price of good 2 changes from $3 to $4,while the price of good 1 stays at $1,then the income effect of the price change

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Goods 1 and 2 are perfect complements,and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1.If a consumer has an income of $300 and if the price of good 2 changes from $5 to $6,while the price of good 1 stays at $1,then the income effect of the price change

Correct AnswerverifiedB

In Problem 4,Maude thinks delphiniums and hollyhocks are perfect substitutes,one for one.If delphiniums currently cost $3 per unit and hollyhocks cost $4 per unit and if the price of delphiniums rises to $6 per unit,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedC

Correct AnswerverifiedShow Answer

In Problem 4,Maude thinks delphiniums and hollyhocks are perfect substitutes,one for one.If delphiniums currently cost $4 per unit and hollyhocks cost $5 per unit and if the price of delphiniums rises to $7 per unit,

Correct AnswerverifiedShow Answer

Goods 1 and 2 are perfect complements,and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1.If a consumer has an income of $720 and if the price of good 2 changes from $8 to $9,while the price of good 1 stays at $1,then the income effect of the price change

Correct AnswerverifiedShow Answer

Suppose that Agatha in Problem 10 had $270 to spend on tickets for her trip.She needs to travel a total of 1,500 miles.Suppose that the price of first-class tickets is $.30 per mile and the price of second-class tickets is $.10 per mile.How many miles will she travel by second class?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that Agatha in Problem 10 had $465 to spend on tickets for her trip.She needs to travel a total of 1,500 miles.Suppose that the price of first-class tickets is $.40 per mile and the price of second-class tickets is $.10 per mile.How many miles will she travel by second class?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that Agatha in Problem 10 had $360 to spend on tickets for her trip.She needs to travel a total of 1,500 miles.Suppose that the price of first-class tickets is $.40 per mile and the price of second-class tickets is $.10 per mile.How many miles will she travel by second class?

Correct AnswerverifiedShow Answer

In Problem 4,Maude thinks delphiniums and hollyhocks are perfect substitutes,one for one.If delphiniums currently cost $5 per unit and hollyhocks cost $6 per unit and if the price of delphiniums rises to $9 per unit,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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B

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B

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C

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Correct Answer
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Correct Answer
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