The marginal rate of substitution is the

The marginal rate of substitution is the

A. rate at which the consumer increases utility
B. absolute value of the indifference curve
C. tradeoff rate between the two goods under consideration at any particular point
D. total utility derived at any point


Answer: C. tradeoff rate between two goods under consideration at any particular point

The indifference curves for right shoes and left shoes will be

The indifference curves for right shoes and left shoes will be

A. convex
B. L-shaped
C. a straight line with negative slope
D. a straight line with positive slope


Answer: B. L-shaped

Suppose you are choosing between milk and cookies. If the opportunity cost of cookies in terms of milk increases, then the budget curve will

Suppose you are choosing between milk and cookies. If the opportunity cost of cookies in terms of milk increases, then the budget curve will

A. shift inward
B. rotate outward
C. shift outward
D. rotate inward


Answer: D. rotate inward

Say a consumer always consumed peanut butter and jelly in fixed proportions (for a perfect peanut and jelly sandwich). Then the indifference curves for peanut butter and jelly for this consumer would be

Say a consumer always consumed peanut butter and jelly in fixed proportions (for a perfect peanut and jelly sandwich). Then the indifference curves for peanut butter and jelly for this consumer would be

A. a straight line with positive slope
B. L-shaped
C. a straight line with negative slope
D. convex


Answer: B. L-shaped

Excluding corner solutions, in consumer equilibrium, which of the following is true?

Excluding corner solutions, in consumer equilibrium, which of the following is true?

A. The consumer is minimizing utility given the constraints
B. The marginal rate of substitution equals the slope of the budget constraint
C. The consumer can improve his/her situation by consuming more of both goods
D. The indifference curve is steeper than the budget constraint


Answer: B. The marginal rate of substitution equals the slope of the budget constraint

Say Anna chooses between partying and studying. Supposed her indifference curves satisfied all the assumptions about consumer theory, but she also like studying a lot more than partying. If the price of studying increased, then Anna would consume

Say Anna chooses between partying and studying. Supposed her indifference curves satisfied all the assumptions about consumer theory, but she also like studying a lot more than partying. If the price of studying increased, then Anna would consume

A. the same as before
B. less studying and more partying
C. no partying at all, in order to consume more studying
E. more studying and less partying


Answer: B. less studying and more partying

If food is on the vertical axis and shelter on the horizontal axis, the slope of the budget line is given by

If food is on the vertical axis and shelter on the horizontal axis, the slope of the budget line is given by

A. Ps/Pf
B. Pf/Ps
C. -Pf/Ps
D. -Ps/Pf


Answer: D. -Ps/Pf