QUESTION 5
1. To find a consumer's optimal consumption point, we locate the point where the marginal benefit, which is equivalent to _________________ is equal to the marginal cost, which is equivalent to _________________.
A. the marginal rate of substitution, the price ratio
B. the dollar amount of the good, the initial endowment
C. the price ratio, the marginal rate of substitution
D. the initial endowment, the dollar amount of the good

QUESTION 8
1. Charlieâ€™s indifference curves have the equation xB = k / xA where k is a constant and larger values of k denote better indifference curves. Charlie strictly prefers the bundle (10, 17) to:
A. the bundle (11, 16).
B. the bundle (17, 10).
C. the bundle (12, 15).
D. none of these bundles

QUESTION 9
1. Preferences are said to be monotonic if:
A. all goods are perfect substitutes.
B. all goods must be consumed in fixed proportions.
C. more is always preferred to less.
D. there is a diminishing marginal rate of substitution.

QUESTION 10
1. Which of the following (choose all that are correct) are assumptions that we make about individual's preferences?
A. Reflexivity
B. Repatriation
C. Transitivity
D. Flexibility
E. Indifference
F. Completeness
G. Non-satiation

QUESTION 11
1. Leo consumes only apples and bananas. He prefers more apples to fewer, but he gets tired of bananas. If he consumes fewer than 24 bananas per week, he thinks that 1 banana is a perfect substitute for 1 apple. But you would have to pay him 1 apple for each banana beyond 24 that he consumes. The indifference curve that passes through the consumption bundle with 31 apples and 36 bananas also passes through the bundle with A apples and 18 bananas, where A equals:
A. 29
B. 25
C. 31
D. 27

QUESTION 5 1. To find a consumer's optimal consumption point, we l...