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    Econs 101 - Quiz #2 Answer Key

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    Sano Manjiro
    This document provides an answer key for a quiz on microeconomics concepts. It includes answers to 8 multiple choice questions that assess understanding of indifference curves, marginal rates of substitution, budget constraints, and properties of consumer preferences like diminishing marginal utility. The key explains why each answer choice is correct by referring back to the concepts being tested.

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    Econs 101 - Quiz #2 Answer Key

    Uploaded by

    Sano Manjiro
    33 views1 page
    This document provides an answer key for a quiz on microeconomics concepts. It includes answers to 8 multiple choice questions that assess understanding of indifference curves, marginal rates of substitution, budget constraints, and properties of consumer preferences like diminishing marginal utility. The key explains why each answer choice is correct by referring back to the concepts being tested.

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    This document provides an answer key for a quiz on microeconomics concepts. It includes answers to 8 multiple choice questions that assess understanding of indifference curves, marginal rates of substitution, budget constraints, and properties of consumer preferences like diminishing marginal utility. The key explains why each answer choice is correct by referring back to the concepts being tested.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    33 views1 page

    Econs 101 - Quiz #2 Answer Key

    Uploaded by

    Sano Manjiro
    This document provides an answer key for a quiz on microeconomics concepts. It includes answers to 8 multiple choice questions that assess understanding of indifference curves, marginal rates of substitution, budget constraints, and properties of consumer preferences like diminishing marginal utility. The key explains why each answer choice is correct by referring back to the concepts being tested.

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    © All Rights Reserved
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    ECONS 101 – QUIZ #2

    Answer Key
    1. Answer b. Although each answer describes a property of indifference curves for
    ordinary goods, it is diminishing marginal utility that drives the bowed shape of the
    indifference curve. As consumers consume additional units of one of the goods depicted,
    they find their utility from the good declining. To maintain the same level of satisfaction,
    they must give up smaller and smaller amounts of the other good for each additional unit
    of the good they are consuming.

    2. Answer c. Since Bob gets the same amount of total utility from these two
    combinations of the hot dogs and soda, they must lie on the same indifference curve. We
    cannot know whether Bob prefers hot dogs or sodas.

    3. Answer a. The marginal rate of substitution is the slope of the indifference curve at a
    particular point and is given by the slope of the line that is drawn tangent to the
    indifference curve at that point. If you draw this tangent line for each of the mentioned
    points, you will find that the line drawn tangent to point A is the steepest line, and
    therefore the absolute value of the slope of this line is greater than the absolute value of
    the slope of any of the other lines drawn tangent to the other points.

    4. Answer b. As this consumer moves downward along the indifference curve from point
    A to point D, this individual gives up fewer units of food to get each additional unit of
    clothing, therefore the marginal rate of substitution decreases as the individual moves
    from point A to point D.

    5. Answer b. Normal indifference curves slope downward because individuals must be


    compensated by getting more units of good X when they give up units of good Y.
    Answer (c) explains why normal indifference curves are convex, or bowed toward the
    origin.

    6. Answer c. The individual is initially consuming consumption bundle B, which


    contains 2 items of clothing and 14 meals. The individual is willing to give up 3 meals to
    consume an additional unit of clothing (consumption bundle C).

    7. Answer b. If you graph this individual’s consumption bundles from the above
    information and then connect these bundles to create an indifference curve (remember
    that each of these bundles yields the same level of utility for the individual and therefore
    each bundle is on the same indifference curve), the indifference curve’s slope gets flatter
    as you move downward along the curve. From the table we can see that the individual
    gives up fewer and fewer units of meals as the level of clothing consumed by the
    individual increases.

    8. Answer e. Joe’s budget line can be expressed as 500 = 10F + 20C, since he has $500
    he can spend on food and clothing and each unit of food costs $10 and each unit of

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