Question 1

Which of the following best describes the 'completeness' property of consumer preferences?

Accepted Answer

For any two bundles X and Y, the consumer can always say either $$X \succeq Y or$$ $$Y \succeq X.$$

Question 2

Suppose a consumer is choosing between two goods: coffee and bagels. If the consumer's preferences are rational, which two properties must their preferences satisfy?

Accepted Answer

Completeness and transitivity

Question 3

If a consumer's indifference curves for two goods are straight lines with a constant negative slope, what does this imply about the consumer's preferences?

Accepted Answer

The goods are perfect substitutes.

Question 4

Given the bundles: A (5 coffee, 5 bagels), B (3 coffee, 6 bagels), C (4 coffee, 7 bagels), D (6 coffee, 8 bagels), which ranking is consistent with the 'more is better' assumption?

Accepted Answer

D $$\succ C$$ $$\succ A$$ $$\succ B$$

Question 5

Which of the following is the correct formula for the marginal rate of substitution (MRS) between good $$x_1$$ and good $$x_2$$?

Accepted Answer

$$MRS_{x_1$ x_2$} = -\frac{\Delta x_2$}{\Delta x_1$}$$

Question 6

If a consumer's indifference curves are L-shaped, what does this imply about the goods?

Accepted Answer

The goods are perfect complements.

Question 7

Which of the following statements about indifference curves is FALSE?

Accepted Answer

Indifference curves can cross if preferences are not transitive.

Question 8

A consumer is willing to give up a lot of $$x_2$$ for one more unit of $$x_1. $$What does this say about the marginal rate of substitution (MRS) at that point?

Accepted Answer

The MRS is high and the indifference curve is steep.

Question 9

Which of the following is an example of a real-world situation where indifference curves would be L-shaped?

Accepted Answer

A consumer choosing between left and right shoes.

Question 10

Suppose a consumer's preferences for two goods are such that more of both goods is always better, but the consumer is willing to substitute one for the other at a constant rate. Which type of indifference curve best represents these preferences?

Accepted Answer

A straight line with a constant negative slope.

Question 11

If a consumer's preferences exhibit diminishing marginal rate of substitution, what will the shape of their indifference curves be?

Accepted Answer

Convex to the origin

Question 12

Which of the following is NOT a property of well-behaved indifference curves?

Accepted Answer

They can slope upward.

Question 13

A consumer is choosing between two goods, $$x_1$$ and $$x_2. If $$bundle X has more of both goods than bundle Y, and the consumer's preferences are strongly monotonic, which of the following is true?

Accepted Answer

Bundle X is strictly preferred to bundle Y ($$X \succ Y).$$

Question 14

Which of the following best describes the difference between weak and strong monotonicity?

Accepted Answer

Strong monotonicity requires strictly more of at least one good, while weak monotonicity requires more of every good.

Question 15

If a consumer's indifference curves are thick, what does this imply about their preferences?

Accepted Answer

Their preferences violate the property of weak monotonicity.

Question 16

Suppose a consumer's indifference curves for pizza and soda are downward sloping and convex to the origin. What does this imply about the consumer's willingness to substitute pizza for soda?

Accepted Answer

The consumer experiences diminishing marginal rate of substitution.

Question 17

Which of the following is a real-world example of perfect substitutes?

Accepted Answer

A consumer choosing between 3-oz and 12-oz bags of tortilla chips, where only the total ounces matter.

Question 18

If a consumer's indifference curves for two goods cross, what property of preferences is violated?

Accepted Answer

Transitivity

Question 19

Suppose a consumer's indifference curve between hot dogs and hot dog buns is L-shaped. What does this imply about the consumer's preferences?

Accepted Answer

The consumer wants to consume hot dogs and buns in fixed proportions.

Consumer Preferences and Indifference Curves in Microeconomics

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