MBA 701 EXAM QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTIONS VERIFIED
Refer to the following indifference map for a consumer who has an income of $48
to spend on goods X and Y and the market prices of X and Y are both $4:
Now suppose the price of good X increases to $12 while the price of
good Y remains $4. Utility will be maximized on which indifference curve?
II
The rate at which a consumer is able to substitute one good for another is
determined by
the budget line.
The demand for heart surgery is price inelastic. So it follows that
if the price of heart surgery increases, total expenditure by consumers on heart surgery
will rise.
If the demand for umbrellas is price inelastic,
if more umbrellas are sold as the result of a price decrease, total expenditures by
consumers on umbrellas will decrease.
The slope of an indifference curve
is the rate at which the consumer is willing to exchange one good for another, utility held
constant.
Suppose that the Houston Rockets' management is considering a plan in which
fans who donate blood can attend games for $35 instead of the usual $50. If both
, ticket revenues and blood donations rise with this plan, which of the following is
true?
The demand for Houston Rockets' tickets is price elastic.
Which of the following will NOT affect the elasticity of demand for a product?
the cost of producing the product
If the quantity of gidgets demanded increases when the price of gadgets
decreases,
gidgets and gadgets are complements.
Marginal revenue
"is the change in total revenue when output increases by one unit" and "measures the
slope of the total revenue curve".
A utility function
shows the relation between the amount of goods consumed and a consumer's utility.
The cross-price elasticity of demand between goods X and Y
both "measures the responsiveness of the quantity of X demanded to changes in the
price of Y" and "is greater than zero if X and Y are substitutes".
An individual's demand curve for X
shows how the utility-maximizing choice of X changes as the price of X changes.
Which of the following assumptions is (are) NOT made in consumer behavior
theory?
Consumers can measure the utility they get from all bundles of goods.
When marginal revenue is positive,
demand is elastic.
COMPLETE SOLUTIONS VERIFIED
Refer to the following indifference map for a consumer who has an income of $48
to spend on goods X and Y and the market prices of X and Y are both $4:
Now suppose the price of good X increases to $12 while the price of
good Y remains $4. Utility will be maximized on which indifference curve?
II
The rate at which a consumer is able to substitute one good for another is
determined by
the budget line.
The demand for heart surgery is price inelastic. So it follows that
if the price of heart surgery increases, total expenditure by consumers on heart surgery
will rise.
If the demand for umbrellas is price inelastic,
if more umbrellas are sold as the result of a price decrease, total expenditures by
consumers on umbrellas will decrease.
The slope of an indifference curve
is the rate at which the consumer is willing to exchange one good for another, utility held
constant.
Suppose that the Houston Rockets' management is considering a plan in which
fans who donate blood can attend games for $35 instead of the usual $50. If both
, ticket revenues and blood donations rise with this plan, which of the following is
true?
The demand for Houston Rockets' tickets is price elastic.
Which of the following will NOT affect the elasticity of demand for a product?
the cost of producing the product
If the quantity of gidgets demanded increases when the price of gadgets
decreases,
gidgets and gadgets are complements.
Marginal revenue
"is the change in total revenue when output increases by one unit" and "measures the
slope of the total revenue curve".
A utility function
shows the relation between the amount of goods consumed and a consumer's utility.
The cross-price elasticity of demand between goods X and Y
both "measures the responsiveness of the quantity of X demanded to changes in the
price of Y" and "is greater than zero if X and Y are substitutes".
An individual's demand curve for X
shows how the utility-maximizing choice of X changes as the price of X changes.
Which of the following assumptions is (are) NOT made in consumer behavior
theory?
Consumers can measure the utility they get from all bundles of goods.
When marginal revenue is positive,
demand is elastic.
