Chapter 2
True-False Budget Constraint
Topic: Budget Constraint Diculty: 1
% Correct Responses: 90 Discrimination Index: 10
Correct Answer: False
2.1 If there are two goods with positive prices and the price of one good is reduced, while income
and other prices remain constant, then the size of the budget set is reduced.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 76 Discrimination Index: 24
Correct Answer: False
2.2 If good 1 is measured on the horizontal axis and good 2 is measured on the vertical axis, and
if the price of good 1 is p1 and the price of good 2 is p2 ; then the slope of the budget line is ,p2 =p1.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 91 Discrimination Index: 13
Correct Answer: False
2.3 If all prices are doubled and money income is left the same, the budget set does not change
because relative prices don't change.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 93 Discrimination Index: 21
Correct Answer: True
2.4 If there are two goods, and if one good has a negative price and the other has a positive
price, then the slope of the budget line will be positive.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 94 Discrimination Index: 12
Correct Answer: False
2.5 If all prices double and income triples, then the budget line will become steeper.
, CHAPTER 2 Budget Constraint 2
Topic: Budget Constraint Diculty: 1
% Correct Responses: 95 Discrimination Index: 13
Correct Answer: False
2.6 If Good 1 is on the horizontal axis and Good 2 is on the vertical axis, then an increase in the
price of Good 1 will not change the horizontal intercept of the budget line.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 98 Discrimination Index: 1
Correct Answer: False
2.7 If there are two goods and the prices of both goods rise, then the budget line must become
steeper.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 97 Discrimination Index: 0
Correct Answer: True
2.8 There are two goods. You know how much of good 1 a consumer can a ord if she spends all
of her income on good 1. If you know the ratio of the prices of the two goods, then you could draw
the consumer's budget line without any more information.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 91 Discrimination Index: 0
Correct Answer: True
2.9 A consumer prefers more to less of every good. Her income rises, and the price of one of the
goods falls while other prices stay constant. These changes must have made her better o .
Topic: Budget Constraint Diculty: 2
% Correct Responses: 0 Discrimination Index: 0
Correct Answer: True
2.10 There are 3 goods. The price of good 1 is ,1; the price of good 2 is +1; and the price
of good 3 is +2. It is physically possible for a consumer to consume any commodity bundle with
non-negative amounts of each good. A consumer who has income of 10 could a ord to consume
some commodity bundles that include 5 units of good 1 and 6 units of good 2.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 80 Discrimination Index: 49
Correct Answer: False
2.11 A decrease in income pivots the budget line around the bundle initially consumed.
,Multiple Choice Budget Constraint
Topic: Budget Constraint Diculty: 1
% Correct Responses: 97 Discrimination Index: 6
Correct Answer: A
2.1
If she spends all of her income on lemons and tangerines, Isabella can just a ord 30 lemons and
8 tangerines per day. She could also use her entire budget to buy 6 lemons and 14 tangerines per
day. The price of lemons is 6 guineas each. How much is Isabella's income per day?
(a) 372 guineas
(b) 377 guineas
(c) 371 guineas
(d) 363 guineas
(e) None of the above.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 97 Discrimination Index: 6
Correct Answer: A
2.2
If she spends all of her income on uglifruit and breadfruits, Maria can just a ord 11 uglifruit
and 4 breadfruits per day. She could also use her entire budget to buy 3 uglifruit and 8 breadfruits
per day. The price of uglifruit is 6 pesos each. How much is Maria's income per day?
(a) 115 pesos
(b) 119 pesos
(c) 114 pesos
(d) 105 pesos
(e) None of the above.
, CHAPTER 2 Budget Constraint 4
Topic: Budget Constraint Diculty: 2
% Correct Responses: 0 Discrimination Index: 0
Correct Answer: A
2.3 Matt lives on popcorn and seafood salads. The price of popcorn is 1 dollar per bag and the
price of seafood salads is 2 dollars each. Matt allows himself to spend no more than 13 dollars a
day on food. He also restricts his consumption to 5,500 calories per day. There are 1,000 calories
in a bag of popcorn and 500 calories in a seafood salad. If he spends his entire money budget each
day and consumes no more calories than his calorie limit:
(a) he can consume up to 3 bags of popcorn per day, but no more.
(b) he can consume up to 1 bags of popcorn per day, butno more.
(c) he can consume up to 5 seafood salads per day, but no more.
(d) he can consume up to 4 bags of popcorn per day, but no more.
(e) None of the above.
Topic: Budget Constraint Diculty: 2
% Correct Responses: 0 Discrimination Index: 0
Correct Answer: A
2.4 Quincy lives on ding dongs and seafood salads. The price of ding dongs is 1 dollar per bag
and the price of seafood salads is 4 dollars each. Quincy allows himself to spend no more than 23
dollars a day on food. He also restricts his consumption to 3,300 calories per day. There are 600
calories in a bag of ding dongs and 300 calories in a seafood salad. If he spends his entire money
budget each day and consumes no more calories than his calorie limit:
(a) he can consume up to 3 bags of ding dongs per day, but no more.
(b) he can consume up to 1 bags of ding dongs per day, butno more.
(c) he can consume up to 5 seafood salads per day, but no more.
(d) he can consume up to 4 bags of ding dongs per day, but no more.
(e) None of the above.
True-False Budget Constraint
Topic: Budget Constraint Diculty: 1
% Correct Responses: 90 Discrimination Index: 10
Correct Answer: False
2.1 If there are two goods with positive prices and the price of one good is reduced, while income
and other prices remain constant, then the size of the budget set is reduced.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 76 Discrimination Index: 24
Correct Answer: False
2.2 If good 1 is measured on the horizontal axis and good 2 is measured on the vertical axis, and
if the price of good 1 is p1 and the price of good 2 is p2 ; then the slope of the budget line is ,p2 =p1.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 91 Discrimination Index: 13
Correct Answer: False
2.3 If all prices are doubled and money income is left the same, the budget set does not change
because relative prices don't change.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 93 Discrimination Index: 21
Correct Answer: True
2.4 If there are two goods, and if one good has a negative price and the other has a positive
price, then the slope of the budget line will be positive.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 94 Discrimination Index: 12
Correct Answer: False
2.5 If all prices double and income triples, then the budget line will become steeper.
, CHAPTER 2 Budget Constraint 2
Topic: Budget Constraint Diculty: 1
% Correct Responses: 95 Discrimination Index: 13
Correct Answer: False
2.6 If Good 1 is on the horizontal axis and Good 2 is on the vertical axis, then an increase in the
price of Good 1 will not change the horizontal intercept of the budget line.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 98 Discrimination Index: 1
Correct Answer: False
2.7 If there are two goods and the prices of both goods rise, then the budget line must become
steeper.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 97 Discrimination Index: 0
Correct Answer: True
2.8 There are two goods. You know how much of good 1 a consumer can a ord if she spends all
of her income on good 1. If you know the ratio of the prices of the two goods, then you could draw
the consumer's budget line without any more information.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 91 Discrimination Index: 0
Correct Answer: True
2.9 A consumer prefers more to less of every good. Her income rises, and the price of one of the
goods falls while other prices stay constant. These changes must have made her better o .
Topic: Budget Constraint Diculty: 2
% Correct Responses: 0 Discrimination Index: 0
Correct Answer: True
2.10 There are 3 goods. The price of good 1 is ,1; the price of good 2 is +1; and the price
of good 3 is +2. It is physically possible for a consumer to consume any commodity bundle with
non-negative amounts of each good. A consumer who has income of 10 could a ord to consume
some commodity bundles that include 5 units of good 1 and 6 units of good 2.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 80 Discrimination Index: 49
Correct Answer: False
2.11 A decrease in income pivots the budget line around the bundle initially consumed.
,Multiple Choice Budget Constraint
Topic: Budget Constraint Diculty: 1
% Correct Responses: 97 Discrimination Index: 6
Correct Answer: A
2.1
If she spends all of her income on lemons and tangerines, Isabella can just a ord 30 lemons and
8 tangerines per day. She could also use her entire budget to buy 6 lemons and 14 tangerines per
day. The price of lemons is 6 guineas each. How much is Isabella's income per day?
(a) 372 guineas
(b) 377 guineas
(c) 371 guineas
(d) 363 guineas
(e) None of the above.
Topic: Budget Constraint Diculty: 1
% Correct Responses: 97 Discrimination Index: 6
Correct Answer: A
2.2
If she spends all of her income on uglifruit and breadfruits, Maria can just a ord 11 uglifruit
and 4 breadfruits per day. She could also use her entire budget to buy 3 uglifruit and 8 breadfruits
per day. The price of uglifruit is 6 pesos each. How much is Maria's income per day?
(a) 115 pesos
(b) 119 pesos
(c) 114 pesos
(d) 105 pesos
(e) None of the above.
, CHAPTER 2 Budget Constraint 4
Topic: Budget Constraint Diculty: 2
% Correct Responses: 0 Discrimination Index: 0
Correct Answer: A
2.3 Matt lives on popcorn and seafood salads. The price of popcorn is 1 dollar per bag and the
price of seafood salads is 2 dollars each. Matt allows himself to spend no more than 13 dollars a
day on food. He also restricts his consumption to 5,500 calories per day. There are 1,000 calories
in a bag of popcorn and 500 calories in a seafood salad. If he spends his entire money budget each
day and consumes no more calories than his calorie limit:
(a) he can consume up to 3 bags of popcorn per day, but no more.
(b) he can consume up to 1 bags of popcorn per day, butno more.
(c) he can consume up to 5 seafood salads per day, but no more.
(d) he can consume up to 4 bags of popcorn per day, but no more.
(e) None of the above.
Topic: Budget Constraint Diculty: 2
% Correct Responses: 0 Discrimination Index: 0
Correct Answer: A
2.4 Quincy lives on ding dongs and seafood salads. The price of ding dongs is 1 dollar per bag
and the price of seafood salads is 4 dollars each. Quincy allows himself to spend no more than 23
dollars a day on food. He also restricts his consumption to 3,300 calories per day. There are 600
calories in a bag of ding dongs and 300 calories in a seafood salad. If he spends his entire money
budget each day and consumes no more calories than his calorie limit:
(a) he can consume up to 3 bags of ding dongs per day, but no more.
(b) he can consume up to 1 bags of ding dongs per day, butno more.
(c) he can consume up to 5 seafood salads per day, but no more.
(d) he can consume up to 4 bags of ding dongs per day, but no more.
(e) None of the above.
