Question

Question 1 (1 point) (1 Point) We assume that the representative consumer's preferences exhibit the properties that Oa) they evolve over time and that more is always preferred to less. Ob) more is sometimes preferred to less and that consumption and leisure are both normal goods c) more is preferred to less and that the consumer prefers diversity d) the consumer likes diversity and that more is sometimes preferred to less. Question 2 (1 point) (1 Point) A good is inferior for a consumer if Oa) its consumption rises when income rises. b) its consumption falls when income rises. c) some minimal level of the good must be consumed to assure the consumer's survival. Od) it is never included in his or her consumption bundle Question 3 (1 point) (1 Point) The marginal rate of transformation is defined as a) the amount of good Y substituted for good X by a consumer. Ob) the amount of good Y that a consumer is willing to substitute for good X and stay at a given level of satisfaction. Oc) the feasible rate of substitution given prices. d) None of the above Question 4 (1 point) (1 Point) In a one period economy a) savings is always zero. b) consumption equals disposable income plus the value of non-market work. c) consumers may increase their consumption by borrowing. d) consumption does not equal disposable income.

Answer 1

Q1. Option c

As quantity demanded decreases with the increase in price and consumer has varied tastes, preferences

Q2. Option b

As consumer substitute with superior good with the increase in income

Q3. Option b

It is the opportunity cost of gaining an additional quantity of a good by forgoing another additional quantity of another good

Q4. Option a

All agents spend whatever they have because there is no future to save

Q9. Option d

As increase in capital increases the productivity

Q10. Option c

Q11. Option b

Profit = TR-TC= 1200-(700+100+200) = 200

Q12. Option d

As it may discourage people from consumption