Free Practice Quiz Question List

3 Budget-Constrained Consumer Choice Online Quiz Questions

Use this free practice quiz with 20 questions to review 3 Budget-Constrained Consumer Choice, test your knowledge, and prepare for your next test or exam.

20 questions

True or false

1 point

If a utility function assigns bundle A a higher utility value than bundle B, it represents A as preferred to B, but the difference in utility values does not generally measure an objective difference in satisfaction.

A
True
B
False

Choose one

1 point

Which statement correctly distinguishes a consumer’s budget set from the budget line?

A
The budget line contains every bundle the consumer can afford, including bundles that leave income unspent.
B
The budget set contains every affordable bundle, while the budget line contains bundles that use all available income.
C
The budget set contains only bundles that use all available income.
D
The budget line contains only bundles that cost less than available income.

Choose one

1 point

A consumer’s income increases while the prices of both goods remain unchanged. How does the budget line change?

A
It shifts outward in parallel.
B
It rotates around the horizontal intercept.
C
It rotates around the vertical intercept.
D
It stays in the same position because prices have not changed.

True or false

1 point

For an interior optimum where the consumer buys positive amounts of both goods, the tangency condition is $\mathrm{MRS}_{xy}=\frac{p_x}{p_y}$ .

A
True
B
False

Written response

1 point

A consumer has income $m=84$ and faces price $p_x=7$ . What is the maximum quantity of good $x$ the consumer can buy if all income is spent on $x$ ?

Fill in the blank

1 point

The amount of good $y$ a consumer is willing to give up for a small increase in good $x$ , while remaining equally satisfied, is described by the .

Choose one

1 point

The price of good $x$ rises while income and the price of good $y$ remain unchanged. What happens to the budget line?

A
It shifts outward in parallel because the consumer can afford fewer units of $x$ .
B
It rotates around the horizontal intercept, which is unchanged.
C
It rotates around the vertical intercept, which is unchanged.
D
It shifts inward in parallel, leaving both intercepts unchanged.

Choose all

1 point

A consumer faces prices $p_x=3$ and $p_y=2$ , with income $m=12$ . Select all correct statements about the bundles listed.

A
The bundle $(1,4)$ is on the budget line.
B
The bundle $(2,3)$ is on the budget line.
C
The bundle $(1,4)$ is in the budget set but not on the budget line.
D
The bundle $(3,2)$ is unaffordable.

Fill in the blank

1 point

For Cobb–Douglas utility $U(x,y)=x^{\alpha}y^{1-\alpha}$ , an interior optimum has $x^*=\frac{\alpha m}{p_x}$ . If $\alpha=\frac{1}{4}$ , $m=80$ , and $p_x=4$ , then the optimal quantity of $x$ is units.

Written response

1 point

A consumer has Cobb–Douglas utility with $\alpha=0.4$ , income $m=150$ , and price $p_y=3$ . Using $y^*=\frac{(1-\alpha)m}{p_y}$ , what quantity of good $y$ does the consumer choose?

Choose all

1 point

A consumer has Cobb–Douglas utility $U(x,y)=x^{\alpha}y^{1-\alpha}$ with $\alpha=\frac{1}{4}$ , income $m=120$ , and prices $p_x=3$ , $p_y=2$ . Select all correct conclusions about the interior optimum.

A
The consumer chooses $x=10$ .
B
The consumer chooses $x=15$ .
C
The consumer chooses $y=45$ .
D
The consumer chooses $y=30$ .
E
The consumer spends 30 on good $x$ and 90 on good $y$ .
F
The chosen bundle spends all 120 of the consumer’s income.

Choose one

1 point

A consumer’s optimum is a corner solution. Which statement best describes how to identify that optimum?

A
The consumer must buy positive quantities of both goods and satisfy the tangency condition.
B
The consumer buys none of one good, so the optimum is identified by comparing utility across feasible boundary choices.
C
The consumer can choose an unaffordable bundle if it has high enough utility.
D
The consumer must be indifferent among every affordable bundle.

Open ended

1 point

Explain how repeatedly solving a consumer’s optimization problem as the price of good $x$ changes can produce an individual demand curve for $x$ . State what is held fixed and how the resulting choices form the curve.

True or false

1 point

If a consumer's income rises while both prices stay fixed, the budget line shifts outward in parallel.

A
True
B
False

Choose one

1 point

A budget line has prices $p_x=6$ and $p_y=3$ . What does its slope imply about the opportunity cost of increasing $x$ by one unit while keeping total spending unchanged?

A
The slope is $-\frac{1}{2}$ , so one unit of $x$ costs half a unit of $y$ .
B
The slope is $-2$ , so one unit of $x$ costs two units of $y$ .
C
The slope is $2$ , so one unit of $x$ costs two units of $y$ .
D
The slope is $-3$ , so one unit of $x$ costs three units of $y$ .

Choose one

1 point

A consumer's utility function assigns a higher value to bundle A than to bundle B. What can be concluded from this representation?

A
A utility value measures a person's satisfaction in objectively comparable units.
B
A utility value directly reveals how much income the person has.
C
A utility function represents a ranking of bundles by preference.
D
A utility value determines the market price of each good.

Choose one

1 point

A consumer chooses positive quantities of both goods at an interior optimum. Which condition describes the relationship between the marginal rate of substitution and prices?

A
$\frac{MU_x}{MU_y}=\frac{p_x}{p_y}$
B
$MU_x=MU_y$ , regardless of prices
C
$p_x=p_y$ , regardless of preferences
D
$\frac{MU_x}{p_y}=\frac{MU_y}{p_x}$

Choose one

1 point

The price of good $x$ changes, while income and the price of good $y$ remain fixed. How does the budget line change?

A
It shifts outward in parallel because the consumer's income has risen.
B
It shifts inward in parallel because both prices have risen proportionally.
C
It rotates around the horizontal intercept because the price of $x$ changed.
D
It rotates around the vertical intercept because the price of $y$ is unchanged.

Written response

1 point

For Cobb–Douglas preferences with $\alpha=\frac{1}{2}$ , income $m=120$ , and price $p_x=4$ , calculate the optimal quantity $x^*$ .

Written response

1 point

What is the standard term for a curve joining bundles that provide the same utility?

3 Budget-Constrained Consumer Choice Online Quiz Questions

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