# TEST BANK FOR CHAPTER 2: Utility and Choice

21. Suppose a caffeine-deprived man needs to wake up. Suppose his preferences can be described by.gif”> If the price of coffee is \$4 and the price of tea is \$1, he will buy

a. all coffee

b. all tea

c. some of both, but more coffee

d. some of both, but more tea

22. Suppose a little girl likes peanut butter and jelly sandwiches with exactly 2T of jelly and 1T of peanut butter. Suppose further that her mom agrees to make sandwiches to those exact specifications and the price of peanut butter is \$.25/T and the price of jelly is \$.10/T. If she has \$1.8 to spend on peanut butter and jelly ingredients (ignore the bread) in a week, how many sandwiches will she make?

a. 1

b. 2

c. 4

d. 8

23. If people like their goods in fixed proportions, the two goods are

a. perfect substitutes

b. perfect complements

c. complements (but not perfect)

d. substitutes (but not perfect)

24. If a personÂ’s indifference curves can be represented as a straight line, the person views the goods as

a. perfect substitutes

b. perfect complements

c. complements (but not perfect)

d. substitutes (but not perfect)

25. If the government imposes a law requiring you to save when you otherwise would not have, they are

a. truncating a budget line

b. shifting a budget line

c. changing preferences toward saving

d. changing preferences toward consumption

26. Suppose a teenager likes both rap music (R) and country music (C) with a set of preferences so that U = C1/2R1/2. Which point (C, R) makes the teen the happiest?

a. 4, 16

b. 25, 1

c. 9, 9

d. 16, 4

27. Suppose a teenager likes both rap music (R) and country music (C) with a set of preferences so that U = C1/2R1/2. Which point (C, R) makes the teen the happiest?

a. 9, 16

b. 36, 1

c. 49, 4

d. 100, 0

28. Suppose a teenager has \$20 and likes both rap music (R) and country music (C) with a set of preferences so that U = C1/2R1/2. Suppose that the iTunes price of a rap music song is.gif”> and the price of a country music song is.gif”>. Which level of utility is affordable?

a. .gif”>

b. 9

c. 16

d. 25

29. Suppose a teenager has \$20 and likes both rap music (R) and country music (C) with a set of preferences so that U = C1/2R1/2. Suppose that the iTunes price of a rap music song is.gif”> and the price of a country music song is.gif”>. What is the greatest level of affordable utility?

a. 7

b. .gif”>

c. 8

d. 9

30. Suppose a teenager has \$20 and likes both rap music (R) and country music (C) with a set of preferences so that U = C1/2R1/2. Suppose that the iTunes price of a rap music song is.gif”> and the price of a country music song is.gif”>. What level of utility is unaffordable?

a. 6

b. 7

c. .gif”>

d. 8

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