IMM LATEST 2024 EXAM QUESTIONS AND CORRECT ANSWERS (ALL ARE CORRECT) A GRADED
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IMM LATEST 2024 EXAM QUESTIONS AND CORRECT ANSWERS (ALL ARE CORRECT) A GRADED
1) If the price of one good increases while the price of the other good and the consumer's income remain unchanged, what will happen to the budget line?
A) The budget line rotates inward from the intercept on the axis...
IMM LATEST 2024 EXAM QUESTIONS
AND CORRECT ANSWERS (ALL ARE
CORRECT) A GRADED
1) If the price of one good increases while the price of the other good and the
consumer's income remain unchanged, what will happen to the budget line?
A) The budget line rotates inward from the intercept on the axis of the good that did not
change in price.
B) The budget line rotates outward from the intercept on the axis of the good that did
not change in price.
C) The budget line shifts inward without a change in slope.
D) The budget line shifts outward without a change in slope. - Answer- A) The budget
line rotates inward from the intercept on the axis of the good that did not change in
price.
2) If the consumer's income increases while the prices of both goods remain
unchanged, what will happen to the budget line?
A) The budget line rotates inward from the intercept on the horizontal axis.
B) The budget line rotates outward from the intercept on the vertical axis.
C) The budget line shifts inward without a change in slope.
D) The budget line shifts outward without a change in slope. - Answer- D) The budget
line shifts outward without a change in slope.
3) If the prices of both goods and income increase by the same percentage, what will
happen to the budget line?
A) The budget line rotates inward from the intercept on the axis of the good that did not
change in price.
B) The budget line rotates outward from the intercept on the axis of the good that did
not change in price.
C) The budget line shifts outward without a change in slope.
D) Nothing. - Answer- D) Nothing.
4) If a consumer's budget line for food (F) and shelter (S) is represented as F=250-5S,
and 50 units of food is purchased, how many units of shelter can be purchased at most?
A) 0
, B) 40
C) 60
D) 80 - Answer- B) 40
5) An optimum that occurs as a corner solution
A) includes only one good.
B) cannot be an equilibrium.
C) cannot exhaust the budget constraint.
D) includes the exact same amounts of each good. - Answer- A) includes only one
good.
6) The consumer is in equilibrium when
A) MRT = MRS.
B) Px/Py = MUx/MUy.
C) the budget line is tangent to the indifference curve at the bundle chosen.
D) All of the above. - Answer- D) All of the above.
7) By selecting a bundle where MRS = MRT, the consumer is saying
A) "I value my last unit of each good equally."
B) "I am willing to trade one good for the other at the same rate that I am required to do
so."
C) "I will equate the amounts spent on all goods consumed."
D) All of the above. - Answer- B) "I am willing to trade one good for the other at the
same rate that I am required to do so."
8) With respect to consuming food and shelter, two consumers face the same prices
and both claim to be in equilibrium. We therefore know that
A) they both have the same marginal utility for food.
B) they both have the same marginal utility for shelter.
C) they both have the same MRS of food for shelter.
D) All of the above. - Answer- C) they both have the same MRS of food for shelter.
7) When deriving an Engel curve the prices of both goods
A) are held constant.
B) increase by the same percentage as income.
C) decrease by the same percentage as income.
D) can either decrease, increase or stay the same. - Answer- A) are held constant
1) Microeconomics studies the allocation of
A) decision makers.
B) scarce resources.
C) models.
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