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Midterm

Mid-term exam answers.pdf

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Department
Economics
Course
ECON 2030
Professor
Xiaoyi Yan
Semester
Fall

Description
ECON2030A Midterm Exam Answers Winter 2013Section 11 Indifference curves cannot intersect AnswerTrue As seen in the above figure points a and c are on the same indifference curve and are therefore equally preferred Points b and c are also on the same indifference curve and are therefore equally preferred Transitivity implies that the consumer would be indifferent between a and b however since more is preferred to less a is preferred to b Thus as a result of the assumption of transitivity and the assumption that more is preferred to less indifference curves cannot intersect 2 The slope of the budget line represents the rate at which the consumer is willing to trade one good for another at any given bundle AnswerFalse This describes the slope of the indifference curve The slope of the budget line represents the rate at which the consumer must trade one good for another at any given bundle3 An increase in a consumers income will increase the Marginal Rate of Transformation AnswerFalseIn increase in income will result in a parallel shift of the budget constraint leaving the slope MRT unchanged4 If the priceconsumption curve is upward sloping when the price of the good measured on the horizontal axis changes then the demand curve for that good will be upward sloping AnswerFalse An upward sloping priceconsumption curve indicates that as the price of the good falls more of both goods will be purchased So the demand curve for the good measured on the horizontal axis slopes downward
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