ESFM2-L2 Score:
1.    A consumer buys two goods. Good X is depicted on the horizontal axis and good
Y on the vertical axis. If the budget line has a slope of -4, then
A the price of good Y is lower than the price of good X.
B the price of good Y is higher than the price of good X.
C the consumer has higher utility from good Y than from good X.
D the consumer has lower utility from good Y than from good X.
E None of the above follows from the instructions.
2.    A consumer makes a choice from two goods. In a graph, good X is on the
horizontal and good Y on the vertical axis. We assume that the indifference curves
are smooth, convex and there is inner solution. The consumer considers a bundle at
his budget line where the indifference curve is steeper than the budget line. It holds
for the current bundle that
A it is optimal.
B the consumer could have higher utility if he bought more X and less Y.
C the consumer could have higher utility if he bought more Y and less X.
3.    If the optimal bundle is such that the ratio between marginal utilities, MU
A
/MU
B
,
is lower that the ratio of prices p
A
/p
B
, then the consumer
A buys only good A.
B buys only good B.
C will buy both goods.
4.    A consumer spends her income m on goods 1 and 2, that have prices p
1
and p
2
.
Good 1 is a good and good 2 is a bad. Which of the following is true?
A The demand for good 1 is m/p
2
.
B The demand for good 1 is m/p
1
.
C The demand for good 1 is 0.
5.    If for the optimal choice holds that MRS = -p
1
/p
2
, than the preferences are
certainly not
A perfect substitutes.
B perfect complements.
C Cobb-Douglas preferences.
D quasilinear preferences.
E More than one of the above choices are correct.
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6.    At prices (p
1
,p
2
), the chosen bundle (x
1
,x
2
) directly revealed preferred to a
bundle (y
1
,y
2
) if
A x
1
p
1
+ y
1
p
1
≤ x
2
p
2
+ y
2
p
2
.
B x
1
p
1
+ y
1
p
1
≥ x
2
p
2
+ y
2
p
2
.
C x
1
p
1
+ x
2
p
2
≥ y
1
p
1
+ y
2
p
2
.
D x
1
p
1
+ x
2
p
2
≤ y
1
p
1
+ y
2
p
2
.
7.    If consumer's choices do not violate the strong axiom of revealed preference,
then
A the demand is always decreasing.
B they might still violate the weak axiom of revealed preference.
C we can use a utility function to describe her choices.
D More than one of the above choices are correct.
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