13.A consumer buys 12 units of entertainment and 84 units of "all other things." The consumer's incomeelasticity of demand is greater than 1 for entertainment and less than 1 for all other things. If incomeincreases by 10%, then the consumer's marginal rate of substitution at the utility-maximizing market+bundle will:a. increase.b. decrease.be equal to 1.d. remain constant.There is insufficient information to answer the question.с.е.ANS: ADIF: DifficultREF: 69TOP: The Marginal Rate of SubstitutionMSC: Applied29. Jamie is considering the purchase of a new car for $20,000. Her income is $60,000, and her alternative is"all other things," which sell for $1 each. If all other things are plotted on the vertical axis and hermarginal rate of substitution isа. 15,000; 0b. 15,000; 1с. 15,000; 2d. 15,000; 31/15,000; 3then she will buycar(s).е.ANS: ADIF: ModerateREF: 72TOP: The Budget LineMSC: Applied30. Jamie is considering the purchase of a new Ferrari for $100,000. Her income is $200,000, and heralternative is "all other things," which sell for $1 each. If all other things are plotted on the vertical axisand her marginal rate of substitution is .a. 200,000; 1b. 200,000; 2c. 1/200,000; 1d. 1/200,000; 2none of the abovethen she will buyFerrari(s).е.ANS: BDIF: ModerateREF: 72TOP: The Budget LineMSC: Applied

since you have asked multiple questions and according to our policy we can only solve the 1st…

13.A consumer buys 12 units of entertainment and 84 units of "all other things." The consumer's income elasticity of demand is greater than 1 for entertainment and less than 1 for all other things. If income increases by 10%, then the consumer's marginal rate of substitution at the utility-maximizing market + bundle will: increase. b. decrease. а. c. be equal to 1. d. remain constant. e. There is insufficient information to answer the question. ANS: A DIF: Difficult REF: 69 TOP: The Marginal Rate of Substitution MSC: Applied

13.A consumer buys 12 units of entertainment and 84 units of "all other things." The consumer's income elasticity of demand is greater than 1 for entertainment and less than 1 for all other things. If income increases by 10%, then the consumer's marginal rate of substitution at the utility-maximizing market + bundle will: increase. b. decrease. а. c. be equal to 1. d. remain constant. e. There is insufficient information to answer the question. ANS: A DIF: Difficult REF: 69 TOP: The Marginal Rate of Substitution MSC: Applied

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

13.A consumer buys 12 units of entertainment and 84 units of "all other things." The consumer's income
elasticity of demand is greater than 1 for entertainment and less than 1 for all other things. If income
increases by 10%, then the consumer's marginal rate of substitution at the utility-maximizing market
+bundle will:
a. increase.
b. decrease.
be equal to 1.
d. remain constant.
There is insufficient information to answer the question.
с.
е.
ANS: A
DIF: Difficult
REF: 69
TOP: The Marginal Rate of Substitution
MSC: Applied
29. Jamie is considering the purchase of a new car for $20,000. Her income is $60,000, and her alternative is
"all other things," which sell for $1 each. If all other things are plotted on the vertical axis and her
marginal rate of substitution is
а. 15,000; 0
b. 15,000; 1
с. 15,000; 2
d. 15,000; 3
1/15,000; 3
then she will buy
car(s).
е.
ANS: A
DIF: Moderate
REF: 72
TOP: The Budget Line
MSC: Applied
30. Jamie is considering the purchase of a new Ferrari for $100,000. Her income is $200,000, and her
alternative is "all other things," which sell for $1 each. If all other things are plotted on the vertical axis
and her marginal rate of substitution is .
a. 200,000; 1
b. 200,000; 2
c. 1/200,000; 1
d. 1/200,000; 2
none of the above
then she will buy
Ferrari(s).
е.
ANS: B
DIF: Moderate
REF: 72
TOP: The Budget Line
MSC: Applied

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