Topic Questions (MCQ – EASY): Indifference curves and budget lines – 3auk

Helen's income is \$100 and she purchases food and drink. Food costs $2 per unit and drink costs \$1 per unit. Which spending combination indicates that Helen intends to save some of her income?

20 units of food and 50 units of drink

30 units of food and 40 units of drink

40 units of food and 20 units of drink

50 units of food and 10 units of drink

The budget line for a consumer is represented by JK in the diagram.

What could cause the budget line to shift from JK to GH, assuming the price of good X remains unchanged?

The price of good Y decreases, and the consumer experiences a decrease in her money income.

The price of good Y decreases, and the consumer experiences an increase in their money income.

The price of good Y increases; the consumer's money income decreases.

The price of good Y increases, and the consumer experiences an increase in her money income.

The budget line of a consumer has shifted from JK to JH in the given diagram. What conclusion can definitely be drawn from the diagram?

The price of good Y has decreased.

The consumer's money income has decreased.

The consumer's real income has increased.

The price of good X has not changed.

In the diagram, a consumer's budget line and indifference curves for good X and good Y are shown. Assuming that income and prices of both goods remain constant, which point on the diagram represents the maximum satisfaction for the consumer?

A

B

C

D