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# According to the rational choice model, cash grants are preferred to housing benefit

According to the rational choice model, cash grants are preferred to housing benefit because:

A. they enhance consumer choice

B. cash grants allow consumers to reach lower indifference curves

C. housing is the most essential commodity

D. housing would be cheaper to buy with cash

23.If food is on the vertical axis and shelter on the horizontal axis, the slope of the budget line is given by:

A. Pf/Ps

B. Ps/Pf

C. -Ps/Pf

D. -Pf/Ps

24.If food is on the vertical axis and shelter on the horizontal axis, then the equation for the budget line can be expressed as:

A. PsS + PfF = M

B. PsF + PfS = M

C. PsS + PfM = S

25.If food is on the vertical axis and shelter on the horizontal axis, then the equation for the budget line can be expressed as:

A. PsS + Pf = M

B. F = Pf - (Ps/Pf)S

C. S = M/Ps - (Pf/Ps)F

D. S = M/Ps

26.If all consumers are perfectly rational according to microeconomic models they should:

A. all have the same marginal rate of substitution

B. always buy more of the least expensive good

C. all end up with the same bundle of goods

D. all have the same level of satisfaction

27.According to the text, gift giving in kind:

A. should happen more often if people were rational

B. cannot be easily explained by the rational choice model

C. happens only because people expect to get gifts in return

D. always increase consumer welfare

28.According to the rational choice model developed in this chapter, which statement below is false?

A. People would be less happy if they exchanged money rather than things at Christmas

B. Individual preference patterns do not change because prices change

C. Consumers behave as if they did cost-benefit analysis on every purchase

D. Cash grants are always better than in-kind gifts

29.If the consumer is willing to give up 3 units of food (vertical axis) in exchange for one unit of shelter (horizontal axis) and food is priced at 10 and shelter at 20, then the consumer is:

A. purchasing too much food for utility maximization

B. purchasing too much shelter for utility maximization

C. purchasing just the right amount of each good for utility maximization

D. purchasing less than the budget would allow

30.Which statement is true within the framework of rational choice economics?

A. When relative prices change a rational consumer&#39;s preference pattern will be altered

B. The budget line and the indifference curves are interdependent in the maximizing models

C. Indifference curves are empirically determined functions that are identical for all persons who are truly rational choice operators

D. When the relative prices change a rational consumer&#39;s preference will not be altered

Feb 11 2020 View more View Less