MULTIPLE CHOICE B Difficul ty: 2 9 Correct REsp anse Discrimination index: 32 Correct Answer: A 2.26 Young Alasd air loves lolli pops and hates oat meal. To induce him to eat enough oat meal d to restrain him from eating too many lollipops, his mum pays him 10 pence for every quart of oat meal that he eats. The only way that he can get lolli pops is to buy them at the sweet shop. where lollipops cost 5 pence each. Besides what he earns from eating oat meal, Alasdair gets an allowance of 10 pence per week. If Alasdair consumes only oat meal and lolli pops and if his con sumption bundles are graphed with quarts of oat meal on the horizont al axis and lolli pops on the vertical axis. then Alasdairs budget line (a) has a slope of 2 (b) has a slope of less than -2 (c) has a slope of-2 (d has a slope of 1/2 (e) has a slope greater than 2 Topic Budget Constraint DIfficul ty: 2 f Correct REsp anses: 41 Discrimination index: 30 Correct Answer: C 2.27 The Chuzzlewit have an income of Sm per week. Let x be food and let y be all ot her goods be the price of food and py be the price of ot her goods. They can use food stamps to buy ood at a price of pr(l-s) for up to x* units of food per week. If they buy more food than x they have to pay the full price, pr for additional units. Their weekly income is greater than p The maximum amount of food t hat t hey can buy per week is (a ) x*+(m/pr (c)(m/pr)+sx* e)(m+p)/(1-s)prMULTIPLE CHOICE 13 Topic: Budget Constraint Diculty: 2 % Correct Responses: 70 Discrimination Index: 32 Correct Answer: A 2.26 Young Alasdair loves lollipops and hates oatmeal. To induce him to eat enough oatmeal and to restrain him from eating too many lollipops, his mum pays him 10 pence for every quart of oatmeal that he eats. The only way that he can get lollipops is to buy them at the sweet shop, where lollipops cost 5 pence each. Besides what he earns from eating oatmeal, Alasdair gets an allowance of 10 pence per week. If Alasdair consumes only oatmeal and lollipops and if his con￾sumption bundles are graphed with quarts of oatmeal on the horizontal axis and lollipops on the vertical axis, then Alasdair's budget line: (a) has a slope of 2. (b) has a slope of less than ￾2. (c) has a slope of ￾2. (d) has a slope of 1=2. (e) has a slope greater than 2. Topic: Budget Constraint Diculty: 2 % Correct Responses: 41 Discrimination Index: 30 Correct Answer: C 2.27 The Chuzzlewits have an income of $m per week. Let x be food and let y be all other goods. Let px be the price of food and py be the price of other goods. They can use food stamps to buy food at a price of px(1 ￾ s) for up to x* units of food per week. If they buy more food than x*, they have to pay the full price, px for additional units. Their weekly income is greater than px(1 ￾ s)x. The maximum amount of food that they can buy per week is: (a) x +(m=px) (b) (m + x)=px (c) (m=px) + sx (d) m=(1 ￾ s)px (e) (m + px)=(1 ￾ s)px