Question 1

Exhibit 6-11   At point a in Exhibit 6-11, total expenditure on neckties is

Accepted Answer

A) $5 
B) $9 
C) $20 
D) $26 
E) $45 
A) $5 
B) $9 
C) $20 
D) $26 
E) $45

Question 2

If MUx/Px > MUy/Py, the consumer can increase utility by buying less of good y, which means the MUy will rise.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements cannot be made regarding consumer preferences?

Accepted Answer

A) Pat enjoys her second cotton candy less than her first. 
B) Bill enjoys his second cotton candy as much as the first. 
C) Arnie enjoys two cotton candies more than one cotton candy. 
D) Arnie enjoys two cotton candies more than Pat enjoys one cotton candy. 
E) Bill and Arnie enjoy their second cotton candy less than they do their first. 
A) Pat enjoys her second cotton candy less than her first. 
B) Bill enjoys his second cotton candy as much as the first. 
C) Arnie enjoys two cotton candies more than one cotton candy. 
D) Arnie enjoys two cotton candies more than Pat enjoys one cotton candy. 
E) Bill and Arnie enjoy their second cotton candy less than they do their first.

Question 4

If a good is offered to you free of charge, then you

Accepted Answer

A) never stop consuming it 
B) stop consuming it when its marginal utility begins to fall 
C) stop consuming it when its marginal utility begins to increase 
D) stop consuming it when its marginal utility equals 0 
E) stop consuming it when its total utility equals 0 
A) never stop consuming it 
B) stop consuming it when its marginal utility begins to fall 
C) stop consuming it when its marginal utility begins to increase 
D) stop consuming it when its marginal utility equals 0 
E) stop consuming it when its total utility equals 0

Question 5

The law of diminishing marginal utility states that as you consume more and more of a good, other things constant,

Accepted Answer

A) total utility eventually rises 
B) marginal utility can become positive 
C) marginal utility approaches, but never becomes, zero 
D) total utility can never become negative 
E) marginal utility eventually declines 
A) total utility eventually rises 
B) marginal utility can become positive 
C) marginal utility approaches, but never becomes, zero 
D) total utility can never become negative 
E) marginal utility eventually declines

Question 6

Exhibit 6-5   In Exhibit 6-5, the marginal utility of consuming the fourth scone is

Accepted Answer

A) 4 
B) 7 
C) 6 
D) 24 
E) 2 
A) 4 
B) 7 
C) 6 
D) 24 
E) 2

Question 7

Exhibit 6-15   Which area in Exhibit 6-15 represents the maximum amount that consumers are willing to pay for 10 opera tickets?

Accepted Answer

A) area a 
B) area b 
C) area c 
D) areas a + b + c 
E) areas a + b 
A) area a 
B) area b 
C) area c 
D) areas a + b + c 
E) areas a + b

Question 8

The difference between the maximum amount a person is willing to pay for a given quantity of a good and the amount actually paid for that quantity is called

Accepted Answer

A) producer surplus 
B) the substitution effect 
C) price discrimination 
D) the income effect 
E) consumer surplus 
A) producer surplus 
B) the substitution effect 
C) price discrimination 
D) the income effect 
E) consumer surplus

Question 9

"The marginal utility received from each additional unit of a good consumed declines, other things constant." This is a statement of the law of

Accepted Answer

A) increasing marginal returns 
B) marginal rate of substitution 
C) supply 
D) diminishing marginal utility 
E) demand 
A) increasing marginal returns 
B) marginal rate of substitution 
C) supply 
D) diminishing marginal utility 
E) demand

Question 10

Which of the following statements is true?

Accepted Answer

A) The money price is usually the same as the time price for most consumers. 
B) The money price of a good is always greater than the time price. 
C) The money price is always greater for high-wage earners than for low-wage earners. 
D) The time price is usually less for low-wage earners than for high-wage earners. 
E) The time price of a good is directly proportional to the money price. 
A) The money price is usually the same as the time price for most consumers. 
B) The money price of a good is always greater than the time price. 
C) The money price is always greater for high-wage earners than for low-wage earners. 
D) The time price is usually less for low-wage earners than for high-wage earners. 
E) The time price of a good is directly proportional to the money price.

Question 11

Exhibit 6-18   On a normal day, Emily Mapai's demand curve for a cup of hot chocolate is initially shown as D in Exhibit 6-18.On a day when the high temperature does not get above zero degrees, her demand curve increases to D'.At a price P for a cup of hot chocolate, Emily's consumer surplus on a freezing day

Accepted Answer

A) cannot be determined without calculating an exact marginal valuation 
B) increases a great deal over her consumer surplus on a normal day 
C) will vary depending on whether hot chocolate is a normal or an inferior good 
D) increases only if her demand curve is unit-elastic 
E) decreases a great deal over her consumer surplus on a normal day 
A) cannot be determined without calculating an exact marginal valuation 
B) increases a great deal over her consumer surplus on a normal day 
C) will vary depending on whether hot chocolate is a normal or an inferior good 
D) increases only if her demand curve is unit-elastic 
E) decreases a great deal over her consumer surplus on a normal day

Question 12

Exhibit 6-12   In Exhibit 6-12, at a price of $2, consumer surplus is

Accepted Answer

A) $4 
B) $5 
C) $10 
D) $80 
E) $200 
A) $4 
B) $5 
C) $10 
D) $80 
E) $200

Question 13

Which of the following statements concerning utility is correct?

Accepted Answer

A) It is possible to precisely measure the utility an individual receives from consuming a particular good or service 
B) It is always possible to determine whether Dalene or Juloy gets more utility from consuming two units of the same good 
C) The utility of goods can be measured while the same is not true for services 
D) Utility is a subjective measure of satisfaction an individual receives from consuming a good or service 
E) It is only useful if there is no scarcity 
A) It is possible to precisely measure the utility an individual receives from consuming a particular good or service 
B) It is always possible to determine whether Dalene or Juloy gets more utility from consuming two units of the same good 
C) The utility of goods can be measured while the same is not true for services 
D) Utility is a subjective measure of satisfaction an individual receives from consuming a good or service 
E) It is only useful if there is no scarcity

Question 14

After paying admission and entering King's Island Amusement Park near Cincinnati, Alan Fujiwara sees a list of waiting times for each attraction and ride.At this point, Alan's marginal dollar cost is

Accepted Answer

A) zero and so are the marginal time costs of each attraction or ride 
B) zero, so he will base his next move on the marginal time costs of each attraction or ride 
C) greater than zero based on the admission price, so he will base his next move on the marginal time costs of each attraction or ride 
D) greater than zero based on the admission price, so he will ignore the marginal time costs of each attraction or ride 
E) less than zero and so are the marginal time costs of each attraction or ride 
A) zero and so are the marginal time costs of each attraction or ride 
B) zero, so he will base his next move on the marginal time costs of each attraction or ride 
C) greater than zero based on the admission price, so he will base his next move on the marginal time costs of each attraction or ride 
D) greater than zero based on the admission price, so he will ignore the marginal time costs of each attraction or ride 
E) less than zero and so are the marginal time costs of each attraction or ride

Question 15

Which of the following is true of units of utility?

Accepted Answer

A) Each unit is worth $1. 
B) They cannot be compared across consumers. 
C) They apply to goods but not to services. 
D) They do not exist for very wealthy individuals. 
E) They are negative for inferior goods. 
A) Each unit is worth $1. 
B) They cannot be compared across consumers. 
C) They apply to goods but not to services. 
D) They do not exist for very wealthy individuals. 
E) They are negative for inferior goods.

Question 16

If Debbye is willing to pay $50 for a pair of shoes but only has to pay $20 because the shoes are on sale, then her consumer surplus on that pair of shoes is

Accepted Answer

A) $50 
B) $20 
C) $70 
D) $30 
E) $25 
A) $50 
B) $20 
C) $70 
D) $30 
E) $25

Question 17

Which of the following must be true of an attorney who buys a portable computer so that she can work on trains and planes?

Accepted Answer

A) She is engaging in conspicuous consumption. 
B) She gets utility from working. 
C) She thinks the opportunity cost of her time is higher than it really is. 
D) She thinks the opportunity cost of her time is lower than it really is. 
E) She is trying to reduce the opportunity cost of traveling. 
A) She is engaging in conspicuous consumption. 
B) She gets utility from working. 
C) She thinks the opportunity cost of her time is higher than it really is. 
D) She thinks the opportunity cost of her time is lower than it really is. 
E) She is trying to reduce the opportunity cost of traveling.

Question 18

If marginal utility is negative, total utility is negative.

Accepted Answer

A) True 
 B)False

Question 19

Positive marginal utility implies increasing total utility.

Accepted Answer

A) True 
 B)False

Question 20

When a consumer spends income so that the ratio of marginal utilities (MUs)of all goods purchased equals the ratio of their prices, the consumer is

Accepted Answer

A) maximizing marginal utility 
B) spending too much on all goods 
C) maximizing total utility 
D) beyond the point of diminishing marginal utility 
E) behaving in opposition to the principal of rational behavior 
A) maximizing marginal utility 
B) spending too much on all goods 
C) maximizing total utility 
D) beyond the point of diminishing marginal utility 
E) behaving in opposition to the principal of rational behavior

Exam 6: Consumer Choice and Demand

Exhibit 6-11 At point a in Exhibit 6-11, total expenditure on neckties is

If MUx/Px > MUy/Py, the consumer can increase utility by buying less of good y, which means the MUy will rise.

Which of the following statements cannot be made regarding consumer preferences?

If a good is offered to you free of charge, then you

The law of diminishing marginal utility states that as you consume more and more of a good, other things constant,

Exhibit 6-5 In Exhibit 6-5, the marginal utility of consuming the fourth scone is

Exhibit 6-15 Which area in Exhibit 6-15 represents the maximum amount that consumers are willing to pay for 10 opera tickets?

The difference between the maximum amount a person is willing to pay for a given quantity of a good and the amount actually paid for that quantity is called

"The marginal utility received from each additional unit of a good consumed declines, other things constant." This is a statement of the law of

Which of the following statements is true?

Exhibit 6-12 In Exhibit 6-12, at a price of $2, consumer surplus is

Which of the following statements concerning utility is correct?

After paying admission and entering King's Island Amusement Park near Cincinnati, Alan Fujiwara sees a list of waiting times for each attraction and ride.At this point, Alan's marginal dollar cost is

Which of the following is true of units of utility?

If Debbye is willing to pay $50 for a pair of shoes but only has to pay $20 because the shoes are on sale, then her consumer surplus on that pair of shoes is

Which of the following must be true of an attorney who buys a portable computer so that she can work on trains and planes?

If marginal utility is negative, total utility is negative.

Positive marginal utility implies increasing total utility.

When a consumer spends income so that the ratio of marginal utilities (MUs)of all goods purchased equals the ratio of their prices, the consumer is

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters

If MU_x/P_x > MU_y/P_y, the consumer can increase utility by buying less of good y, which means the MU_y will rise.