Question 1

Consumption bundles that Mei CANNOT afford because the bundles cost more than her income are _____ the budget line.

Accepted Answer

A) within 
B) beyond 
C) on 
D) at the corner of 
A) within 
B) beyond 
C) on 
D) at the corner of

Question 2

Abdul spends all of his income on food (F)and shelter (S).His budget line is given by the equation 5F + 20S = 100.Which consumption bundle is part of his consumption possibilities?

Accepted Answer

A) 8 units of F and 3 units of S 
B) 14 units of F and 2 units of S 
C) 0 units of F and 6 units of S 
D) 20 units of F and 15 units of S 
A) 8 units of F and 3 units of S 
B) 14 units of F and 2 units of S 
C) 0 units of F and 6 units of S 
D) 20 units of F and 15 units of S

Question 3

The demand curve for a normal good will always slope downward because:

Accepted Answer

A) the substitution effect and the income effect reinforce each other,and the substitution effect always displays an inverse relation between price and quantity demanded. 
B) the substitution effect and the income effect reinforce each other,and the income effect always displays an inverse relation between price and quantity demanded. 
C) even though the substitution effect and the income effect move in opposite directions,the substitution effect dominates,and it always displays an inverse relation between price and quantity demanded. 
D) even though the substitution effect and the income effect move in opposite directions,the income effect dominates,and it always displays an inverse relation between price and quantity demanded. 
A) the substitution effect and the income effect reinforce each other,and the substitution effect always displays an inverse relation between price and quantity demanded. 
B) the substitution effect and the income effect reinforce each other,and the income effect always displays an inverse relation between price and quantity demanded. 
C) even though the substitution effect and the income effect move in opposite directions,the substitution effect dominates,and it always displays an inverse relation between price and quantity demanded. 
D) even though the substitution effect and the income effect move in opposite directions,the income effect dominates,and it always displays an inverse relation between price and quantity demanded.

Question 4

Chuck spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.If the price of each good doubles and Chuck's income doubles:

Accepted Answer

A) Chuck's budget line will be unaffected. 
B) Chuck's budget line will shift out. 
C) Chuck's budget line will shift in. 
D) Chuck will be able to buy more of both goods. 
A) Chuck's budget line will be unaffected. 
B) Chuck's budget line will shift out. 
C) Chuck's budget line will shift in. 
D) Chuck will be able to buy more of both goods.

Question 5

On a sparsely populated island,an additional minute of high-speed Internet service would have a _____ marginal utility than in New York City,while in New York City,quiet evenings would carry a _____ marginal utility than on a deserted island.

Accepted Answer

A) lower;higher 
B) higher;lower 
C) lower;lower 
D) higher;higher 
A) lower;higher 
B) higher;lower 
C) lower;lower 
D) higher;higher

Question 6

Use the following to answer question:  
-(Table: Consumer Equilibrium)Use Table: Consumer Equilibrium.Assume that the price of good X is $5 per unit,that the price of good Y is $1 per unit,and that you have $10 to spend on both goods.To maximize utility,you would consume _____ unit(s)of X and _____ unit(s)of Y.

Accepted Answer

A) 0;1 
B) 1;5 
C) 4;6 
D) 5;5 
A) 0;1 
B) 1;5 
C) 4;6 
D) 5;5

Question 7

Use the following to answer question:  
-(Table: Marginal Utility per Dollar III)Use Table: Marginal Utility per Dollar III.If Liyun has $20 to spend on potatoes and clams,then the utility-maximizing combination is _____ pound(s)of clams and _____ pound(s)of potatoes.

Accepted Answer

A) 2;6 
B) 3;4 
C) 1;8 
D) 3;9 
A) 2;6 
B) 3;4 
C) 1;8 
D) 3;9

Question 8

If the price of coffee cups falls and the consumer decides to buy more coffee cups solely because they are less expensive,this describes the:

Accepted Answer

A) income effect. 
B) substitution effect. 
C) consumer surplus effect. 
D) marginal-maximizing rule. 
A) income effect. 
B) substitution effect. 
C) consumer surplus effect. 
D) marginal-maximizing rule.

Question 9

For most goods,the income effect has no significant effect on individual consumption.

Accepted Answer

A) True 
 B)False

Question 10

Use the following to answer question:  
-(Table: Utility from Burgers and Milkshakes)Use Table: Utility from Burgers and Milkshakes.David's marginal utilities for milkshakes and burgers are given in the table.The price of milkshakes is $2,and the price of burgers is $5.If David's income is $22,to maximize his utility,he buys _____ shake(s)and _____ burger(s).

Accepted Answer

A) 1;1 
B) 6;0 
C) 5;1 
D) 6;2 
A) 1;1 
B) 6;0 
C) 5;1 
D) 6;2

Question 11

The amount by which total utility _____ when an additional unit of a good is consumed is _____.

Accepted Answer

A) changes;average utility 
B) increases;the income effect 
C) decreases;maximum utility 
D) changes;marginal utility 
A) changes;average utility 
B) increases;the income effect 
C) decreases;maximum utility 
D) changes;marginal utility

Question 12

Which statement BEST describes the principle of diminishing marginal utility? As an individual consumes more of a good:

Accepted Answer

A) the total utility obtained will eventually fall. 
B) the total utility obtained will eventually become negative. 
C) the addition to total utility obtained from the nth unit of the good will be less than that obtained from the immediately preceding unit of the good. 
D) the marginal utility will eventually become negative. 
A) the total utility obtained will eventually fall. 
B) the total utility obtained will eventually become negative. 
C) the addition to total utility obtained from the nth unit of the good will be less than that obtained from the immediately preceding unit of the good. 
D) the marginal utility will eventually become negative.

Question 13

When the price of an inferior good falls,the substitution effect contributes to a(n)_____ in the quantity demanded,and the income effect _____ the substitution effect.

Accepted Answer

A) decrease;reinforces 
B) increase;reinforces 
C) increase;opposes 
D) decrease;opposes 
A) decrease;reinforces 
B) increase;reinforces 
C) increase;opposes 
D) decrease;opposes

Question 14

Tonya's budget constraint for gallons of gasoline (G)and shirts (S)each month can be expressed by the equation G = 100 - 2S,where G is the number of gallons of gasoline she buys and S is the total number of shirts she buys.Assume that she spends her entire budget each month.If the price of shirts is $10,the price of gasoline is _____ per gallon,and the total amount of income spent on both shirts and gasoline each month is _____.

Accepted Answer

A) $5;$500 
B) $2;$100 
C) $1;$500 
D) $2;$1,000 
A) $5;$500 
B) $2;$100 
C) $1;$500 
D) $2;$1,000

Question 15

Use the following to answer question:  
-(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A(n)_____ in the price of clams would rotate the budget line,changing the intercept on the _____ axis and moving it _____ the origin.

Accepted Answer

A) increase;horizontal;toward 
B) decrease;horizontal;toward 
C) increase;vertical;toward 
D) decrease;vertical;away from 
A) increase;horizontal;toward 
B) decrease;horizontal;toward 
C) increase;vertical;toward 
D) decrease;vertical;away from

Question 16

To say that you can't have too much of a good thing means that,for any good that you enjoy (for example,pizza):

Accepted Answer

A) higher consumption will always lead to higher utility. 
B) higher consumption will cause utility to decrease at an increasing rate. 
C) higher consumption will increase utility,but only up to a point;after that,utility will start to decrease. 
D) it is valid to measure utility in utils. 
A) higher consumption will always lead to higher utility. 
B) higher consumption will cause utility to decrease at an increasing rate. 
C) higher consumption will increase utility,but only up to a point;after that,utility will start to decrease. 
D) it is valid to measure utility in utils.

Question 17

A person's consumption possibilities include all points on their budget line as well as all points below the budget line.

Accepted Answer

A) True 
 B)False

Question 18

The income effect will play a greater role in a consumer's spending if the good:

Accepted Answer

A) accounts for a substantial share of the consumer's spending. 
B) accounts for a small share of the consumer's spending. 
C) is not subject to a budget constraint. 
D) is not something the consumer needs. 
A) accounts for a substantial share of the consumer's spending. 
B) accounts for a small share of the consumer's spending. 
C) is not subject to a budget constraint. 
D) is not something the consumer needs.

Question 19

Use the following to answer question:  
-(Table: Marginal Utility per Dollar IV)Use Table: Marginal Utility per Dollar IV.If Ashyra has $40 to spend on potatoes and clams,then the utility-maximizing combination is _____ pound(s)of clams and _____ pound(s)of potatoes.

Accepted Answer

A) 3;4 
B) 2;5 
C) 1;8 
D) 2;6 
A) 3;4 
B) 2;5 
C) 1;8 
D) 2;6

Question 20

Which statement is TRUE if the principle of diminishing marginal utility applies?

Accepted Answer

A) When a customer at the Pie Palace continues to eat more pie,each additional piece of pie gives the same marginal utility. 
B) When a customer at the Pie Palace continues to eat more pie,each additional piece of pie gives less marginal utility. 
C) When a customer at the Pie Palace continues to eat more pie,each additional piece of pie lowers total utility. 
D) The total utility of pie is at a maximum,while the marginal utility of pie is still increasing. 
A) When a customer at the Pie Palace continues to eat more pie,each additional piece of pie gives the same marginal utility. 
B) When a customer at the Pie Palace continues to eat more pie,each additional piece of pie gives less marginal utility. 
C) When a customer at the Pie Palace continues to eat more pie,each additional piece of pie lowers total utility. 
D) The total utility of pie is at a maximum,while the marginal utility of pie is still increasing.

Consumption bundles that Mei CANNOT afford because the bundles cost more than her income are _____ the budget line.

Abdul spends all of his income on food (F)and shelter (S).His budget line is given by the equation 5F + 20S = 100.Which consumption bundle is part of his consumption possibilities?

The demand curve for a normal good will always slope downward because:

Chuck spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.If the price of each good doubles and Chuck's income doubles:

On a sparsely populated island,an additional minute of high-speed Internet service would have a _ marginal utility than in New York City,while in New York City,quiet evenings would carry a _ marginal utility than on a deserted island.

Use the following to answer question: -(Table: Marginal Utility per Dollar III)Use Table: Marginal Utility per Dollar III.If Liyun has $20 to spend on potatoes and clams,then the utility-maximizing combination is _ pound(s)of clams and _ pound(s)of potatoes.

If the price of coffee cups falls and the consumer decides to buy more coffee cups solely because they are less expensive,this describes the:

For most goods,the income effect has no significant effect on individual consumption.

The amount by which total utility _ when an additional unit of a good is consumed is _.

Which statement BEST describes the principle of diminishing marginal utility? As an individual consumes more of a good:

When the price of an inferior good falls,the substitution effect contributes to a(n)_ in the quantity demanded,and the income effect _ the substitution effect.

Use the following to answer question: -(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A(n)___ in the price of clams would rotate the budget line,changing the intercept on the _ axis and moving it ___ the origin.

To say that you can't have too much of a good thing means that,for any good that you enjoy (for example,pizza):

A person's consumption possibilities include all points on their budget line as well as all points below the budget line.

The income effect will play a greater role in a consumer's spending if the good:

Use the following to answer question: -(Table: Marginal Utility per Dollar IV)Use Table: Marginal Utility per Dollar IV.If Ashyra has $40 to spend on potatoes and clams,then the utility-maximizing combination is _ pound(s)of clams and _ pound(s)of potatoes.

Which statement is TRUE if the principle of diminishing marginal utility applies?

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Exam 10: The Rational Consumer

Consumption bundles that Mei CANNOT afford because the bundles cost more than her income are _____ the budget line.

Abdul spends all of his income on food (F)and shelter (S).His budget line is given by the equation 5F + 20S = 100.Which consumption bundle is part of his consumption possibilities?

The demand curve for a normal good will always slope downward because:

Chuck spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.If the price of each good doubles and Chuck's income doubles:

On a sparsely populated island,an additional minute of high-speed Internet service would have a _____ marginal utility than in New York City,while in New York City,quiet evenings would carry a _____ marginal utility than on a deserted island.

Use the following to answer question: -(Table: Marginal Utility per Dollar III)Use Table: Marginal Utility per Dollar III.If Liyun has $20 to spend on potatoes and clams,then the utility-maximizing combination is _____ pound(s)of clams and _____ pound(s)of potatoes.

If the price of coffee cups falls and the consumer decides to buy more coffee cups solely because they are less expensive,this describes the:

For most goods,the income effect has no significant effect on individual consumption.

The amount by which total utility _____ when an additional unit of a good is consumed is _____.

Which statement BEST describes the principle of diminishing marginal utility? As an individual consumes more of a good:

When the price of an inferior good falls,the substitution effect contributes to a(n)_____ in the quantity demanded,and the income effect _____ the substitution effect.

Use the following to answer question: -(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A(n)_____ in the price of clams would rotate the budget line,changing the intercept on the _____ axis and moving it _____ the origin.

To say that you can't have too much of a good thing means that,for any good that you enjoy (for example,pizza):

A person's consumption possibilities include all points on their budget line as well as all points below the budget line.

The income effect will play a greater role in a consumer's spending if the good:

Use the following to answer question: -(Table: Marginal Utility per Dollar IV)Use Table: Marginal Utility per Dollar IV.If Ashyra has $40 to spend on potatoes and clams,then the utility-maximizing combination is _____ pound(s)of clams and _____ pound(s)of potatoes.

Which statement is TRUE if the principle of diminishing marginal utility applies?

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

On a sparsely populated island,an additional minute of high-speed Internet service would have a _ marginal utility than in New York City,while in New York City,quiet evenings would carry a _ marginal utility than on a deserted island.

Use the following to answer question: -(Table: Marginal Utility per Dollar III)Use Table: Marginal Utility per Dollar III.If Liyun has $20 to spend on potatoes and clams,then the utility-maximizing combination is _ pound(s)of clams and _ pound(s)of potatoes.

The amount by which total utility _ when an additional unit of a good is consumed is _.

When the price of an inferior good falls,the substitution effect contributes to a(n)_ in the quantity demanded,and the income effect _ the substitution effect.

Use the following to answer question: -(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A(n)___ in the price of clams would rotate the budget line,changing the intercept on the _ axis and moving it ___ the origin.

Use the following to answer question: -(Table: Marginal Utility per Dollar IV)Use Table: Marginal Utility per Dollar IV.If Ashyra has $40 to spend on potatoes and clams,then the utility-maximizing combination is _ pound(s)of clams and _ pound(s)of potatoes.