Question 1

If,because of a price change,both the income and substitution effects are strong for a normal good,this segment of the demand curve must be:

Accepted Answer

A) unit-elastic. 
B) vertical. 
C) relatively price-elastic. 
D) horizontal. 
A) unit-elastic. 
B) vertical. 
C) relatively price-elastic. 
D) horizontal.

Question 2

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,which consumption bundle is NOT feasible for Tonya?

Accepted Answer

A) 45 shirts and 100 gallons of gasoline 
B) 50 shirts and 0 gallons of gasoline 
C) 0 shirts and 100 gallons of gasoline 
D) 10 shirts and 5 gallons of gasoline 
A) 45 shirts and 100 gallons of gasoline 
B) 50 shirts and 0 gallons of gasoline 
C) 0 shirts and 100 gallons of gasoline 
D) 10 shirts and 5 gallons of gasoline

Question 3

If the price of pecan rolls is $2,the price of a gyro is $6,and the marginal utility of the last pecan roll consumed is 12,then the marginal utility of the last gyro consumed for a consumer purchasing the optimal consumption bundle of pecan rolls and gyros is 36.

Accepted Answer

A) True 
 B)False

Question 4

Economists identify the satisfaction a person derives from the consumption of goods and services as:

Accepted Answer

A) happiness. 
B) usefulness. 
C) utility. 
D) pleasure. 
A) happiness. 
B) usefulness. 
C) utility. 
D) pleasure.

Question 5

Use the following to answer question:  
-(Table: Utility from Candy Bars and Sodas)Use Table: Utility from Candy Bars and Sodas.Stan's daily income is $11,the price of a candy bar is $2,and the price of a soda is $1.Given this budget constraint,Stan will receive the MOST utils from consuming _____ candy bar(s)and _____ sodas.

Accepted Answer

A) 3;5 
B) 1;4 
C) 5;6 
D) 2;7 
A) 3;5 
B) 1;4 
C) 5;6 
D) 2;7

Question 6

Use the following to answer question:  
-(Table: The Utility of Macaroni and Cheese)Use Table: The Utility of Macaroni and Cheese.Carmen loves eating macaroni and cheese on Thanksgiving.Carmen's total utility is maximized after she eats the _____ serving.

Accepted Answer

A) first 
B) second 
C) forth 
D) sixth 
A) first 
B) second 
C) forth 
D) sixth

Question 7

A Giffin good is one in which the _____ curve is _____ sloping.

Accepted Answer

A) supply;downward 
B) demand;downward 
C) supply;upward 
D) demand;upward 
A) supply;downward 
B) demand;downward 
C) supply;upward 
D) demand;upward

Question 8

Use the following to answer question:  
-(Figure: Budget Lines for Tea and Scones)Use Figure: Budget Lines for Tea and Scones.For months now,Agnes has had $20 per month to spend on tea and scones.The price of each cup of tea and each scone has been $1.Which chart shows what will happen to her budget line if the price of a cup of tea falls to $0.50?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 9

Assume that diminishing marginal utility applies to both coffee and football tickets and that the consumer is spending all of her income.If a consumer purchases a combination of coffee and football tickets such that MUCoffee/ /PCoffee = 20 and MUFootball tickets/ /PFootball tickets = 10,to maximize utility,the consumer should buy _____ coffee and _____ football tickets.

Accepted Answer

A) less;more 
B) more;fewer 
C) more;more 
D) less;fewer 
A) less;more 
B) more;fewer 
C) more;more 
D) less;fewer

Question 10

For economists,the satisfaction an individual derives from the consumption of goods and services is BEST described as:

Accepted Answer

A) happiness. 
B) usefulness. 
C) utility. 
D) opportunity cost. 
A) happiness. 
B) usefulness. 
C) utility. 
D) opportunity cost.

Question 11

According to the substitution effect,a decrease in the price of a product leads to an increase in the quantity of the product demanded because buyers:

Accepted Answer

A) have more real income. 
B) purchase fewer substitute goods. 
C) purchase more of the now less expensive good. 
D) purchase more complementary goods. 
A) have more real income. 
B) purchase fewer substitute goods. 
C) purchase more of the now less expensive good. 
D) purchase more complementary goods.

Question 12

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.Put tacos on the horizontal axis and milkshakes on the vertical axis.The vertical intercept for Chuck's budget line is _____ milkshakes.

Accepted Answer

A) 50 
B) 10 
C) 5 
D) 100 
A) 50 
B) 10 
C) 5 
D) 100

Question 13

Wolfgang really likes both rutabagas and broccoli.Suppose the price of each good is $0.60 per pound and Wolfgang is maximizing utility,consuming 5 pounds of rutabagas and 0.5 pound of broccoli per month.At the point of maximal utility,the marginal utility of:

Accepted Answer

A) the two goods is the same. 
B) rutabagas is greater than that of broccoli. 
C) broccoli is greater than that of rutabagas. 
D) both goods is zero. 
A) the two goods is the same. 
B) rutabagas is greater than that of broccoli. 
C) broccoli is greater than that of rutabagas. 
D) both goods is zero.

Question 14

Whatever the time period in question,Molly's spending will be _____ by her _____.

Accepted Answer

A) unlimited;marginal utility 
B) limited;marginal utility 
C) limited;budget 
D) unlimited;budget 
A) unlimited;marginal utility 
B) limited;marginal utility 
C) limited;budget 
D) unlimited;budget

Question 15

Use the following to answer question:  
-(Table: Consumer Equilibrium)Use Table: Consumer Equilibrium.Assume that the price of good X is $2 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 _____ units of X and _____ units of Y.

Accepted Answer

A) 3;4 
B) 2;3 
C) 2;6 
D) 5;0 
A) 3;4 
B) 2;3 
C) 2;6 
D) 5;0

Question 16

Use the following to answer question:  
-(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A decrease in income would:

Accepted Answer

A) rotate the budget line,changing the intercept on the horizontal axis. 
B) shift the budget line to the left. 
C) rotate the budget line,changing the intercept on the vertical axis. 
D) shift the budget line to the right. 
A) rotate the budget line,changing the intercept on the horizontal axis. 
B) shift the budget line to the left. 
C) rotate the budget line,changing the intercept on the vertical axis. 
D) shift the budget line to the right.

Question 17

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 $10,to maximize his utility,he buys _____ shake(s)and _____ burger(s).

Accepted Answer

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

Question 18

Faruq 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.Put tacos on the horizontal axis and milkshakes on the vertical axis.The slope of Faruq's budget line is equal to:

Accepted Answer

A) -1/5. 
B) -5. 
C) 1/5. 
D) 5. 
A) -1/5. 
B) -5. 
C) 1/5. 
D) 5.

Question 19

When the price of Spam (an inferior good)decreased,Dale bought more Spam.For Dale,the income and substitution effects moved in the same direction.

Accepted Answer

A) True 
 B)False

Question 20

The substitution effect always entails a change in consumption in the _____ direction as (of)the change in _____.

Accepted Answer

A) same;marginal utility 
B) same;price 
C) opposite;price 
D) opposite;the budget 
A) same;marginal utility 
B) same;price 
C) opposite;price 
D) opposite;the budget

If,because of a price change,both the income and substitution effects are strong for a normal good,this segment of the demand curve must be:

If the price of pecan rolls is $2,the price of a gyro is $6,and the marginal utility of the last pecan roll consumed is 12,then the marginal utility of the last gyro consumed for a consumer purchasing the optimal consumption bundle of pecan rolls and gyros is 36.

Economists identify the satisfaction a person derives from the consumption of goods and services as:

Use the following to answer question: -(Table: The Utility of Macaroni and Cheese)Use Table: The Utility of Macaroni and Cheese.Carmen loves eating macaroni and cheese on Thanksgiving.Carmen's total utility is maximized after she eats the _____ serving.

A Giffin good is one in which the _ curve is _ sloping.

For economists,the satisfaction an individual derives from the consumption of goods and services is BEST described as:

According to the substitution effect,a decrease in the price of a product leads to an increase in the quantity of the product demanded because buyers:

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.Put tacos on the horizontal axis and milkshakes on the vertical axis.The vertical intercept for Chuck's budget line is _____ milkshakes.

Wolfgang really likes both rutabagas and broccoli.Suppose the price of each good is $0.60 per pound and Wolfgang is maximizing utility,consuming 5 pounds of rutabagas and 0.5 pound of broccoli per month.At the point of maximal utility,the marginal utility of:

Whatever the time period in question,Molly's spending will be _ by her _.

Use the following to answer question: -(Table: Consumer Equilibrium)Use Table: Consumer Equilibrium.Assume that the price of good X is $2 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 _ units of X and _ units of Y.

Use the following to answer question: -(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A decrease in income would:

Faruq 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.Put tacos on the horizontal axis and milkshakes on the vertical axis.The slope of Faruq's budget line is equal to:

When the price of Spam (an inferior good)decreased,Dale bought more Spam.For Dale,the income and substitution effects moved in the same direction.

The substitution effect always entails a change in consumption in the _ direction as (of)the change in _.

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

If,because of a price change,both the income and substitution effects are strong for a normal good,this segment of the demand curve must be:

If the price of pecan rolls is $2,the price of a gyro is $6,and the marginal utility of the last pecan roll consumed is 12,then the marginal utility of the last gyro consumed for a consumer purchasing the optimal consumption bundle of pecan rolls and gyros is 36.

Economists identify the satisfaction a person derives from the consumption of goods and services as:

Use the following to answer question: -(Table: The Utility of Macaroni and Cheese)Use Table: The Utility of Macaroni and Cheese.Carmen loves eating macaroni and cheese on Thanksgiving.Carmen's total utility is maximized after she eats the _____ serving.

A Giffin good is one in which the _____ curve is _____ sloping.

For economists,the satisfaction an individual derives from the consumption of goods and services is BEST described as:

According to the substitution effect,a decrease in the price of a product leads to an increase in the quantity of the product demanded because buyers:

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.Put tacos on the horizontal axis and milkshakes on the vertical axis.The vertical intercept for Chuck's budget line is _____ milkshakes.

Wolfgang really likes both rutabagas and broccoli.Suppose the price of each good is $0.60 per pound and Wolfgang is maximizing utility,consuming 5 pounds of rutabagas and 0.5 pound of broccoli per month.At the point of maximal utility,the marginal utility of:

Whatever the time period in question,Molly's spending will be _____ by her _____.

Use the following to answer question: -(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A decrease in income would:

Faruq 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.Put tacos on the horizontal axis and milkshakes on the vertical axis.The slope of Faruq's budget line is equal to:

When the price of Spam (an inferior good)decreased,Dale bought more Spam.For Dale,the income and substitution effects moved in the same direction.

The substitution effect always entails a change in consumption in the _____ direction as (of)the change in _____.

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

A Giffin good is one in which the _ curve is _ sloping.

Whatever the time period in question,Molly's spending will be _ by her _.

The substitution effect always entails a change in consumption in the _ direction as (of)the change in _.