Question 1

Exhibit 21-8
  
-Refer to Exhibit 21-8.If the price of good X falls,the budget constraint moves from budget constraint

Accepted Answer

A)  1 to 2. 
B)  3 to 2. 
C)  3 to 1. 
D)  1 to 3. 
A)  1 to 2. 
B)  3 to 2. 
C)  3 to 1. 
D)  1 to 3.

Question 2

Economists use the term utility to mean usefulness.

Accepted Answer

A) True 
 B)False

Question 3

You and your roommate are eating pizza and have already consumed all but the last slice.Your roommate claims that he is hungrier than you and therefore should get the last slice of pizza.Your roommate has made

Accepted Answer

A)  a diamond-water paradox. 
B)  an interpersonal utility comparison. 
C)  a correct statement. 
D)  a marginal error. 
A)  a diamond-water paradox. 
B)  an interpersonal utility comparison. 
C)  a correct statement. 
D)  a marginal error.

Question 4

Exhibit 21-6
  
-Refer to Exhibit 21-6.I1,I2and I3 are indifference curves and line ab is the relevant budget constraint.Point N is

Accepted Answer

A)  the consumer's equilibrium position. 
B)  unattainable. 
C)  inferior to every other labeled point on the diagram. 
D)  attainable, but does not exhaust the consumer's income. 
A)  the consumer's equilibrium position. 
B)  unattainable. 
C)  inferior to every other labeled point on the diagram. 
D)  attainable, but does not exhaust the consumer's income.

Question 5

Total utility

Accepted Answer

A)  is the total amount of satisfaction derived from consuming a particular quantity of a good. 
B)  for quantity Y can be calculated by summing the marginal utilities of each unit that comprises quantity Y. 
C)  is the sum of the amounts of utility derived from consuming each unit of a good. 
D)  a and b 
E)  all of the above 
A)  is the total amount of satisfaction derived from consuming a particular quantity of a good. 
B)  for quantity Y can be calculated by summing the marginal utilities of each unit that comprises quantity Y. 
C)  is the sum of the amounts of utility derived from consuming each unit of a good. 
D)  a and b 
E)  all of the above

Question 6

Which of the following statements is true?

Accepted Answer

A)  An extra dollar earned by a millionaire necessarily brings him or her less utility than an extra dollar earned by a poor person. 
B)  If marginal utility is constant, then total utility for two units of a good is equal to the marginal utility of the second unit of the good. 
C)  The marginal and total utility of a good are the same for the first unit of the good. 
D)  Total utility will rise if marginal utility is negative. 
E)  a and c 
A)  An extra dollar earned by a millionaire necessarily brings him or her less utility than an extra dollar earned by a poor person. 
B)  If marginal utility is constant, then total utility for two units of a good is equal to the marginal utility of the second unit of the good. 
C)  The marginal and total utility of a good are the same for the first unit of the good. 
D)  Total utility will rise if marginal utility is negative. 
E)  a and c

Question 7

A consumer is in equilibrium if he or she derives the same

Accepted Answer

A)  total utility from each good consumed. 
B)  total utility per dollar spent on each good consumed. 
C)  marginal utility from each good consumed. 
D)  marginal utility per dollar spent on each good consumed. 
A)  total utility from each good consumed. 
B)  total utility per dollar spent on each good consumed. 
C)  marginal utility from each good consumed. 
D)  marginal utility per dollar spent on each good consumed.

Question 8

As presented in the text,research by some economists has shown that even when there is no difference between options provided to people

Accepted Answer

A)  the way in which the options are framed has no impact on the outcome (i.e. there will be no preference for one option over another). 
B)  the preferred option will always be the one that is stated most simplistically. 
C)  the preferred option will always be the one that sounds more complicated. 
D)  the way in which the options are framed impacts the outcome (i.e. which option is preferred). 
A)  the way in which the options are framed has no impact on the outcome (i.e. there will be no preference for one option over another). 
B)  the preferred option will always be the one that is stated most simplistically. 
C)  the preferred option will always be the one that sounds more complicated. 
D)  the way in which the options are framed impacts the outcome (i.e. which option is preferred).

Question 9

It is possible for total utility to rise as marginal utility falls.

Accepted Answer

A) True 
 B)False

Question 10

Assuming only two goods X and Y,if MUX/PX = MUY/PY,then

Accepted Answer

A)  the consumer is in equilibrium. 
B)  the consumer cannot be made better off by redirecting his purchases. 
C)  the consumer is deriving the same marginal utility per dollar for all goods. 
D)  a and c 
E)  a, b and c 
A)  the consumer is in equilibrium. 
B)  the consumer cannot be made better off by redirecting his purchases. 
C)  the consumer is deriving the same marginal utility per dollar for all goods. 
D)  a and c 
E)  a, b and c

Question 11

Exhibit 21-1
  
-Refer to Exhibit 21-1.The marginal utility of the third plum is

Accepted Answer

A)  17 utils. 
B)  10 utils. 
C)  8 utils. 
D)  3 utils. 
E)  cannot be determined 
A)  17 utils. 
B)  10 utils. 
C)  8 utils. 
D)  3 utils. 
E)  cannot be determined

Question 12

Exhibit 21-6
  
-Refer to Exhibit 21-6.I1,I2 and I3 are indifference curves and line ab is the relevant budget constraint.The equilibrium position for the consumer is at

Accepted Answer

A)  any point on the budget constraint. 
B)  point M. 
C)  point J. 
D)  point T. 
E)  point R. 
A)  any point on the budget constraint. 
B)  point M. 
C)  point J. 
D)  point T. 
E)  point R.

Question 13

Given the choice between a sure-thing option and a gamble option with the same expected payoff,a____________ person will choose the sure thing.

Accepted Answer

A)  risk averse 
B)  risk loving 
C)  risk neutral 
D)  risk enjoying 
E)  none of the above 
A)  risk averse 
B)  risk loving 
C)  risk neutral 
D)  risk enjoying 
E)  none of the above

Question 14

Exhibit 21-7
  
-Refer to Exhibit 21-7.For graph (1),if the price of X is $20,the price of Y is

Accepted Answer

A)  $10. 
B)  $40. 
C)  $80. 
D)  $100. 
E)  $160. 
A)  $10. 
B)  $40. 
C)  $80. 
D)  $100. 
E)  $160.

Question 15

Jackson says that his fifth game of chess gave him greater utility than his first,and therefore the law of diminishing marginal utility does not hold.An economist who believes that marginal utility definitely and always declines with the consumption of equal successive units of a good will likely say

Accepted Answer

A)  the fifth game of chess is a different good than the first game of chess. 
B)  there are exceptions to the law of diminishing marginal utility. 
C)  the law of diminishing marginal utility does not apply to board games. 
D)  a or b 
E)  a or c 
A)  the fifth game of chess is a different good than the first game of chess. 
B)  there are exceptions to the law of diminishing marginal utility. 
C)  the law of diminishing marginal utility does not apply to board games. 
D)  a or b 
E)  a or c

Question 16

An indifference curve shows

Accepted Answer

A)  the bundles of two goods that give an individual equal total utility. 
B)  two bundles of two goods each where one bundle gives greater utility to an individual than the other bundle. 
C)  two bundles of two goods each where one bundle is preferred to the other. 
D)  the bundles of two goods that give an individual equal marginal utility. 
A)  the bundles of two goods that give an individual equal total utility. 
B)  two bundles of two goods each where one bundle gives greater utility to an individual than the other bundle. 
C)  two bundles of two goods each where one bundle is preferred to the other. 
D)  the bundles of two goods that give an individual equal marginal utility.

Question 17

Exhibit 21-8
  
-Refer to Exhibit 21-8.A move of the budget constraint from 1 to 2 is caused by a

Accepted Answer

A)  rise in the price of good X. 
B)  fall in the price of good X. 
C)  rise in the price of good Y. 
D)  fall in income. 
A)  rise in the price of good X. 
B)  fall in the price of good X. 
C)  rise in the price of good Y. 
D)  fall in income.

Question 18

The white rats in the Texas A & M study acted the same way a person who

Accepted Answer

A)  sought to achieve consumer equilibrium would act. 
B)  is irrational would act. 
C)  didn't want to assume any risk would act. 
D)  didn't like any goods would act. 
E)  There was no study done at Texas A & M with white rats. 
A)  sought to achieve consumer equilibrium would act. 
B)  is irrational would act. 
C)  didn't want to assume any risk would act. 
D)  didn't like any goods would act. 
E)  There was no study done at Texas A & M with white rats.

Question 19

Exhibit 21-1
  
-Refer to Exhibit 21-1.In this example,marginal utility

Accepted Answer

A)  constantly increases. 
B)  constantly diminishes. 
C)  increases then diminishes. 
D)  diminishes then increases. 
A)  constantly increases. 
B)  constantly diminishes. 
C)  increases then diminishes. 
D)  diminishes then increases.

Question 20

To economists,utility means

Accepted Answer

A)  marginal value. 
B)  relative value. 
C)  satisfaction. 
D)  usefulness. 
E)  a, c, and d 
A)  marginal value. 
B)  relative value. 
C)  satisfaction. 
D)  usefulness. 
E)  a, c, and d

Exam 21: Consumer Choice: Maximizing Utility and Behavioral Economics

Exhibit 21-8 -Refer to Exhibit 21-8.If the price of good X falls,the budget constraint moves from budget constraint

Economists use the term utility to mean usefulness.

You and your roommate are eating pizza and have already consumed all but the last slice.Your roommate claims that he is hungrier than you and therefore should get the last slice of pizza.Your roommate has made

Exhibit 21-6 -Refer to Exhibit 21-6.I1,I2and I3 are indifference curves and line ab is the relevant budget constraint.Point N is

Total utility

Which of the following statements is true?

A consumer is in equilibrium if he or she derives the same

As presented in the text,research by some economists has shown that even when there is no difference between options provided to people

It is possible for total utility to rise as marginal utility falls.

Assuming only two goods X and Y,if MUX/PX = MUY/PY,then

Exhibit 21-1 -Refer to Exhibit 21-1.The marginal utility of the third plum is

Exhibit 21-6 -Refer to Exhibit 21-6.I1,I2 and I3 are indifference curves and line ab is the relevant budget constraint.The equilibrium position for the consumer is at

Given the choice between a sure-thing option and a gamble option with the same expected payoff,a____________ person will choose the sure thing.

Exhibit 21-7 -Refer to Exhibit 21-7.For graph (1),if the price of X is $20,the price of Y is

An indifference curve shows

Exhibit 21-8 -Refer to Exhibit 21-8.A move of the budget constraint from 1 to 2 is caused by a

The white rats in the Texas A & M study acted the same way a person who

Exhibit 21-1 -Refer to Exhibit 21-1.In this example,marginal utility

To economists,utility means

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

Exhibit 21-6 -Refer to Exhibit 21-6.I₁,I₂and I₃ are indifference curves and line ab is the relevant budget constraint.Point N is

Exhibit 21-6 -Refer to Exhibit 21-6.I₁,I₂ and I₃ are indifference curves and line ab is the relevant budget constraint.The equilibrium position for the consumer is at