Question 1

If MUx/Px exceeds MUy/Py, then a household can increase its utility by spending more on X and less on Y.

Accepted Answer

A) True 
 B)False

Question 2

If the price of a normal good rises, the income effect will result in households buying ________ of the good and the substitution effect will result in households buying ________ of the good.

Accepted Answer

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

Question 3

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow.   Figure 6.2
-Refer to Figure 6.2. Assume Mr. Lingle is on budget constraint AC. If the price of a beer is $2.50, Mr. Lingle's monthly income is

Accepted Answer

A)  $40. 
B)  $100. 
C)  $125. 
D)  $200. 
A)  $40. 
B)  $100. 
C)  $125. 
D)  $200.

Question 4

Refer to the information provided in Figure 6.8 below to answer the question(s) that follow.   Figure 6.8
-Refer to Figure 6.8. The total utility of the three movies is ________ and the marginal utility of the third movie is ________.

Accepted Answer

A)  15; 0 
B)  25; 10 
C)  28; 3 
D)  0; 0 
A)  15; 0 
B)  25; 10 
C)  28; 3 
D)  0; 0

Question 5

Refer to the information provided in Figure 6.8 below to answer the question(s) that follow.   Figure 6.8
-Refer to Figure 6.8. The marginal utility of the first movie rental is

Accepted Answer

A)  0. 
B)  15. 
C)  25. 
D)  40. 
A)  0. 
B)  15. 
C)  25. 
D)  40.

Question 6

Refer to the information provided in Figure 6.14 below to answer the question(s) that follow.   Figure 6.14
-Refer to Figure 6.14. If the price of an ice cream cone is $2, the price of ice cream sandwiches is

Accepted Answer

A)  $2. 
B)  $3. 
C)  $50. 
D)  $100. 
A)  $2. 
B)  $3. 
C)  $50. 
D)  $100.

Question 7

Refer to the information provided in Figure 6.1 below to answer the question(s) that follow.   Figure 6.1
-Refer to Figure 6.1. Assume Tom's budget constraint is AC. He will have leftover income if he purchases the bundle represented by point

Accepted Answer

A)  A. 
B)  B. 
C)  E. 
D)  D. 
A)  A. 
B)  B. 
C)  E. 
D)  D.

Question 8

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow.   Figure 6.2
-Refer to Figure 6.2. The slope of budget constraint AC is

Accepted Answer

A)  -1/2. 
B)  -1. 
C)  -2. 
D)  indeterminate from this information because prices are not given. 
A)  -1/2. 
B)  -1. 
C)  -2. 
D)  indeterminate from this information because prices are not given.

Question 9

Refer to the information provided in Figure 6.11 below to answer the question that follows.   Figure 6.11
-Refer to Figure 6.11. The opportunity cost for a day's worth of income is ________ of leisure.

Accepted Answer

A)  1 hour 
B)  10 hours 
C)  24 hours 
D)  indeterminate from this information. 
A)  1 hour 
B)  10 hours 
C)  24 hours 
D)  indeterminate from this information.

Question 10

Refer to the information provided in Figure 6.6 below to answer the question(s) that follow.   Figure 6.6
-Refer to Figure 6.6. Bill's budget constraint is BD. Bill's income is $800, the price of a bell pepper is $1, and the price of a bag of black beans is $1. At point B Bill is buying ________ bell peppers and ________ bags of black beans.

Accepted Answer

A)  0; 800 
B)  800; 0 
C)  400; 400 
D)  600; 200 
A)  0; 800 
B)  800; 0 
C)  400; 400 
D)  600; 200

Question 11

The law of diminishing marginal utility implies that

Accepted Answer

A)  demand curves always slope downward and to the right. 
B)  supply curves always slope upward and to the right. 
C)  a consumer will always buy positive amounts of all goods. 
D)  total utility will always increase by an increasing amount as consumption increases. 
A)  demand curves always slope downward and to the right. 
B)  supply curves always slope upward and to the right. 
C)  a consumer will always buy positive amounts of all goods. 
D)  total utility will always increase by an increasing amount as consumption increases.

Question 12

Refer to the information provided in Figure 6.12 below to answer the question that follows.   Figure 6.12
-Refer to Figure 6.12. If Arthur moves from indifference curve 2 to indifference curve 1, then Arthurʹs

Accepted Answer

A)  marginal utility decreases. 
B)  total utility decreases. 
C)  total income increases. 
D)  prices of the goods decrease. 
A)  marginal utility decreases. 
B)  total utility decreases. 
C)  total income increases. 
D)  prices of the goods decrease.

Question 13

The law of diminishing marginal utility is in effect when marginal utility is

Accepted Answer

A)  positive and increasing. 
B)  positive and decreasing. 
C)  initially zero and then increasing. 
D)  initially zero and then decreasing. 
A)  positive and increasing. 
B)  positive and decreasing. 
C)  initially zero and then increasing. 
D)  initially zero and then decreasing.

Question 14

Hector has $1,000 a month to spend on clothing and food. The price of clothing is $50 and the price of food is $20. What is the equation for Hector's budget constraint?

Accepted Answer

A)  Clothing + Food < $1,000 
B)  $50 × Clothing + $20 × Food ≥ $1,000 
C)  ($50 × Clothing) / ($20 × Food) = $1,000 
D)  $50 × Clothing + $20 × Food = $1,000 
A)  Clothing + Food < $1,000 
B)  $50 × Clothing + $20 × Food ≥ $1,000 
C)  ($50 × Clothing) / ($20 × Food) = $1,000 
D)  $50 × Clothing + $20 × Food = $1,000

Question 15

A price change would have the largest income effect on a

Accepted Answer

A)  magazine. 
B)  tablet computer. 
C)  piece of clothing. 
D)  car. 
A)  magazine. 
B)  tablet computer. 
C)  piece of clothing. 
D)  car.

Question 16

Refer to the information provided in Figure 6.14 below to answer the question(s) that follow.   Figure 6.14
-Refer to Figure 6.14. At point ________, the slope of the indifference curve is -0.67.

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  All of the above are correct. 
A)  A 
B)  B 
C)  C 
D)  All of the above are correct.

Question 17

Refer to the information provided in Figure 6.4 below to answer the question(s) that follow.   Figure 6.4
-Refer to Figure 6.4. Billʹs budget constraint is AC. His budget constraint would shift to AD if the price of

Accepted Answer

A)  black beans increased. 
B)  black beans decreased. 
C)  bell peppers increased. 
D)  bell peppers decreased. 
A)  black beans increased. 
B)  black beans decreased. 
C)  bell peppers increased. 
D)  bell peppers decreased.

Question 18

For inferior goods

Accepted Answer

A)  the substitution and income effects of a price increase will both decrease the quantity of the good demanded. 
B)  the substitution and income effects of a price increase will both increase the quantity of the good demanded. 
C)  the substitution effect of a price increase will increase the quantity of the good demanded while the income effect of a price increase will decrease the quantity of the good demanded. 
D)  the substitution effect of a price increase will decrease the quantity of the good demanded while the income effect of a price increase will increase the quantity of the good demanded. 
A)  the substitution and income effects of a price increase will both decrease the quantity of the good demanded. 
B)  the substitution and income effects of a price increase will both increase the quantity of the good demanded. 
C)  the substitution effect of a price increase will increase the quantity of the good demanded while the income effect of a price increase will decrease the quantity of the good demanded. 
D)  the substitution effect of a price increase will decrease the quantity of the good demanded while the income effect of a price increase will increase the quantity of the good demanded.

Question 19

The marginal utility of the first cup of coffee that Tom drinks in the morning is worth $2.00. The marginal utility of the 9th cup of coffee he drinks is positive while the marginal utility of the 10th cup of coffee he drinks in the morning is worth $0. This implies that at a price of $0, Tom would drink

Accepted Answer

A)  zero cups of coffee per morning. 
B)  at most 10 cups of coffee per morning. 
C)  more than 10 cups of coffee per morning, but the actual number is indeterminate from this information. 
D)  an infinite number of cups of coffee each morning. 
A)  zero cups of coffee per morning. 
B)  at most 10 cups of coffee per morning. 
C)  more than 10 cups of coffee per morning, but the actual number is indeterminate from this information. 
D)  an infinite number of cups of coffee each morning.

Question 20

Refer to the information provided in Figure 6.9 below to answer the question(s) that follow.   Figure 6.9
-Refer to Figure 6.9. The marginal utility of the first video game rental is

Accepted Answer

A)  8. 
B)  10. 
C)  25. 
D)  40. 
A)  8. 
B)  10. 
C)  25. 
D)  40.

If MU_x/P_x exceeds MU_y/P_y, then a household can increase its utility by spending more on X and less on Y.

If the price of a normal good rises, the income effect will result in households buying of the good and the substitution effect will result in households buying of the good.

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. Assume Mr. Lingle is on budget constraint AC. If the price of a beer is $2.50, Mr. Lingle's monthly income is

Refer to the information provided in Figure 6.8 below to answer the question(s) that follow. Figure 6.8 -Refer to Figure 6.8. The total utility of the three movies is and the marginal utility of the third movie is .

Refer to the information provided in Figure 6.8 below to answer the question(s) that follow. Figure 6.8 -Refer to Figure 6.8. The marginal utility of the first movie rental is

Refer to the information provided in Figure 6.14 below to answer the question(s) that follow. Figure 6.14 -Refer to Figure 6.14. If the price of an ice cream cone is $2, the price of ice cream sandwiches is

Refer to the information provided in Figure 6.1 below to answer the question(s) that follow. Figure 6.1 -Refer to Figure 6.1. Assume Tom's budget constraint is AC. He will have leftover income if he purchases the bundle represented by point

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. The slope of budget constraint AC is

Refer to the information provided in Figure 6.11 below to answer the question that follows. Figure 6.11 -Refer to Figure 6.11. The opportunity cost for a day's worth of income is ________ of leisure.

The law of diminishing marginal utility implies that

Refer to the information provided in Figure 6.12 below to answer the question that follows. Figure 6.12 -Refer to Figure 6.12. If Arthur moves from indifference curve 2 to indifference curve 1, then Arthurʹs

The law of diminishing marginal utility is in effect when marginal utility is

Hector has $1,000 a month to spend on clothing and food. The price of clothing is $50 and the price of food is $20. What is the equation for Hector's budget constraint?

A price change would have the largest income effect on a

Refer to the information provided in Figure 6.14 below to answer the question(s) that follow. Figure 6.14 -Refer to Figure 6.14. At point ________, the slope of the indifference curve is -0.67.

Refer to the information provided in Figure 6.4 below to answer the question(s) that follow. Figure 6.4 -Refer to Figure 6.4. Billʹs budget constraint is AC. His budget constraint would shift to AD if the price of

For inferior goods

Refer to the information provided in Figure 6.9 below to answer the question(s) that follow. Figure 6.9 -Refer to Figure 6.9. The marginal utility of the first video game rental is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 6: Household Behavior and Consumer Choice

If MUx/Px exceeds MUy/Py, then a household can increase its utility by spending more on X and less on Y.

If the price of a normal good rises, the income effect will result in households buying ________ of the good and the substitution effect will result in households buying ________ of the good.

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. Assume Mr. Lingle is on budget constraint AC. If the price of a beer is $2.50, Mr. Lingle's monthly income is

Refer to the information provided in Figure 6.8 below to answer the question(s) that follow. Figure 6.8 -Refer to Figure 6.8. The total utility of the three movies is ________ and the marginal utility of the third movie is ________.

Refer to the information provided in Figure 6.8 below to answer the question(s) that follow. Figure 6.8 -Refer to Figure 6.8. The marginal utility of the first movie rental is

Refer to the information provided in Figure 6.14 below to answer the question(s) that follow. Figure 6.14 -Refer to Figure 6.14. If the price of an ice cream cone is $2, the price of ice cream sandwiches is

Refer to the information provided in Figure 6.1 below to answer the question(s) that follow. Figure 6.1 -Refer to Figure 6.1. Assume Tom's budget constraint is AC. He will have leftover income if he purchases the bundle represented by point

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. The slope of budget constraint AC is

Refer to the information provided in Figure 6.11 below to answer the question that follows. Figure 6.11 -Refer to Figure 6.11. The opportunity cost for a day's worth of income is ________ of leisure.

The law of diminishing marginal utility implies that

Refer to the information provided in Figure 6.12 below to answer the question that follows. Figure 6.12 -Refer to Figure 6.12. If Arthur moves from indifference curve 2 to indifference curve 1, then Arthurʹs

The law of diminishing marginal utility is in effect when marginal utility is

Hector has $1,000 a month to spend on clothing and food. The price of clothing is $50 and the price of food is $20. What is the equation for Hector's budget constraint?

A price change would have the largest income effect on a

Refer to the information provided in Figure 6.14 below to answer the question(s) that follow. Figure 6.14 -Refer to Figure 6.14. At point ________, the slope of the indifference curve is -0.67.

Refer to the information provided in Figure 6.4 below to answer the question(s) that follow. Figure 6.4 -Refer to Figure 6.4. Billʹs budget constraint is AC. His budget constraint would shift to AD if the price of

For inferior goods

Refer to the information provided in Figure 6.9 below to answer the question(s) that follow. Figure 6.9 -Refer to Figure 6.9. The marginal utility of the first video game rental is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

If MU_x/P_x exceeds MU_y/P_y, then a household can increase its utility by spending more on X and less on Y.

If the price of a normal good rises, the income effect will result in households buying of the good and the substitution effect will result in households buying of the good.

Refer to the information provided in Figure 6.8 below to answer the question(s) that follow. Figure 6.8 -Refer to Figure 6.8. The total utility of the three movies is and the marginal utility of the third movie is .