Question 1

If the MU/P ratio for two goods is the same, then

Accepted Answer

A) the slope of the budget constraint between the two goods is equal to the marginal rate of substitution (MRS) between the two goods. 
B) the indifference curve between the two goods is concave to the origin. 
C) the prices of the two goods are the same. 
D) it follows that consumers prefer fewer goods to more goods. 
E) a and c 
A) the slope of the budget constraint between the two goods is equal to the marginal rate of substitution (MRS) between the two goods. 
B) the indifference curve between the two goods is concave to the origin. 
C) the prices of the two goods are the same. 
D) it follows that consumers prefer fewer goods to more goods. 
E) a and c A

Question 2

Don receives 100 utils from consuming two oranges. The utility he derives from consuming the second orange equals 30 utils. The information provided

Accepted Answer

A) is consistent with the law of diminishing marginal utility. 
B) is inconsistent with the law of diminishing marginal utility. 
C) is sufficient to determine the quantity of oranges Don will consume. 
D) lends support to the inferiority of oranges as consumer goods. 
A) is consistent with the law of diminishing marginal utility. 
B) is inconsistent with the law of diminishing marginal utility. 
C) is sufficient to determine the quantity of oranges Don will consume. 
D) lends support to the inferiority of oranges as consumer goods. A

Question 3

Exhibit 20-5
  
-Refer to Exhibit 20-5. What value goes in blank (A)?

Accepted Answer

A) 12.0 
B) 13.5 
C) 10.0 
D) 14.0 
E) There is not enough information to answer this question. 
A) 12.0 
B) 13.5 
C) 10.0 
D) 14.0 
E) There is not enough information to answer this question. C

Question 4

Research presented in the textbookbook shows that people are more likely to spend a larger percentage of money received from the government when it is called a "tax bonus" than they would if it were called a "tax rebate."

Accepted Answer

A) True 
 B)False

Question 5

Consumers tend to equate total utilities per dollar spent.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 20-4
  
-Refer to Exhibit 20-4. What value goes in blank (D)?

Accepted Answer

A) 172 
B) 182 
C) 158 
D) 250 
E) There is not enough information to answer this question. 
A) 172 
B) 182 
C) 158 
D) 250 
E) There is not enough information to answer this question.

Question 7

Exhibit 20-2
​
  
-Refer to Exhibit 20-2. Total utility for the first four oranges is

Accepted Answer

A) 11 utils. 
B) 60 utils. 
C) 52 utils. 
D) 15 utils. 
E) 40 utils. 
A) 11 utils. 
B) 60 utils. 
C) 52 utils. 
D) 15 utils. 
E) 40 utils.

Question 8

A person is said to be in consumer equilibrium if she

Accepted Answer

A) equates marginal utilities per dollar spent. 
B) has diminishing marginal utility of money. 
C) purchases only normal goods. 
D) has an incentive to redirect her purchases. 
A) equates marginal utilities per dollar spent. 
B) has diminishing marginal utility of money. 
C) purchases only normal goods. 
D) has an incentive to redirect her purchases.

Question 9

Exhibit 20-2
​
  
-Refer to Exhibit 20-2. Total utility for all five oranges is

Accepted Answer

A) 70 utils. 
B) 12 utils. 
C) 68 utils. 
D) 80 utils. 
E) 40 utils. 
A) 70 utils. 
B) 12 utils. 
C) 68 utils. 
D) 80 utils. 
E) 40 utils.

Question 10

Suppose Will receives 190 utils from consuming one banana and 280 utils from consuming two bananas. What is the marginal utility of the second banana?

Accepted Answer

A) 470 utils 
B) 235 utils 
C) 90 utils 
D) 280 utils 
E) none of the above 
A) 470 utils 
B) 235 utils 
C) 90 utils 
D) 280 utils 
E) none of the above

Question 11

Consumer equilibrium exists when an individual

Accepted Answer

A) can be made better off by buying more of a normal good and less of an inferior good. 
B) is receiving the same total utility from each of the goods he or she purchases. 
C) is receiving the same marginal utility from each of the goods he or she purchases. 
D) has the same MU/P ratio for each of the goods he or she purchases. 
E) none of the above 
A) can be made better off by buying more of a normal good and less of an inferior good. 
B) is receiving the same total utility from each of the goods he or she purchases. 
C) is receiving the same marginal utility from each of the goods he or she purchases. 
D) has the same MU/P ratio for each of the goods he or she purchases. 
E) none of the above

Question 12

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 13

Consumer equilibrium occurs at the point where the slope of the budget constraint is equal to the slope of the indifference curve.

Accepted Answer

A) True 
 B)False

Question 14

If the MU/P ratio for good X is less than the MU/P ratio for good Y, this means that

Accepted Answer

A) an individual is receiving more utility per dollar from good Y than good X. 
B) the price of good X is lower than the price of good Y. 
C) the price of good Y is lower than the price of good X. 
D) the MU of good X is lower than the MU of good Y. 
E) none of the above 
A) an individual is receiving more utility per dollar from good Y than good X. 
B) the price of good X is lower than the price of good Y. 
C) the price of good Y is lower than the price of good X. 
D) the MU of good X is lower than the MU of good Y. 
E) none of the above

Question 15

Consumer equilibrium exists when the

Accepted Answer

A) slope of the indifference curve is greater than the slope of the budget constraint. 
B) consumer is on his highest indifference curve. 
C) marginal rate of substitution equals the slope of the budget constraint. 
D) slope of the indifference curve equals the slope of the budget constraint. 
E) c and d 
A) slope of the indifference curve is greater than the slope of the budget constraint. 
B) consumer is on his highest indifference curve. 
C) marginal rate of substitution equals the slope of the budget constraint. 
D) slope of the indifference curve equals the slope of the budget constraint. 
E) c and d

Question 16

An indifference curve shows all the combinations of bundles of two goods a person can purchase given a fixed amount of income.

Accepted Answer

A) True 
 B)False

Question 17

Exhibit 20-2
​
  
-Refer to Exhibit 20-2. Total utility for the first two oranges is

Accepted Answer

A) 35 utils. 
B) 20 utils. 
C) 40 utils. 
D) 36 utils. 
E) cannot be determined 
A) 35 utils. 
B) 20 utils. 
C) 40 utils. 
D) 36 utils. 
E) cannot be determined

Question 18

Exhibit 20-7
​
  
-Refer to Exhibit 20-7. The relative price of X in terms of Y is the greatest on graph

Accepted Answer

A) (1). 
B) (2). 
C) (3). 
D) This cannot be determined based on the information provided 
A) (1). 
B) (2). 
C) (3). 
D) This cannot be determined based on the information provided

Question 19

When an economist talks about utility, she is talking about

Accepted Answer

A) a company that provides electricity, water, gas, etc. 
B) the satisfaction, in terms of price, that a producer receives from selling his product. 
C) the satisfaction that results from the consumption of a good. 
D) the amount of one good that a person is willing to give up in order to get a unit of another good. 
E) the satisfaction that results from the consumption of a good minus the price that must be paid to get the good. 
A) a company that provides electricity, water, gas, etc. 
B) the satisfaction, in terms of price, that a producer receives from selling his product. 
C) the satisfaction that results from the consumption of a good. 
D) the amount of one good that a person is willing to give up in order to get a unit of another good. 
E) the satisfaction that results from the consumption of a good minus the price that must be paid to get the good.

Question 20

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

Exam 20: Consumer Choice and Behavioral Economics

If the MU/P ratio for two goods is the same, then

Don receives 100 utils from consuming two oranges. The utility he derives from consuming the second orange equals 30 utils. The information provided

Exhibit 20-5 -Refer to Exhibit 20-5. What value goes in blank (A)?

Research presented in the textbookbook shows that people are more likely to spend a larger percentage of money received from the government when it is called a "tax bonus" than they would if it were called a "tax rebate."

Consumers tend to equate total utilities per dollar spent.

Exhibit 20-4 -Refer to Exhibit 20-4. What value goes in blank (D)?

Exhibit 20-2 ​ -Refer to Exhibit 20-2. Total utility for the first four oranges is

A person is said to be in consumer equilibrium if she

Exhibit 20-2 ​ -Refer to Exhibit 20-2. Total utility for all five oranges is

Suppose Will receives 190 utils from consuming one banana and 280 utils from consuming two bananas. What is the marginal utility of the second banana?

Consumer equilibrium exists when an individual

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

Consumer equilibrium occurs at the point where the slope of the budget constraint is equal to the slope of the indifference curve.

If the MU/P ratio for good X is less than the MU/P ratio for good Y, this means that

Consumer equilibrium exists when the

An indifference curve shows all the combinations of bundles of two goods a person can purchase given a fixed amount of income.

Exhibit 20-2 ​ -Refer to Exhibit 20-2. Total utility for the first two oranges is

Exhibit 20-7 ​ -Refer to Exhibit 20-7. The relative price of X in terms of Y is the greatest on graph

When an economist talks about utility, she is talking about

What Economics Is About

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Exhibit 20-2 -Refer to Exhibit 20-2. Total utility for the first four oranges is

Exhibit 20-2 -Refer to Exhibit 20-2. Total utility for all five oranges is

Exhibit 20-2 -Refer to Exhibit 20-2. Total utility for the first two oranges is

Exhibit 20-7 -Refer to Exhibit 20-7. The relative price of X in terms of Y is the greatest on graph