Question 1

Explain the difference between total utility and marginal utility. Give a hypothetical example to help support your answer.

Accepted Answer

Total utility is the total amount of sat

Question 2

Suppose that the total utility from consuming one unit of good X is 87 utils, the total utility of two units of good X is 150 utils, and the total utility of three units of good X is 180 utils. The marginal utility of the third unit is

Accepted Answer

A) 30 utils. 
B) 417 utils. 
C) 63 utils. 
D) 139 utils. 
A) 30 utils. 
B) 417 utils. 
C) 63 utils. 
D) 139 utils.

Question 3

Which of the following statements is false?

Accepted Answer

A) A millionaire definitely receives less utility from an additional dollar than a poor person. 
B) A poor person definitely receives less utility from an additional dollar than a rich person. 
C) A millionaire definitely receives the same utility from an additional dollar as a poor person. 
D) A millionaire generally receives less utility from an additional dollar than a poor person. 
E) We do not know if any of the statements are true or false, because we do not know how much utility one person receives relative to another. 
A) A millionaire definitely receives less utility from an additional dollar than a poor person. 
B) A poor person definitely receives less utility from an additional dollar than a rich person. 
C) A millionaire definitely receives the same utility from an additional dollar as a poor person. 
D) A millionaire generally receives less utility from an additional dollar than a poor person. 
E) We do not know if any of the statements are true or false, because we do not know how much utility one person receives relative to another.

Question 4

Describe the diamond-water paradox and its solution.

Accepted Answer

The diamond-water paradox states that so

Question 5

Exhibit 20-8
​
  
-Refer to Exhibit 20-8. 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 6

Suppose Alice receives 150 utils from consuming one hamburger and 70 utils from consuming a second hamburger. What is the marginal utility of the second hamburger?

Accepted Answer

A) 220 utils 
B) 150 utils 
C) 70 utils 
D) 0 utils 
E) none of the above 
A) 220 utils 
B) 150 utils 
C) 70 utils 
D) 0 utils 
E) none of the above

Question 7

Suppose that a consumer purchases a combination of X and Y such that MUX/PX = 15 utils per dollar and MUY /PY = 10 utils per dollar. To maximize utility, the consumer should buy

Accepted Answer

A) less of X and more of Y. 
B) more of X and less of Y. 
C) more of both X and Y. 
D) less of both X and Y. 
E) neither X nor Y. 
A) less of X and more of Y. 
B) more of X and less of Y. 
C) more of both X and Y. 
D) less of both X and Y. 
E) neither X nor Y.

Question 8

If a person's income falls, his or her budget constraint moves

Accepted Answer

A) inward toward the origin, and its slope changes. 
B) outward away from the origin, and its slope remains the same. 
C) inward toward the origin, and its slope remains the same. 
D) outward away from the origin, and its slope changes. 
E) none of the above 
A) inward toward the origin, and its slope changes. 
B) outward away from the origin, and its slope remains the same. 
C) inward toward the origin, and its slope remains the same. 
D) outward away from the origin, and its slope changes. 
E) none of the above

Question 9

The law of diminishing marginal utility says that

Accepted Answer

A) the marginal utility gained by consuming equal successive units of a good will decline as the amount consumed increases. 
B) the more of a particular good one consumes, the greater is the utility received from the consumption of that good. 
C) the marginal utility gained by consuming equal successive units of a good will increase as the amount consumed increases. 
D) the more of a particular product one sells, the less utility one receives from selling. 
E) none of the above 
A) the marginal utility gained by consuming equal successive units of a good will decline as the amount consumed increases. 
B) the more of a particular good one consumes, the greater is the utility received from the consumption of that good. 
C) the marginal utility gained by consuming equal successive units of a good will increase as the amount consumed increases. 
D) the more of a particular product one sells, the less utility one receives from selling. 
E) none of the above

Question 10

The diamond-water paradox holds that often things that have high __________ have a __________ price and things that have a low __________ have a __________ price.

Accepted Answer

A) value in exchange; high; value in use; low 
B) value in use; low; value in use; high 
C) absolute price; low relative; relative price; low absolute 
D) relative price; low absolute; relative price; high absolute 
E) exchange value; high; exchange value; low 
A) value in exchange; high; value in use; low 
B) value in use; low; value in use; high 
C) absolute price; low relative; relative price; low absolute 
D) relative price; low absolute; relative price; high absolute 
E) exchange value; high; exchange value; low

Question 11

According to the traditional theory of marginal utility as presented in the textbookbook, as more units of a good are acquired, the consumer's marginal utility

Accepted Answer

A) always continues to rise. 
B) diminishes. 
C) remains constant. 
D) may diminish at first, but it must eventually rise. 
E) may rise at first, but it must eventually become constant. 
A) always continues to rise. 
B) diminishes. 
C) remains constant. 
D) may diminish at first, but it must eventually rise. 
E) may rise at first, but it must eventually become constant.

Question 12

For economists, framing refers to the

Accepted Answer

A) manner in which a problem is presented. 
B) degree of competition present in a given market. 
C) total satisfaction a consumer derives from consuming a good. 
D) level of total utility derived from consuming a good. 
E) c and d 
A) manner in which a problem is presented. 
B) degree of competition present in a given market. 
C) total satisfaction a consumer derives from consuming a good. 
D) level of total utility derived from consuming a good. 
E) c and d

Question 13

Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 30, 50, 65, 72, respectively. In this situation we have __________ marginal utility, which is generally __________ in the analysis of consumer choice.

Accepted Answer

A) increasing; assumed 
B) increasing; not assumed 
C) diminishing; assumed 
D) diminishing; not assumed 
A) increasing; assumed 
B) increasing; not assumed 
C) diminishing; assumed 
D) diminishing; not assumed

Question 14

Economists assume that the goal of consumers is to maximize marginal utility.

Accepted Answer

A) True 
 B)False

Question 15

If a person is receiving greater marginal utility per dollar from consuming one good than another, it follows that he or she is

Accepted Answer

A) maximizing disutility. 
B) not maximizing utility. 
C) maximizing utility. 
D) There is not enough information to answer the question. 
A) maximizing disutility. 
B) not maximizing utility. 
C) maximizing utility. 
D) There is not enough information to answer the question.

Question 16

Which of the following statements is false?

Accepted Answer

A) If total utility rises, so must marginal utility. 
B) If marginal utility rises, so must total utility. 
C) If marginal utility falls, so must total utility. 
D) If total utility falls, marginal utility is negative. 
E) a and c 
A) If total utility rises, so must marginal utility. 
B) If marginal utility rises, so must total utility. 
C) If marginal utility falls, so must total utility. 
D) If total utility falls, marginal utility is negative. 
E) a and c

Question 17

If total utility is a positive number, marginal utility must also be a positive number.

Accepted Answer

A) True 
 B)False

Question 18

As presented in the textbookbook, research on neuroeconomics has shown that when individuals are presented with present-future choices the

Accepted Answer

A) analytic system (which weights the future heavily) seems to win out over the limbic system (which weights the present heavily). 
B) limbic system (which weights the present heavily) seems to win out over the analytic system (which weights the future heavily). 
C) limbic system and the analytic system are equally weighted, making the individuals indifferent to the choices presented. 
D) limbic system (which weights the future heavily) seems to win out over the analytic system (which weights the present heavily). 
A) analytic system (which weights the future heavily) seems to win out over the limbic system (which weights the present heavily). 
B) limbic system (which weights the present heavily) seems to win out over the analytic system (which weights the future heavily). 
C) limbic system and the analytic system are equally weighted, making the individuals indifferent to the choices presented. 
D) limbic system (which weights the future heavily) seems to win out over the analytic system (which weights the present heavily).

Question 19

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

Accepted Answer

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

Question 20

Given two goods, X and Y, their prices, PX and PY, a consumer is in equilibrium when the last dollar spent on X yields

Accepted Answer

A) zero marginal utility for Y. 
B) the same marginal utility as if all the money were spent on Y. 
C) a smaller marginal utility than the last dollar spent on Y. 
D) the same marginal utility as the last dollar spent on Y. 
E) none of the above 
A) zero marginal utility for Y. 
B) the same marginal utility as if all the money were spent on Y. 
C) a smaller marginal utility than the last dollar spent on Y. 
D) the same marginal utility as the last dollar spent on Y. 
E) none of the above

Exam 20: Consumer Choice and Behavioral Economics

Explain the difference between total utility and marginal utility. Give a hypothetical example to help support your answer.

Suppose that the total utility from consuming one unit of good X is 87 utils, the total utility of two units of good X is 150 utils, and the total utility of three units of good X is 180 utils. The marginal utility of the third unit is

Which of the following statements is false?

Describe the diamond-water paradox and its solution.

Exhibit 20-8 ​ -Refer to Exhibit 20-8. If the price of good X falls, the budget constraint moves from budget constraint

Suppose Alice receives 150 utils from consuming one hamburger and 70 utils from consuming a second hamburger. What is the marginal utility of the second hamburger?

Suppose that a consumer purchases a combination of X and Y such that MUX/PX = 15 utils per dollar and MUY /PY = 10 utils per dollar. To maximize utility, the consumer should buy

If a person's income falls, his or her budget constraint moves

The law of diminishing marginal utility says that

The diamond-water paradox holds that often things that have high __________ have a __________ price and things that have a low __________ have a __________ price.

According to the traditional theory of marginal utility as presented in the textbookbook, as more units of a good are acquired, the consumer's marginal utility

For economists, framing refers to the

Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 30, 50, 65, 72, respectively. In this situation we have __________ marginal utility, which is generally __________ in the analysis of consumer choice.

Economists assume that the goal of consumers is to maximize marginal utility.

If a person is receiving greater marginal utility per dollar from consuming one good than another, it follows that he or she is

Which of the following statements is false?

If total utility is a positive number, marginal utility must also be a positive number.

As presented in the textbookbook, research on neuroeconomics has shown that when individuals are presented with present-future choices the

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

Given two goods, X and Y, their prices, PX and PY, a consumer is in equilibrium when the last dollar spent on X yields

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II 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

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

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

Filters

Exhibit 20-8 -Refer to Exhibit 20-8. If the price of good X falls, the budget constraint moves from budget constraint

Suppose that a consumer purchases a combination of X and Y such that MU_X/P_X = 15 utils per dollar and MU_Y /P_Y = 10 utils per dollar. To maximize utility, the consumer should buy

The diamond-water paradox holds that often things that have high have a price and things that have a low have a price.

Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 30, 50, 65, 72, respectively. In this situation we have marginal utility, which is generally in the analysis of consumer choice.

Given two goods, X and Y, their prices, P_X and P_Y, a consumer is in equilibrium when the last dollar spent on X yields