Question 1

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 2

Suppose a consumer is purchasing Coke (c) and pretzels (p) in quantities such that he is achieving consumer equilibrium. Then the price of Coke increases. Which of the following will be true?

Accepted Answer

A) MUC/PC = MUP/PP 
B) MUC/PC > MUP/PP 
C) MUC/PC P/PP 
D) We cannot say for certain what will happen to the MUC/PC relative to the MUP/PP. 
A) MUC/PC = MUP/PP 
B) MUC/PC > MUP/PP 
C) MUC/PC P/PP 
D) We cannot say for certain what will happen to the MUC/PC relative to the MUP/PP.

Question 3

Economists contend that the goal of individuals is to maximize marginal utility.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 20-3
​
  
-Refer to Exhibit 20-3. Assume that the price of oranges increases to $2, while the price of apples remains at $1, and Linda allocates $5 of the weekly food budget to purchasing apples and oranges. If Linda wants to maximize her utility, her new consumption bundle will consist of

Accepted Answer

A) 1 apple and 2 oranges. 
B) 3 apples and 1 orange. 
C) 5 apples and no oranges. 
D) none of the above 
A) 1 apple and 2 oranges. 
B) 3 apples and 1 orange. 
C) 5 apples and no oranges. 
D) none of the above

Question 5

In which of the following settings is an interpersonal utility comparison being made?

Accepted Answer

A) Brandon says to Jack, "I get a lot more satisfaction out of eating pizza than you do." 
B) Stephanie says, "I don't know what Taylor is feeling or thinking; I can't read a person's heart or mind." 
C) David says to Maria, "I know you like this course a lot more than I do." 
D) a and c 
E) a, b, and c 
A) Brandon says to Jack, "I get a lot more satisfaction out of eating pizza than you do." 
B) Stephanie says, "I don't know what Taylor is feeling or thinking; I can't read a person's heart or mind." 
C) David says to Maria, "I know you like this course a lot more than I do." 
D) a and c 
E) a, b, and c

Question 6

Describe some of the findings of behavioral economists presented in the textbook and explain how these findings differ from the traditional economic framework.

Accepted Answer

According to behavioral economists, not

Question 7

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

Accepted Answer

A) 27 
B) 38 
C) 40 
D) 35 
E) There is not enough information to answer this question. 
A) 27 
B) 38 
C) 40 
D) 35 
E) There is not enough information to answer this question.

Question 8

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

Question 9

To an economist, utility refers to the

Accepted Answer

A) usefulness of a good or service. 
B) satisfaction that results from the consumption of a good. 
C) relative scarcity of a good. 
D) rate of decline in the demand curve. 
A) usefulness of a good or service. 
B) satisfaction that results from the consumption of a good. 
C) relative scarcity of a good. 
D) rate of decline in the demand curve.

Question 10

Exhibit 20-1
  
-Refer to Exhibit 20-1. The marginal utility of the second plum is

Accepted Answer

A) 18.5 utils. 
B) 7.5 utils. 
C) 37 utils. 
D) 12 utils. 
A) 18.5 utils. 
B) 7.5 utils. 
C) 37 utils. 
D) 12 utils.

Question 11

Exhibit 20-1
  
-Refer to Exhibit 20-1. The marginal utility of the fourth plum is

Accepted Answer

A) 8 utils. 
B) 2 utils. 
C) 10 utils. 
D) 13.5 utils. 
E) 50 utils. 
A) 8 utils. 
B) 2 utils. 
C) 10 utils. 
D) 13.5 utils. 
E) 50 utils.

Question 12

No matter what the price of a given item of food, a person will eat the same amount of that food. This situation is __________ with the concept of __________.

Accepted Answer

A) consistent; consumer equilibrium 
B) not consistent; consumer equilibrium 
C) consistent; maximizing total utility 
D) consistent; consumers' surplus 
E) none of the above 
A) consistent; consumer equilibrium 
B) not consistent; consumer equilibrium 
C) consistent; maximizing total utility 
D) consistent; consumers' surplus 
E) none of the above

Question 13

Given two goods, X and Y, and their prices, PX and PY a consumer will maximize total utility by allocating expenditures such that

Accepted Answer

A) MUX/PY = MUY/PX. 
B) PY/MUX = PX/MUY. 
C) MUX/PX = MUY /PY. 
D) MUX = PX = MUY = PY = MU$. 
E) MUX = MUY = PX = PY = MU$. 
A) MUX/PY = MUY/PX. 
B) PY/MUX = PX/MUY. 
C) MUX/PX = MUY /PY. 
D) MUX = PX = MUY = PY = MU$. 
E) MUX = MUY = PX = PY = MU$.

Question 14

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 15

A good can have high total utility and low marginal utility.

Accepted Answer

A) True 
 B)False

Question 16

Suppose a consumer is purchasing Coke and pretzels in quantities such that she is achieving consumer equilibrium. Then the price of Coke decreases. The consumer will likely __________ her consumption of Coke and the marginal utility of Coke will __________ while the total utility from Coke will __________.

Accepted Answer

A) increase; increase; increase 
B) increase; decrease; decrease 
C) increase; decrease; increase 
D) decrease; increase; increase 
E) decrease; decrease; decrease 
A) increase; increase; increase 
B) increase; decrease; decrease 
C) increase; decrease; increase 
D) decrease; increase; increase 
E) decrease; decrease; decrease

Question 17

When people treat some dollars differently than others, they are said to be compartmentalizing.

Accepted Answer

A) True 
 B)False

Question 18

Suppose that the total utility from consuming one unit of good Z is 80 utils, the total utility from consuming two units of good Z is 125 utils, and the total utility from consuming three units of good Z is 160 utils. The marginal utility received from consuming the third unit of good Z is

Accepted Answer

A) 365 utils. 
B) 35 utils. 
C) 45 utils. 
D) 50 utils. 
A) 365 utils. 
B) 35 utils. 
C) 45 utils. 
D) 50 utils.

Question 19

The 100th game of chess gives Jones more utility than the 32nd game of chess. It follows that

Accepted Answer

A) neither the law or principle of diminishing marginal utility holds. 
B) the law of diminishing marginal utility may hold since the 32nd game of chess might have been a different "good" than the 100th game of chess (after all, it could have been played with a different person). 
C) there must be a law of increasing marginal utility. 
D) total utility after the 32nd game had to be higher than total utility after the 100th game. 
E) none of the above 
A) neither the law or principle of diminishing marginal utility holds. 
B) the law of diminishing marginal utility may hold since the 32nd game of chess might have been a different "good" than the 100th game of chess (after all, it could have been played with a different person). 
C) there must be a law of increasing marginal utility. 
D) total utility after the 32nd game had to be higher than total utility after the 100th game. 
E) none of the above

Question 20

The diamond-water paradox is illustrated by which of the following statements?

Accepted Answer

A) Water, a necessity, has a relatively low price whereas diamonds, usually a luxury, have a relatively high price. 
B) Although water appears to have a relatively low price when compared to diamonds, in reality, it has a relatively higher price. 
C) Although water appears to have a relatively low price when compared to diamonds, in reality, the prices are equal. 
D) Although water appears to have a relatively low price when compared to diamonds, at the margin, water has the relatively higher price. 
E) Although water appears to have a relatively low price when compared to diamonds, at the margin, the prices are equal. 
A) Water, a necessity, has a relatively low price whereas diamonds, usually a luxury, have a relatively high price. 
B) Although water appears to have a relatively low price when compared to diamonds, in reality, it has a relatively higher price. 
C) Although water appears to have a relatively low price when compared to diamonds, in reality, the prices are equal. 
D) Although water appears to have a relatively low price when compared to diamonds, at the margin, water has the relatively higher price. 
E) Although water appears to have a relatively low price when compared to diamonds, at the margin, the prices are equal.

Exam 20: Consumer Choice and Behavioral Economics

An indifference curve shows

Suppose a consumer is purchasing Coke (c) and pretzels (p) in quantities such that he is achieving consumer equilibrium. Then the price of Coke increases. Which of the following will be true?

Economists contend that the goal of individuals is to maximize marginal utility.

Exhibit 20-3 ​ -Refer to Exhibit 20-3. Assume that the price of oranges increases to $2, while the price of apples remains at $1, and Linda allocates $5 of the weekly food budget to purchasing apples and oranges. If Linda wants to maximize her utility, her new consumption bundle will consist of

In which of the following settings is an interpersonal utility comparison being made?

Describe some of the findings of behavioral economists presented in the textbook and explain how these findings differ from the traditional economic framework.

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

To economists, utility means

To an economist, utility refers to the

Exhibit 20-1 -Refer to Exhibit 20-1. The marginal utility of the second plum is

Exhibit 20-1 -Refer to Exhibit 20-1. The marginal utility of the fourth plum is

No matter what the price of a given item of food, a person will eat the same amount of that food. This situation is __________ with the concept of __________.

Given two goods, X and Y, and their prices, PX and PY a consumer will maximize total utility by allocating expenditures such that

Total utility

A good can have high total utility and low marginal utility.

When people treat some dollars differently than others, they are said to be compartmentalizing.

Suppose that the total utility from consuming one unit of good Z is 80 utils, the total utility from consuming two units of good Z is 125 utils, and the total utility from consuming three units of good Z is 160 utils. The marginal utility received from consuming the third unit of good Z is

The 100th game of chess gives Jones more utility than the 32nd game of chess. It follows that

The diamond-water paradox is illustrated by which of the following statements?

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 20-3 -Refer to Exhibit 20-3. Assume that the price of oranges increases to $2, while the price of apples remains at $1, and Linda allocates $5 of the weekly food budget to purchasing apples and oranges. If Linda wants to maximize her utility, her new consumption bundle will consist of

No matter what the price of a given item of food, a person will eat the same amount of that food. This situation is with the concept of .

Given two goods, X and Y, and their prices, P_X and P_Y a consumer will maximize total utility by allocating expenditures such that