Question 1

Use the following to answer questions:  
-(Table: Bundles of X and Y) Look at the table Bundles of X and Y. According to the table:

Accepted Answer

A)  bundle D is preferred to bundles A and B. 
B)  the consumer is indifferent among bundles A, B, and C. 
C)  bundles C and D are both preferred to bundles A and B. 
D)  bundle C is preferred to all other bundles. 
A)  bundle D is preferred to bundles A and B. 
B)  the consumer is indifferent among bundles A, B, and C. 
C)  bundles C and D are both preferred to bundles A and B. 
D)  bundle C is preferred to all other bundles.

Question 2

The satisfaction that a consumer gets from the consumption of a bundle of goods and services is:

Accepted Answer

A)  utility. 
B)  rationalization. 
C)  budget constraints. 
D)  income. 
A)  utility. 
B)  rationalization. 
C)  budget constraints. 
D)  income.

Question 3

Diminishing marginal utility occurs with increasing total utility.

Accepted Answer

A) True 
 B)False

Question 4

Smedley, a careful utility maximizer, consumes peanut butter and broccoli. Assume that both peanut butter and broccoli are normal goods. He had just achieved the utility-maximizing solution in his consumption of the two goods when the price of broccoli increased. As he adjusted to this event, he consumed _____ peanut butter and _____ broccoli.

Accepted Answer

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

Question 5

Nancy is consuming her optimal consumption bundle of burritos and margaritas. The marginal utility of her last burrito was 75 utils, and each burrito costs $3. Her marginal utility of her last margarita was 100 utils. What is the price of a margarita?

Accepted Answer

A)  $1 
B)  $2 
C)  $3 
D)  $4 
A)  $1 
B)  $2 
C)  $3 
D)  $4

Question 6

Shirley knows her marginal rate of substitution of mangoes for bananas is equal to 3. The price of bananas is $0.50 and the price of mangoes is $1.00. Shirley should buy more mangoes.

Accepted Answer

A) True 
 B)False

Question 7

A typical indifference curve is _____, and its slope is the _____ of the good on the horizontal axis divided by the marginal utility of the good on the vertical axis.

Accepted Answer

A)  downward-sloping; negative of the marginal utility 
B)  upward-sloping; negative of the marginal utility 
C)  downward-sloping; negative of the total utility 
D)  downward-sloping; total cost 
A)  downward-sloping; negative of the marginal utility 
B)  upward-sloping; negative of the marginal utility 
C)  downward-sloping; negative of the total utility 
D)  downward-sloping; total cost

Question 8

An indifference curve map illustrates _____ levels of utility, while each indifference curve in the map indicates consumption bundles that yield _____ level of utility for an individual.

Accepted Answer

A)  different; the same 
B)  the same; a different 
C)  the same; the same 
D)  different; a different 
A)  different; the same 
B)  the same; a different 
C)  the same; the same 
D)  different; a different

Question 9

Use the following to answer questions:
Figure: Consumer Equilibrium IV  
-(Figure: Consumer Equilibrium IV) Look at the figure Consumer Equilibrium IV. The highest level of utility is at point:

Accepted Answer

A)  G. 
B)  H. 
C)  I. 
D)  J. 
A)  G. 
B)  H. 
C)  I. 
D)  J.

Question 10

Use the following to answer questions:
Figure: The Consumption of Video Games and E-Books  
-(Figure: The Consumption of Video Games and E-Books) Look at the figure The Consumption of Video Games and E-Books. Which chart shows the effects of an increase in the price of video games when video games and e-books are substitutes but not perfect substitutes?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 11

Decreases in the price of the good measured on the horizontal axis will make the horizontal intercept _____ and make the budget line _____.

Accepted Answer

A)  larger; steeper 
B)  larger; flatter 
C)  smaller; steeper 
D)  smaller; flatter 
A)  larger; steeper 
B)  larger; flatter 
C)  smaller; steeper 
D)  smaller; flatter

Question 12

Paola gets 50 units of utility when she consumes 4 cupcakes and 2 glasses of milk. She also gets 50 units of utility when she consumes 3 cupcakes and 2 glasses of milk. This means that:

Accepted Answer

A)  Paola likes milk better than cupcakes. 
B)  Paola likes cupcakes better than milk. 
C)  these combinations lie on the same indifference curve. 
D)  one of these combinations lies on a higher indifference curve. 
A)  Paola likes milk better than cupcakes. 
B)  Paola likes cupcakes better than milk. 
C)  these combinations lie on the same indifference curve. 
D)  one of these combinations lies on a higher indifference curve.

Question 13

The optimal consumption rule implies that if Pascal is maximizing his utility by spending all of his income on concert tickets and cab rides, with prices equal to PTickets and PRides, respectively, then it must be the case that MUTickets / MURides = PTickets / PRides.

Accepted Answer

A) True 
 B)False

Question 14

Antonio derives more utility from spending an additional dollar on boots than on gloves. We can assume that:

Accepted Answer

A)  the marginal utility per dollar spent on boots is greater than the marginal utility per dollar spent on gloves. 
B)  the marginal utility per dollar spent on boots is equal to the marginal utility per dollar spent on gloves. 
C)  the marginal utility per dollar spent on boots is less than the marginal utility per dollar spent on gloves. 
D)  boots cost less than gloves. 
A)  the marginal utility per dollar spent on boots is greater than the marginal utility per dollar spent on gloves. 
B)  the marginal utility per dollar spent on boots is equal to the marginal utility per dollar spent on gloves. 
C)  the marginal utility per dollar spent on boots is less than the marginal utility per dollar spent on gloves. 
D)  boots cost less than gloves.

Question 15

Use the following to answer questions:
Scenario: E-Books and Sports Tickets
Phillip has an income of $300 per month, which he uses to purchase two goods, e-books and sports tickets. Each e-book costs $10, and each ticket costs $15.
-(Scenario: E-Books and Sports Tickets) Read the scenario E-Books and Sports Tickets. Measure e-books on the horizontal axis and sports tickets on the vertical axis. Suppose the price of e-books decreases. Holding everything else constant, Phillip's budget line has become _____, and his optimal consumption bundle will be on a _____ indifference curve.

Accepted Answer

A)  flatter; higher 
B)  steeper; lower 
C)  flatter; lower 
D)  steeper; higher 
A)  flatter; higher 
B)  steeper; lower 
C)  flatter; lower 
D)  steeper; higher

Question 16

Gehrig's utility from the consumption of mangoes is measured by the level of satisfaction he gets from only the first mango he buys and eats.

Accepted Answer

A) True 
 B)False

Question 17

While at the grocery store, Sidney sees that the price of Grape-Nuts is twice that of Cheerios. If Sidney buys both goods, then Sidney must:

Accepted Answer

A)  get twice as much marginal utility from Grape-Nuts as from Cheerios. 
B)  get twice as much marginal utility from Cheerios as from Grape-Nuts. 
C)  not be maximizing utility. 
D)  buy twice as much Cheerios. 
A)  get twice as much marginal utility from Grape-Nuts as from Cheerios. 
B)  get twice as much marginal utility from Cheerios as from Grape-Nuts. 
C)  not be maximizing utility. 
D)  buy twice as much Cheerios.

Question 18

Jill, a careful utility maximizer, consumes peanut butter and ice cream. Assume that both peanut butter and ice cream are normal goods. She had just achieved the utility-maximizing solution in her consumption of the two goods when the price of peanut butter increased. As she adjusted to this event, the marginal utility of peanut butter _____ and that of ice cream _____.

Accepted Answer

A)  rose; rose 
B)  fell; fell 
C)  fell; rose 
D)  rose; fell 
A)  rose; rose 
B)  fell; fell 
C)  fell; rose 
D)  rose; fell

Question 19

Joseph chooses a combination of apples and oranges along his budget line. The marginal rate of substitution of apples for oranges is 2, the price of an apple is $0.50, and the price of an orange is $0.25. Joseph:

Accepted Answer

A)  is maximizing total utility. 
B)  should consume more apples and fewer oranges to maximize total utility. 
C)  should consume fewer apples and more oranges to maximize total utility. 
D)  may or may not be maximizing total utility. 
A)  is maximizing total utility. 
B)  should consume more apples and fewer oranges to maximize total utility. 
C)  should consume fewer apples and more oranges to maximize total utility. 
D)  may or may not be maximizing total utility.

Question 20

If the combination of two goods occurs at a point of tangency between the budget line and an indifference curve:

Accepted Answer

A)  consumer equilibrium has not been achieved. 
B)  all available income has been spent and total utility is maximized. 
C)  total utility can be increased by consuming less of both goods. 
D)  total utility can be decreased by consuming more of both goods. 
A)  consumer equilibrium has not been achieved. 
B)  all available income has been spent and total utility is maximized. 
C)  total utility can be increased by consuming less of both goods. 
D)  total utility can be decreased by consuming more of both goods.

Use the following to answer questions: -(Table: Bundles of X and Y) Look at the table Bundles of X and Y. According to the table:

The satisfaction that a consumer gets from the consumption of a bundle of goods and services is:

Diminishing marginal utility occurs with increasing total utility.

Nancy is consuming her optimal consumption bundle of burritos and margaritas. The marginal utility of her last burrito was 75 utils, and each burrito costs $3. Her marginal utility of her last margarita was 100 utils. What is the price of a margarita?

Shirley knows her marginal rate of substitution of mangoes for bananas is equal to 3. The price of bananas is $0.50 and the price of mangoes is $1.00. Shirley should buy more mangoes.

A typical indifference curve is _, and its slope is the _ of the good on the horizontal axis divided by the marginal utility of the good on the vertical axis.

An indifference curve map illustrates _ levels of utility, while each indifference curve in the map indicates consumption bundles that yield _ level of utility for an individual.

Use the following to answer questions: Figure: Consumer Equilibrium IV -(Figure: Consumer Equilibrium IV) Look at the figure Consumer Equilibrium IV. The highest level of utility is at point:

Decreases in the price of the good measured on the horizontal axis will make the horizontal intercept _ and make the budget line _.

Paola gets 50 units of utility when she consumes 4 cupcakes and 2 glasses of milk. She also gets 50 units of utility when she consumes 3 cupcakes and 2 glasses of milk. This means that:

The optimal consumption rule implies that if Pascal is maximizing his utility by spending all of his income on concert tickets and cab rides, with prices equal to P_Tickets and P_Rides, respectively, then it must be the case that MU_Tickets / MU_Rides = P_Tickets / P_Rides.

Antonio derives more utility from spending an additional dollar on boots than on gloves. We can assume that:

Gehrig's utility from the consumption of mangoes is measured by the level of satisfaction he gets from only the first mango he buys and eats.

While at the grocery store, Sidney sees that the price of Grape-Nuts is twice that of Cheerios. If Sidney buys both goods, then Sidney must:

Joseph chooses a combination of apples and oranges along his budget line. The marginal rate of substitution of apples for oranges is 2, the price of an apple is $0.50, and the price of an orange is $0.25. Joseph:

If the combination of two goods occurs at a point of tangency between the budget line and an indifference curve:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 10: The Rational Consumer

Use the following to answer questions: -(Table: Bundles of X and Y) Look at the table Bundles of X and Y. According to the table:

The satisfaction that a consumer gets from the consumption of a bundle of goods and services is:

Diminishing marginal utility occurs with increasing total utility.

Nancy is consuming her optimal consumption bundle of burritos and margaritas. The marginal utility of her last burrito was 75 utils, and each burrito costs $3. Her marginal utility of her last margarita was 100 utils. What is the price of a margarita?

Shirley knows her marginal rate of substitution of mangoes for bananas is equal to 3. The price of bananas is $0.50 and the price of mangoes is $1.00. Shirley should buy more mangoes.

A typical indifference curve is _____, and its slope is the _____ of the good on the horizontal axis divided by the marginal utility of the good on the vertical axis.

An indifference curve map illustrates _____ levels of utility, while each indifference curve in the map indicates consumption bundles that yield _____ level of utility for an individual.

Use the following to answer questions: Figure: Consumer Equilibrium IV -(Figure: Consumer Equilibrium IV) Look at the figure Consumer Equilibrium IV. The highest level of utility is at point:

Decreases in the price of the good measured on the horizontal axis will make the horizontal intercept _____ and make the budget line _____.

Paola gets 50 units of utility when she consumes 4 cupcakes and 2 glasses of milk. She also gets 50 units of utility when she consumes 3 cupcakes and 2 glasses of milk. This means that:

The optimal consumption rule implies that if Pascal is maximizing his utility by spending all of his income on concert tickets and cab rides, with prices equal to PTickets and PRides, respectively, then it must be the case that MUTickets / MURides = PTickets / PRides.

Antonio derives more utility from spending an additional dollar on boots than on gloves. We can assume that:

Gehrig's utility from the consumption of mangoes is measured by the level of satisfaction he gets from only the first mango he buys and eats.

While at the grocery store, Sidney sees that the price of Grape-Nuts is twice that of Cheerios. If Sidney buys both goods, then Sidney must:

Joseph chooses a combination of apples and oranges along his budget line. The marginal rate of substitution of apples for oranges is 2, the price of an apple is $0.50, and the price of an orange is $0.25. Joseph:

If the combination of two goods occurs at a point of tangency between the budget line and an indifference curve:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

A typical indifference curve is _, and its slope is the _ of the good on the horizontal axis divided by the marginal utility of the good on the vertical axis.

An indifference curve map illustrates _ levels of utility, while each indifference curve in the map indicates consumption bundles that yield _ level of utility for an individual.

Decreases in the price of the good measured on the horizontal axis will make the horizontal intercept _ and make the budget line _.

The optimal consumption rule implies that if Pascal is maximizing his utility by spending all of his income on concert tickets and cab rides, with prices equal to P_Tickets and P_Rides, respectively, then it must be the case that MU_Tickets / MU_Rides = P_Tickets / P_Rides.