Question 1

If your budget increases,what is the effect on your budget line?

Accepted Answer

Your budget line shi

Question 2

Assume that there are two goods,x and y.The quantity of good x is measured on the x-axis and the quantity of good y is measured on the y-axis.If the price of good y rises,then the

Accepted Answer

A)  y-axis intercept of the budget line increases. 
B)  y-axis intercept of the budget line increases and the x-axis intercept of the budget line decreases. 
C)  y-axis intercept of the budget line decreases and the x-axis intercept does not change. 
D)  slope of the budget line changes. 
E)  Both answers C and D are correct. 
A)  y-axis intercept of the budget line increases. 
B)  y-axis intercept of the budget line increases and the x-axis intercept of the budget line decreases. 
C)  y-axis intercept of the budget line decreases and the x-axis intercept does not change. 
D)  slope of the budget line changes. 
E)  Both answers C and D are correct.

Question 3

-The figure above shows a consumer's budget line for sodas and DVD rentals.Point a represents an

Accepted Answer

A)  affordable combination of sodas and DVDs that spends the entire budget. 
B)  affordable combination of sodas and DVDs that does not spend the entire budget. 
C)  unaffordable combination of sodas and DVDs. 
D)  affordable combination of sodas and DVDs but whether it spends the entire budget cannot be determined from the figure. 
E)  None of the above answers is correct. 
A)  affordable combination of sodas and DVDs that spends the entire budget. 
B)  affordable combination of sodas and DVDs that does not spend the entire budget. 
C)  unaffordable combination of sodas and DVDs. 
D)  affordable combination of sodas and DVDs but whether it spends the entire budget cannot be determined from the figure. 
E)  None of the above answers is correct.

Question 4

The utility-maximizing rule says that consumers must

Accepted Answer

A)  only allocate the entire available budget. 
B)  only make the marginal utility per dollar the same for all goods. 
C)  allocate the entire available budget and make the marginal utility per dollar the same for all goods. 
D)  either allocate the entire available budget or make the marginal utility per dollar the same for all goods, but not both. 
E)  None of the above answers is correct. 
A)  only allocate the entire available budget. 
B)  only make the marginal utility per dollar the same for all goods. 
C)  allocate the entire available budget and make the marginal utility per dollar the same for all goods. 
D)  either allocate the entire available budget or make the marginal utility per dollar the same for all goods, but not both. 
E)  None of the above answers is correct.

Question 5

The budget line is the boundary between

Accepted Answer

A)  preferred and nonpreferred consumption combinations. 
B)  affordable and unaffordable consumption combinations. 
C)  goods and bads. 
D)  income and expenditure. 
E)  income and consumption. 
A)  preferred and nonpreferred consumption combinations. 
B)  affordable and unaffordable consumption combinations. 
C)  goods and bads. 
D)  income and expenditure. 
E)  income and consumption.

Question 6

$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Quantity of } \
\text { ice cream } \
\text { (quarts) }
\end{array} & \begin{array} { c } 
\text { Total utility } \
\text { from ice cream }
\end{array} \
\hline 0 & 0 \
\hline 1 & 80 \
\hline 2 & 150 \
\hline 3 & 210 \
\hline 4 & 260 \
\hline
\end{array}$$
-Given the data in the above table,what is the marginal utility of the fourth quart of ice cream?

Accepted Answer

A)  210 
B)  50 
C)  60 
D)  65 
E)  260 
A)  210 
B)  50 
C)  60 
D)  65 
E)  260

Question 7

"Water is very inexpensive.Thus the marginal and total utility of water is small." Analyze the previous statements.

Accepted Answer

Parts of the statement are true but a ke

Question 8

"As Rob consumes more dates over the course of a day,it is likely that his marginal utility from date consumption will rise." Is the previous statement likely correct or incorrect?

Accepted Answer

The statement is incorrect.The

Question 9

-The figure above shows a consumer's budget line between sodas and DVD rentals.Point c represents an

Accepted Answer

A)  affordable combination of sodas and DVDs that spends the entire budget. 
B)  affordable combination of sodas and DVDs that does not spend the entire budget. 
C)  unaffordable combination of sodas and DVDs. 
D)  affordable combination of sodas and DVDs, but whether it spends the entire budget cannot be determined from the figure. 
E)  None of the above answers is correct. 
A)  affordable combination of sodas and DVDs that spends the entire budget. 
B)  affordable combination of sodas and DVDs that does not spend the entire budget. 
C)  unaffordable combination of sodas and DVDs. 
D)  affordable combination of sodas and DVDs, but whether it spends the entire budget cannot be determined from the figure. 
E)  None of the above answers is correct.

Question 10

Suppose Alice spends her budget on books and downloaded movies.If her budget does not change,and the price of a book stays the same but the price of a downloaded movie falls,her budget line

Accepted Answer

A)  shifts outward and its slope does not change. 
B)  shifts inward and its slope does not change. 
C)  rotates inward and its slope changes. 
D)  rotates outward and its slope changes. 
E)  does not change because her budget has not changed. 
A)  shifts outward and its slope does not change. 
B)  shifts inward and its slope does not change. 
C)  rotates inward and its slope changes. 
D)  rotates outward and its slope changes. 
E)  does not change because her budget has not changed.

Question 11

The indifference curve/budget line diagram concludes that Jim is definitely in equilibrium when he is

Accepted Answer

A)  spending all his budget. 
B)  saving some of his budget. 
C)  consuming the combination of goods and services that is affordable and on the highest attainable indifference curve. 
D)  consuming a combination of goods and services that is on an indifference curve. 
E)  None of the above answers is correct. 
A)  spending all his budget. 
B)  saving some of his budget. 
C)  consuming the combination of goods and services that is affordable and on the highest attainable indifference curve. 
D)  consuming a combination of goods and services that is on an indifference curve. 
E)  None of the above answers is correct.

Question 12

Consumers' preferences are described by

Accepted Answer

A)  budget lines. 
B)  indifference curves. 
C)  relative prices. 
D)  household income. 
E)  demand curves. 
A)  budget lines. 
B)  indifference curves. 
C)  relative prices. 
D)  household income. 
E)  demand curves.

Question 13

Total utility ________ as a person consumes more of one good and marginal utility ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  remains constant; decreases 
D)  fluctuates; decreases 
E)  decreases; increases 
A)  increases; increases 
B)  increases; decreases 
C)  remains constant; decreases 
D)  fluctuates; decreases 
E)  decreases; increases

Question 14

Which of the following statements is FALSE?

Accepted Answer

A)  A consumer has only one indifference curve. 
B)  A consumer possesses a preference map. 
C)  An indifference curve is a curve that shows the combination of goods among which a consumer is indifferent. 
D)  The marginal rate of substitution is equal to the magnitude of the slope of the indifference curve. 
E)  Diminishing marginal rate of substitution means that the marginal rate of substitution decreases as more of the good is consumed. 
A)  A consumer has only one indifference curve. 
B)  A consumer possesses a preference map. 
C)  An indifference curve is a curve that shows the combination of goods among which a consumer is indifferent. 
D)  The marginal rate of substitution is equal to the magnitude of the slope of the indifference curve. 
E)  Diminishing marginal rate of substitution means that the marginal rate of substitution decreases as more of the good is consumed.

Question 15

$$\begin{array} { c c c c } 
\text { Quantity } & \text { Total utility } & \text { Quantity } & \text { Total utility } \
\hline 0 & 0 & 0 & 0 \
1 & 8 & 1 & 10 \
2 & 14 & 2 & 19 \
3 & 18 & 3 & 27 \
4 & 21 & 4 & 34 \
5 & 23 & 5 & 40 \
6 & 24 & 6 & 45
\end{array}$$
-The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.The price of pizza is $2 per slice and the price of soda is $1 per bottle.His marginal utility from the 4th bottle of soda is

Accepted Answer

A)  21. 
B)  3. 
C)  3 units for soda ÷ 7 units for pizza. 
D)  34. 
E)  5.25. 
A)  21. 
B)  3. 
C)  3 units for soda ÷ 7 units for pizza. 
D)  34. 
E)  5.25.

Question 16

Explain why total utility is maximized when the marginal utility per dollar from a good is equal across goods.

Accepted Answer

It is easiest to prove that total utilit

Question 17

In the indifference curve/budget line diagram,consumers reach higher indifference curves when

Accepted Answer

A)  their budget decreases. 
B)  the price of only the good measured along the y-axis increases. 
C)  the price of only the good measured along the x-axis increases. 
D)  the price of either good falls. 
E)  the price of either good rises. 
A)  their budget decreases. 
B)  the price of only the good measured along the y-axis increases. 
C)  the price of only the good measured along the x-axis increases. 
D)  the price of either good falls. 
E)  the price of either good rises.

Question 18

-In the above figure,I is an indifference curve.Moving from point a to point b,

Accepted Answer

A)  the marginal rate of substitution for books decreases. 
B)  the budget line rotates inward. 
C)  the budget line rotates outward. 
D)  there is diminishing total utility. 
E)  the marginal rate of substitution for books increases. 
A)  the marginal rate of substitution for books decreases. 
B)  the budget line rotates inward. 
C)  the budget line rotates outward. 
D)  there is diminishing total utility. 
E)  the marginal rate of substitution for books increases.

Question 19

$\begin{array}{c}
\begin{array}{c}
\
\text { Possibility}\
\hline{A}\
B\
C\
D
\end{array}
\begin{array}{c}
\text {Movies}\
\text {(per month)}\
\hline6\
4\
2\
0
\end{array}
\begin{array}{c}
\text {Plays}\
\text {(permonth)}\
\hline0\
1\
2\
3
\end{array}
\end{array}$

-Susan can watch movies or attend plays.The table above gives combinations of movies and plays that are on her budget line.If the price of a movie is $10,then her budget for movies and plays is

Accepted Answer

A)  $10 per month. 
B)  $50 per month. 
C)  $60 per month. 
D)  $120 per month. 
E)  unknown from the information. 
A)  $10 per month. 
B)  $50 per month. 
C)  $60 per month. 
D)  $120 per month. 
E)  unknown from the information.

Question 20

Suppose Jenny's marginal utility from another serving of fish is 40 and her marginal utility from another serving of chips is 20.The price of a serving of fish is $10 and the price of a serving of chips is $1.What should Jenny do to maximize her utility? Explain your answer.

Accepted Answer

Jenny should buy more chips and fewer fi

If your budget increases,what is the effect on your budget line?

Assume that there are two goods,x and y.The quantity of good x is measured on the x-axis and the quantity of good y is measured on the y-axis.If the price of good y rises,then the

-The figure above shows a consumer's budget line for sodas and DVD rentals.Point a represents an

The utility-maximizing rule says that consumers must

The budget line is the boundary between

Quantity of ice cream (quarts) Total utility from ice cream 0 0 1 80 2 150 3 210 4 260 -Given the data in the above table,what is the marginal utility of the fourth quart of ice cream?

"Water is very inexpensive.Thus the marginal and total utility of water is small." Analyze the previous statements.

"As Rob consumes more dates over the course of a day,it is likely that his marginal utility from date consumption will rise." Is the previous statement likely correct or incorrect?

-The figure above shows a consumer's budget line between sodas and DVD rentals.Point c represents an

Suppose Alice spends her budget on books and downloaded movies.If her budget does not change,and the price of a book stays the same but the price of a downloaded movie falls,her budget line

The indifference curve/budget line diagram concludes that Jim is definitely in equilibrium when he is

Consumers' preferences are described by

Total utility as a person consumes more of one good and marginal utility .

Which of the following statements is FALSE?

Explain why total utility is maximized when the marginal utility per dollar from a good is equal across goods.

In the indifference curve/budget line diagram,consumers reach higher indifference curves when

-In the above figure,I is an indifference curve.Moving from point a to point b,

Possibility A B C D Movies (per month) 6 4 2 0 Plays (permonth) 0 1 2 3 -Susan can watch movies or attend plays.The table above gives combinations of movies and plays that are on her budget line.If the price of a movie is $10,then her budget for movies and plays is

Suppose Jenny's marginal utility from another serving of fish is 40 and her marginal utility from another serving of chips is 20.The price of a serving of fish is $10 and the price of a serving of chips is $1.What should Jenny do to maximize her utility? Explain your answer.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 13: Consumer Choice and Demand

If your budget increases,what is the effect on your budget line?

Assume that there are two goods,x and y.The quantity of good x is measured on the x-axis and the quantity of good y is measured on the y-axis.If the price of good y rises,then the

-The figure above shows a consumer's budget line for sodas and DVD rentals.Point a represents an

The utility-maximizing rule says that consumers must

The budget line is the boundary between

Quantity of ice cream (quarts) Total utility from ice cream 0 0 1 80 2 150 3 210 4 260 -Given the data in the above table,what is the marginal utility of the fourth quart of ice cream?

"Water is very inexpensive.Thus the marginal and total utility of water is small." Analyze the previous statements.

"As Rob consumes more dates over the course of a day,it is likely that his marginal utility from date consumption will rise." Is the previous statement likely correct or incorrect?

-The figure above shows a consumer's budget line between sodas and DVD rentals.Point c represents an

Suppose Alice spends her budget on books and downloaded movies.If her budget does not change,and the price of a book stays the same but the price of a downloaded movie falls,her budget line

The indifference curve/budget line diagram concludes that Jim is definitely in equilibrium when he is

Consumers' preferences are described by

Total utility ________ as a person consumes more of one good and marginal utility ________.

Which of the following statements is FALSE?

Explain why total utility is maximized when the marginal utility per dollar from a good is equal across goods.

In the indifference curve/budget line diagram,consumers reach higher indifference curves when

-In the above figure,I is an indifference curve.Moving from point a to point b,

Possibility A B C D Movies (per month) 6 4 2 0 Plays (permonth) 0 1 2 3 -Susan can watch movies or attend plays.The table above gives combinations of movies and plays that are on her budget line.If the price of a movie is $10,then her budget for movies and plays is

Suppose Jenny's marginal utility from another serving of fish is 40 and her marginal utility from another serving of chips is 20.The price of a serving of fish is $10 and the price of a serving of chips is $1.What should Jenny do to maximize her utility? Explain your answer.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Total utility as a person consumes more of one good and marginal utility .