Question 1

In the paradox of value between expensive diamonds and inexpensive water,we see that

Accepted Answer

A)  the consumer surpluses are very high for both goods. 
B)  diamonds have a low consumer surplus while water has a high consumer surplus. 
C)  diamonds have a high consumer surplus while water has a low consumer surplus. 
D)  the consumer surpluses are very low for both goods. 
E)  the consumer surpluses for the two goods cannot be compared. 
A)  the consumer surpluses are very high for both goods. 
B)  diamonds have a low consumer surplus while water has a high consumer surplus. 
C)  diamonds have a high consumer surplus while water has a low consumer surplus. 
D)  the consumer surpluses are very low for both goods. 
E)  the consumer surpluses for the two goods cannot be compared.

Question 2

$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Quantity } \
\text { (bananas) }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { utility }
\end{array} \
\hline 0 & 0 \
\hline 1 & 35 \
\hline 2 & 60 \
\hline 3 & 80 \
\hline 4 & 100 \
\hline 5 & 115 \
\hline 6 & 127 \
\hline 7 & 137 \
\hline 8 & 145 \
\hline
\end{array}$$
-Sam's total utility for bananas is in the table above.Sam's marginal utility from the fourth banana is

Accepted Answer

A)  100 
B)  25 
C)  20 
D)  15 
E)  It cannot be determined from the given information. 
A)  100 
B)  25 
C)  20 
D)  15 
E)  It cannot be determined from the given information.

Question 3

A budget line shows the

Accepted Answer

A)  quantities of goods a buyer can purchase with given income and prices. 
B)  relationship between price and quantity demanded. 
C)  total utility a consumer realizes from consuming different quantities of a good. 
D)  quantities of consumption that maximizes marginal utility. 
E)  the prices of the two goods a buyer can purchase. 
A)  quantities of goods a buyer can purchase with given income and prices. 
B)  relationship between price and quantity demanded. 
C)  total utility a consumer realizes from consuming different quantities of a good. 
D)  quantities of consumption that maximizes marginal utility. 
E)  the prices of the two goods a buyer can purchase.

Question 4

Sherry is on vacation and wants to bring souvenirs home to family and friends.Her souvenir budget is $100,and she can choose between T-shirts,which cost $20 each,and key chains,which cost $5 each.
a.Draw a graph of Sherry's budget line in the figure below.
   
b.What is the slope of Sherry's budget line? How does that slope represent an opportunity cost? Suppose that Sherry now finds a store where T-shirts are on sale for $10 each.(Key chains still cost $5 each).
c.Draw the new budget line in the figure.
d.What is the slope of the new budget line? How has the opportunity cost changed?

Accepted Answer

@#IMG-DLM& 
a.The budget line is in the figure abo

Question 5

If a consumer's marginal rate of substitution is greater than the relative price of the goods,the consumer is

Accepted Answer

A)  at his or her best affordable point. 
B)  perhaps at his or her best affordable point. 
C)  not at his or her best affordable point and should move along his or her indifference curve to a higher budget line. 
D)  not at his or her best affordable point and should move along his or her budget line to a higher indifference curve. 
E)  More information is needed to determine if the consumer is or is not at his or her best affordable point. 
A)  at his or her best affordable point. 
B)  perhaps at his or her best affordable point. 
C)  not at his or her best affordable point and should move along his or her indifference curve to a higher budget line. 
D)  not at his or her best affordable point and should move along his or her budget line to a higher indifference curve. 
E)  More information is needed to determine if the consumer is or is not at his or her best affordable point.

Question 6

-The figure above shows a consumer's budget line between sodas and DVD rentals.Point d 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 7

A relative price is the

Accepted Answer

A)  price of a substitute. 
B)  price of a related good. 
C)  price of one good divided by the price of another. 
D)  absolute price of a good. 
E)  price of one good multiplied by the price of another. 
A)  price of a substitute. 
B)  price of a related good. 
C)  price of one good divided by the price of another. 
D)  absolute price of a good. 
E)  price of one good multiplied by the price of another.

Question 8

An indifference curve shows all combinations of two goods

Accepted Answer

A)  that can be purchased with a given income. 
B)  that can be purchased if relative prices are constant. 
C)  among which the consumer is indifferent. 
D)  that have the same marginal rate of substitution. 
E)  that have the same opportunity cost. 
A)  that can be purchased with a given income. 
B)  that can be purchased if relative prices are constant. 
C)  among which the consumer is indifferent. 
D)  that have the same marginal rate of substitution. 
E)  that have the same opportunity cost.

Question 9

To resolve the paradox of value,you must

Accepted Answer

A)  compare price elasticities of demand across goods. 
B)  distinguish between marginal and total utility. 
C)  sacrifice efficiency. 
D)  minimize consumer surplus. 
E)  distinguish between marginal utility and price. 
A)  compare price elasticities of demand across goods. 
B)  distinguish between marginal and total utility. 
C)  sacrifice efficiency. 
D)  minimize consumer surplus. 
E)  distinguish between marginal utility and price.

Question 10

If a consumer's total utility increases when another unit of a good is consumed,which of the following is true? Marginal utility must be

Accepted Answer

A)  negative. 
B)  equal to one. 
C)  positive. 
D)  increasing. 
E)  some amount, but more information is needed to determine if marginal utility is positive, negative, or equal to zero. 
A)  negative. 
B)  equal to one. 
C)  positive. 
D)  increasing. 
E)  some amount, but more information is needed to determine if marginal utility is positive, negative, or equal to zero.

Question 11

When Chris maximizes his total utility,then his entire available budget is allocated in such a way that the

Accepted Answer

A)  marginal utility of all goods is equal. 
B)  marginal utility per dollar is equal for all goods. 
C)  marginal utility is as large as possible for goods. 
D)  marginal utility will start decreasing if it consumes fewer goods. 
E)  quantities consumed of each good are equal. 
A)  marginal utility of all goods is equal. 
B)  marginal utility per dollar is equal for all goods. 
C)  marginal utility is as large as possible for goods. 
D)  marginal utility will start decreasing if it consumes fewer goods. 
E)  quantities consumed of each good are equal.

Question 12

When the price of one good changes while another good's price does not change,then there has been a change in the

Accepted Answer

A)  relative price. 
B)  marginal utility price. 
C)  absolute price. 
D)  marginal price. 
E)  utility price. 
A)  relative price. 
B)  marginal utility price. 
C)  absolute price. 
D)  marginal price. 
E)  utility price.

Question 13

Along an indifference curve,if the marginal rate of substitution is 3,then the consumer is willing to

Accepted Answer

A)  give up 1 unit of the good measured along the y-axis for 3 units of the good measured along the x-axis. 
B)  give up 3 units of the good measured along the y-axis for 1 unit of the good measured along the x-axis. 
C)  pay $3 for one unit of the good measured along the y-axis. 
D)  pay $3 for one unit of the good measured along the x-axis. 
E)  give up 3 units of the good measured along the y-axis for 1 unit of income, that is, $1 of income. 
A)  give up 1 unit of the good measured along the y-axis for 3 units of the good measured along the x-axis. 
B)  give up 3 units of the good measured along the y-axis for 1 unit of the good measured along the x-axis. 
C)  pay $3 for one unit of the good measured along the y-axis. 
D)  pay $3 for one unit of the good measured along the x-axis. 
E)  give up 3 units of the good measured along the y-axis for 1 unit of income, that is, $1 of income.

Question 14

In a month,Samantha consumes the quantity of lobster dinners so that her marginal utility from a lobster dinner is 500 units.The price of a lobster dinner is $25.She also is consuming the quantity of spaghetti dinners so that its marginal utility is 300 units,while its price is $15.Samantha is allocating her entire budget.What should she do to maximize her total utility?

Accepted Answer

A)  consume more lobster dinners and fewer spaghetti dinners 
B)  consume more spaghetti dinners and fewer lobster dinners 
C)  consume the current combination of lobster and spaghetti dinners 
D)  consume fewer lobster dinners and fewer spaghetti dinners 
E)  Not enough information is given to answer the question. 
A)  consume more lobster dinners and fewer spaghetti dinners 
B)  consume more spaghetti dinners and fewer lobster dinners 
C)  consume the current combination of lobster and spaghetti dinners 
D)  consume fewer lobster dinners and fewer spaghetti dinners 
E)  Not enough information is given to answer the question.

Question 15

If Mark's marginal utility per dollar from the last taco is 15 and his marginal utility per dollar from the last burrito is 20 units,what should Mark do to increase his total utility?

Accepted Answer

Mark should buy more burritos and fewer

In the paradox of value between expensive diamonds and inexpensive water,we see that

Quantity (bananas) Total utility 0 0 1 35 2 60 3 80 4 100 5 115 6 127 7 137 8 145 -Sam's total utility for bananas is in the table above.Sam's marginal utility from the fourth banana is

A budget line shows the

If a consumer's marginal rate of substitution is greater than the relative price of the goods,the consumer is

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

A relative price is the

An indifference curve shows all combinations of two goods

To resolve the paradox of value,you must

If a consumer's total utility increases when another unit of a good is consumed,which of the following is true? Marginal utility must be

When Chris maximizes his total utility,then his entire available budget is allocated in such a way that the

When the price of one good changes while another good's price does not change,then there has been a change in the

Along an indifference curve,if the marginal rate of substitution is 3,then the consumer is willing to

If Mark's marginal utility per dollar from the last taco is 15 and his marginal utility per dollar from the last burrito is 20 units,what should Mark do to increase his total utility?

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

In the paradox of value between expensive diamonds and inexpensive water,we see that

Quantity (bananas) Total utility 0 0 1 35 2 60 3 80 4 100 5 115 6 127 7 137 8 145 -Sam's total utility for bananas is in the table above.Sam's marginal utility from the fourth banana is

A budget line shows the

If a consumer's marginal rate of substitution is greater than the relative price of the goods,the consumer is

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

A relative price is the

An indifference curve shows all combinations of two goods

To resolve the paradox of value,you must

If a consumer's total utility increases when another unit of a good is consumed,which of the following is true? Marginal utility must be

When Chris maximizes his total utility,then his entire available budget is allocated in such a way that the

When the price of one good changes while another good's price does not change,then there has been a change in the

Along an indifference curve,if the marginal rate of substitution is 3,then the consumer is willing to

If Mark's marginal utility per dollar from the last taco is 15 and his marginal utility per dollar from the last burrito is 20 units,what should Mark do to increase his total utility?

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