Question 1

If a budget line rotates inward and becomes steeper,then the

Accepted Answer

A)  consumer's budget decreased. 
B)  consumer's budget increased. 
C)  price of one of the goods decreased. 
D)  price of one of the goods increased. 
E)  price of both of the goods must have decreased. 
A)  consumer's budget decreased. 
B)  consumer's budget increased. 
C)  price of one of the goods decreased. 
D)  price of one of the goods increased. 
E)  price of both of the goods must have decreased.

Question 2

Why is the budget line negatively sloped?

Accepted Answer

Given the consumer's budget and the pric

Question 3

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (slices of pizza) }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { utility }
\end{array} \
\hline 0 & 0 \
1 & 15 \
2 & 22 \
3 & 27 \
4 & 30 \
5 & 31
\end{array}$$
-The table above gives Matt's utility from consuming slices of pizza.His marginal utility from the 4th slice is

Accepted Answer

A)  30 units. 
B)  3 units. 
C)  94 units. 
D)  23.5 units. 
E)  7.5 units. 
A)  30 units. 
B)  3 units. 
C)  94 units. 
D)  23.5 units. 
E)  7.5 units.

Question 4

At all points on a demand curve,the
i.consumer's budget has been allocated to maximize total utility.
ii.quantity is the quantity demanded at each price when total utility is maximized.
iii.price represents the marginal benefit the consumer gets from an extra unit of a good.

Accepted Answer

A)  i only 
B)  ii only 
C)  i and ii 
D)  i and iii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  i and ii 
D)  i and iii 
E)  i, ii, and iii

Question 5

Diminishing marginal utility means that as more of a good is consumed,

Accepted Answer

A)  the price of the good rises. 
B)  the price of the good falls. 
C)  more income is spent. 
D)  the utility of an additional unit decreases. 
E)  the consumption of some other good must diminish. 
A)  the price of the good rises. 
B)  the price of the good falls. 
C)  more income is spent. 
D)  the utility of an additional unit decreases. 
E)  the consumption of some other good must diminish.

Question 6

Which of the following statements is correct?

Accepted Answer

A)  The slope of the budget line shows the opportunity cost of the good measured along the x-axis. 
B)  Along the budget line, consuming more of one good implies consuming more of the other. 
C)  The slope of the budget line shows there is no tradeoff between the two goods because the consumer can buy each of them. 
D)  If the consumer's budget increases, the budget line shifts leftward and its slope does not change. 
E)  None of the above answers is correct. 
A)  The slope of the budget line shows the opportunity cost of the good measured along the x-axis. 
B)  Along the budget line, consuming more of one good implies consuming more of the other. 
C)  The slope of the budget line shows there is no tradeoff between the two goods because the consumer can buy each of them. 
D)  If the consumer's budget increases, the budget line shifts leftward and its slope does not change. 
E)  None of the above answers is correct.

Question 7

John likes to spend Thursday nights playing pool and drinking soda.John's budget for Thursday nights is $10,a soda costs $2,and one game of pool costs $1.
a.Draw a graph of John's budget line in the figure below.
b.In your graph,label the affordable and unaffordable areas.

Accepted Answer

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

Question 8

Does the fact that diamonds are so expensive imply that the demand curve for diamonds has a positive slope? Use marginal utility theory to answer the question.

Accepted Answer

No.In order for the demand curve for dia

Question 9

-The figure above gives a consumer's budget line and two indifference curves.
a.At which point is the marginal rate of substitution greater than the relative price?
b.At which point is the marginal rate of substitution less than the relative price?
c.Which point represents the consumer equilibrium?

Accepted Answer

a.The marginal rate of substitution is g

Question 10

-The table above gives Jessie's marginal utility and total utility from tacos.Complete the table.

Accepted Answer

\[\begin{array}{l}
\text { Quantity }\

Question 11

What does the slope of the budget line equal?

Accepted Answer

The slope of the budget line equals an o

Question 12

-Tris is shopping for pants and belts.He has a budget of $100.The price of a pair of pants is $20 and the price of a belt is $5.His marginal utility schedules are above.What combination of pants and belts does Tris buy? Explain your answer.

Accepted Answer

Tris buys 4 pairs of pants and 4 belts b

Question 13

Any point below a given indifference curve is

Accepted Answer

A)  inferior to any point on the indifference curve. 
B)  preferred to any point on the indifference curve. 
C)  definitely affordable. 
D)  definitely unaffordable. 
E)  More information is needed to determine if the point is or is not affordable and if the point is or is not preferred. 
A)  inferior to any point on the indifference curve. 
B)  preferred to any point on the indifference curve. 
C)  definitely affordable. 
D)  definitely unaffordable. 
E)  More information is needed to determine if the point is or is not affordable and if the point is or is not preferred.

Question 14

$$\begin{array} { | c | c | } 
\hline \text { Box of doughnuts } & \text { Homer's total utility } \
\hline 1 & 30 \
\hline 2 & 55 \
\hline 3 & 75 \
\hline 4 & 90 \
\hline 5 & 100 \
\hline 6 & 103 \
\hline
\end{array}$$
-The above table shows Homer's utility from boxes of doughnuts.The marginal utility that Homer receives from the third box of doughnuts is equal to

Accepted Answer

A)  75. 
B)  25. 
C)  20. 
D)  3. 
E)  50. 
A)  75. 
B)  25. 
C)  20. 
D)  3. 
E)  50.

Question 15

Linda has $10 a month to spend on ice cream cones and chocolate bars.If the price of an ice cream cone is $2 a cone and the price of a chocolate bar is $1 a bar,which of the following is a point on Linda's budget line?

Accepted Answer

A)  4 cones and 0 chocolate bars 
B)  1 cone and 8 chocolate bars 
C)  3 cones and 1 chocolate bar 
D)  5 cones and 10 chocolate bars 
E)  0 cones and 0 chocolate bars 
A)  4 cones and 0 chocolate bars 
B)  1 cone and 8 chocolate bars 
C)  3 cones and 1 chocolate bar 
D)  5 cones and 10 chocolate bars 
E)  0 cones and 0 chocolate bars

Question 16

The figure above shows three budget lines.
-Based on the figure above,which of the following would lead the consumer's budget line to shift from BL₀ to BL₁?

Accepted Answer

A)  a rise in the price of water 
B)  a fall in the price of water 
C)  a rise in the price of water and the price of gum 
D)  a decrease in the consumer's budget 
E)  an increase in the consumer's budget 
A)  a rise in the price of water 
B)  a fall in the price of water 
C)  a rise in the price of water and the price of gum 
D)  a decrease in the consumer's budget 
E)  an increase in the consumer's budget

Question 17

The marginal rate of substitution is equal to the magnitude of the

Accepted Answer

A)  slope of the demand curve. 
B)  price of the good measured along the x-axis. 
C)  slope of the indifference curve. 
D)  relative prices of the two goods. 
E)  price of the good measured along the y-axis. 
A)  slope of the demand curve. 
B)  price of the good measured along the x-axis. 
C)  slope of the indifference curve. 
D)  relative prices of the two goods. 
E)  price of the good measured along the y-axis.

Question 18

Diamonds have ________ consumer surplus because ________.

Accepted Answer

A)  a smaller; fewer diamonds are sold at higher prices 
B)  a smaller; there is a lower marginal utility for diamonds 
C)  a large; diamonds are a rare and valuable stone 
D)  zero; diamonds have a high price and provide low total utility 
E)  zero; diamonds are not necessary for life 
A)  a smaller; fewer diamonds are sold at higher prices 
B)  a smaller; there is a lower marginal utility for diamonds 
C)  a large; diamonds are a rare and valuable stone 
D)  zero; diamonds have a high price and provide low total utility 
E)  zero; diamonds are not necessary for life

Question 19

In a preference map,consumption combinations on higher indifference curves

Accepted Answer

A)  always cost more than any combination on a lower indifference curve. 
B)  always are preferred to combinations on lower indifference curves. 
C)  always cost less than any combination on a lower indifference curve. 
D)  always are less preferred than combinations on lower indifference curves. 
E)  are sometimes more preferred, sometimes less preferred, and sometimes equally preferred to any combination on a lower indifference curve. 
A)  always cost more than any combination on a lower indifference curve. 
B)  always are preferred to combinations on lower indifference curves. 
C)  always cost less than any combination on a lower indifference curve. 
D)  always are less preferred than combinations on lower indifference curves. 
E)  are sometimes more preferred, sometimes less preferred, and sometimes equally preferred to any combination on a lower indifference curve.

Question 20

Sheryl is maximizing her utility.She notices that her marginal utility from the last package of bubble gum consumed is greater than her marginal utility from the last package of mints consumed.This result means that the

Accepted Answer

A)  price of a package of gum is greater than the price of a package of mints. 
B)  price of a package of mints is greater than the price of a package of gum. 
C)  total utility of gum must be falling as more gum is consumed. 
D)  total utility of mints must be falling as more mints are consumed. 
E)  More information is needed to determine which, if any, of the above answers is correct. 
A)  price of a package of gum is greater than the price of a package of mints. 
B)  price of a package of mints is greater than the price of a package of gum. 
C)  total utility of gum must be falling as more gum is consumed. 
D)  total utility of mints must be falling as more mints are consumed. 
E)  More information is needed to determine which, if any, of the above answers is correct.

If a budget line rotates inward and becomes steeper,then the

Why is the budget line negatively sloped?

Quantity (slices of pizza) Total utility 0 0 1 15 2 22 3 27 4 30 5 31 -The table above gives Matt's utility from consuming slices of pizza.His marginal utility from the 4th slice is

At all points on a demand curve,the i.consumer's budget has been allocated to maximize total utility. ii.quantity is the quantity demanded at each price when total utility is maximized. iii.price represents the marginal benefit the consumer gets from an extra unit of a good.

Diminishing marginal utility means that as more of a good is consumed,

Which of the following statements is correct?

John likes to spend Thursday nights playing pool and drinking soda.John's budget for Thursday nights is $10,a soda costs $2,and one game of pool costs $1. a.Draw a graph of John's budget line in the figure below. b.In your graph,label the affordable and unaffordable areas.

Does the fact that diamonds are so expensive imply that the demand curve for diamonds has a positive slope? Use marginal utility theory to answer the question.

-The figure above gives a consumer's budget line and two indifference curves. a.At which point is the marginal rate of substitution greater than the relative price? b.At which point is the marginal rate of substitution less than the relative price? c.Which point represents the consumer equilibrium?

-The table above gives Jessie's marginal utility and total utility from tacos.Complete the table.

What does the slope of the budget line equal?

-Tris is shopping for pants and belts.He has a budget of $100.The price of a pair of pants is $20 and the price of a belt is $5.His marginal utility schedules are above.What combination of pants and belts does Tris buy? Explain your answer.

Any point below a given indifference curve is

Box of doughnuts Homer's total utility 1 30 2 55 3 75 4 90 5 100 6 103 -The above table shows Homer's utility from boxes of doughnuts.The marginal utility that Homer receives from the third box of doughnuts is equal to

Linda has $10 a month to spend on ice cream cones and chocolate bars.If the price of an ice cream cone is $2 a cone and the price of a chocolate bar is $1 a bar,which of the following is a point on Linda's budget line?

The figure above shows three budget lines. -Based on the figure above,which of the following would lead the consumer's budget line to shift from BL₀ to BL₁?

The marginal rate of substitution is equal to the magnitude of the

Diamonds have consumer surplus because .

In a preference map,consumption combinations on higher indifference curves

Sheryl is maximizing her utility.She notices that her marginal utility from the last package of bubble gum consumed is greater than her marginal utility from the last package of mints consumed.This result means that the

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 a budget line rotates inward and becomes steeper,then the

Why is the budget line negatively sloped?

Quantity (slices of pizza) Total utility 0 0 1 15 2 22 3 27 4 30 5 31 -The table above gives Matt's utility from consuming slices of pizza.His marginal utility from the 4th slice is

At all points on a demand curve,the i.consumer's budget has been allocated to maximize total utility. ii.quantity is the quantity demanded at each price when total utility is maximized. iii.price represents the marginal benefit the consumer gets from an extra unit of a good.

Diminishing marginal utility means that as more of a good is consumed,

Which of the following statements is correct?

John likes to spend Thursday nights playing pool and drinking soda.John's budget for Thursday nights is $10,a soda costs $2,and one game of pool costs $1. a.Draw a graph of John's budget line in the figure below. b.In your graph,label the affordable and unaffordable areas.

Does the fact that diamonds are so expensive imply that the demand curve for diamonds has a positive slope? Use marginal utility theory to answer the question.

-The figure above gives a consumer's budget line and two indifference curves. a.At which point is the marginal rate of substitution greater than the relative price? b.At which point is the marginal rate of substitution less than the relative price? c.Which point represents the consumer equilibrium?

-The table above gives Jessie's marginal utility and total utility from tacos.Complete the table.

What does the slope of the budget line equal?

-Tris is shopping for pants and belts.He has a budget of $100.The price of a pair of pants is $20 and the price of a belt is $5.His marginal utility schedules are above.What combination of pants and belts does Tris buy? Explain your answer.

Any point below a given indifference curve is

Box of doughnuts Homer's total utility 1 30 2 55 3 75 4 90 5 100 6 103 -The above table shows Homer's utility from boxes of doughnuts.The marginal utility that Homer receives from the third box of doughnuts is equal to

Linda has $10 a month to spend on ice cream cones and chocolate bars.If the price of an ice cream cone is $2 a cone and the price of a chocolate bar is $1 a bar,which of the following is a point on Linda's budget line?

The figure above shows three budget lines. -Based on the figure above,which of the following would lead the consumer's budget line to shift from BL₀ to BL₁?

The marginal rate of substitution is equal to the magnitude of the

Diamonds have ________ consumer surplus because ________.

In a preference map,consumption combinations on higher indifference curves

Sheryl is maximizing her utility.She notices that her marginal utility from the last package of bubble gum consumed is greater than her marginal utility from the last package of mints consumed.This result means that the

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

Diamonds have consumer surplus because .