Question 1

Why do consumers prefer higher indifference curves?

Accepted Answer

When comparing two indifference curves,i

Question 2

The figure above shows one of a consumer's indifference curves.
-The marginal rate of substitution (MRS)at point C equals

Accepted Answer

A)  4. 
B)  8. 
C)  2. 
D)  1/2. 
E)  More information is needed to calculate the MRS. 
A)  4. 
B)  8. 
C)  2. 
D)  1/2. 
E)  More information is needed to calculate the MRS.

Question 3

The paradox of value refers to the

Accepted Answer

A)  utility maximizing rule. 
B)  fact that water is vital but cheap while diamonds are relatively useless but expensive. 
C)  fact that consumers have different preferences and utility schedules. 
D)  law of demand. 
E)  issue of why the consumer surplus from water equals the consumer surplus from diamonds. 
A)  utility maximizing rule. 
B)  fact that water is vital but cheap while diamonds are relatively useless but expensive. 
C)  fact that consumers have different preferences and utility schedules. 
D)  law of demand. 
E)  issue of why the consumer surplus from water equals the consumer surplus from diamonds.

Question 4

A budget line shows the

Accepted Answer

A)  limits to production possibilities. 
B)  limits to production opportunities. 
C)  slope of the demand curve. 
D)  limits to consumption possibilities. 
E)  way the demand curve shifts if the consumer's budget changes. 
A)  limits to production possibilities. 
B)  limits to production opportunities. 
C)  slope of the demand curve. 
D)  limits to consumption possibilities. 
E)  way the demand curve shifts if the consumer's budget changes.

Question 5

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

Accepted Answer

A)  27 units. 
B)  5 units. 
C)  9 units. 
D)  11 units. 
E)  None of the above answers is correct. 
A)  27 units. 
B)  5 units. 
C)  9 units. 
D)  11 units. 
E)  None of the above answers is correct.

Question 6

-Which of the above figures reflects a decrease in the price of chicken?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
E)  Both Figure A and Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
E)  Both Figure A and Figure D

Question 7

Suppose the price of a pair of jeans is $25 and the price of a T-shirt is $15.The consumer's budget is entirely allocated.If the marginal utility from a pair of jeans is 100 units and the marginal utility from a T-shirt is 75 units,the consumer is

Accepted Answer

A)  in equilibrium because his or her utility is maximized. 
B)  not in equilibrium and should purchase fewer jeans and more T-shirts. 
C)  not in equilibrium and should purchase fewer T-shirts and more jeans. 
D)  not in equilibrium but should maintain the current level of purchases. 
E)  not in equilibrium and should purchase more T-shirts and more jeans. 
A)  in equilibrium because his or her utility is maximized. 
B)  not in equilibrium and should purchase fewer jeans and more T-shirts. 
C)  not in equilibrium and should purchase fewer T-shirts and more jeans. 
D)  not in equilibrium but should maintain the current level of purchases. 
E)  not in equilibrium and should purchase more T-shirts and more jeans.

Question 8

Mary is currently buying apples and oranges such that the last unit of apples has 30 units of utility and the last unit of oranges has 40 units of utility.She has allocated her entire budget.If the price of an apple is 10 cents and the price of an orange is 20 cents,to maximize her utility,what should Mary do?

Accepted Answer

A)  buy more apples and fewer oranges 
B)  buy more oranges and fewer apples 
C)  continue to buy the same amounts of both goods 
D)  buy fewer apples and fewer oranges 
E)  None of the above answers is correct. 
A)  buy more apples and fewer oranges 
B)  buy more oranges and fewer apples 
C)  continue to buy the same amounts of both goods 
D)  buy fewer apples and fewer oranges 
E)  None of the above answers is correct.

Question 9

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (rentals per week) }
\end{array} & \text { Total utility } & \begin{array} { c } 
\text { Marginal } \
\text { utility }
\end{array} \
\hline 0 & 0 & \mathrm { X } \
1 & 28 & - \
2 & 54 & - \
3 & 78 & - \
4 & 100 & - \
5 & 120 & - \
6 & 138 & \
7 & 154 & \
\hline
\end{array}$$
-Amy has the total utility values given above for video rentals a week.Complete the table by calculating her marginal utilities.

Accepted Answer

\[\begin{array} { c c c } 
\begin{array}

Question 10

$$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity of } \
\text { pizza }
\end{array} & \begin{array} { c } 
\text { Total utility } \
\text { from pizza }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Diet Pepsi }
\end{array} & \begin{array} { c } 
\text { Total utility } \
\text { from Diet } \
\text { Pepsi }
\end{array} \
\hline 0 & 0 & 0 & 0 \
\hline 1 & 24 & 1 & 14 \
\hline 2 & 44 & 2 & 26 \
\hline 3 & 60 & 3 & 36 \
\hline 4 & 72 & 4 & 44 \
\hline 5 & 76 & 5 & 50 \
\hline 6 & 79 & 6 & 54 \
\hline 7 & 80 & 7 & 56 \
\hline
\end{array}$$
-Suppose that you consume only pizza and Diet Pepsi.The table above gives your utility from consuming these two goods.What is the marginal utility you get from the fourth slice of pizza?

Accepted Answer

A)  36 
B)  18 
C)  12 
D)  4 
E)  72 
A)  36 
B)  18 
C)  12 
D)  4 
E)  72

Question 11

If the budget line rotates inward and becomes steeper,there is a

Accepted Answer

A)  higher opportunity cost of the good measured on the x-axis. 
B)  lower opportunity cost of the good measured on the x-axis. 
C)  larger budget. 
D)  higher price for the good measured on the y-axis. 
E)  lower price for the good measured on the x-axis. 
A)  higher opportunity cost of the good measured on the x-axis. 
B)  lower opportunity cost of the good measured on the x-axis. 
C)  larger budget. 
D)  higher price for the good measured on the y-axis. 
E)  lower price for the good measured on the x-axis.

Question 12

Mary likes to consume either pizza or spaghetti.She has $48 to spend on these meals.
a.One week the price of pizza is $8 and the price of spaghetti is $6.Mary uses the indifference curve analysis she learned in microeconomics to decide how much of each type of meal to buy.She puts pizza on the vertical axis and spaghetti on the horizontal axis.What is the marginal rate of substitution at the combination of pizza and spaghetti that Mary chooses?
b.The next week,the price of pizza is $6 and the price of spaghetti is $8 so Mary adjusts her consumption combination to maximize her total utility.What is her marginal rate of substitution now?

Accepted Answer

a.The marginal rate of substitution is e

Question 13

-The above figure shows one of Cheri's indifference curves.Suppose point a represents the best affordable point for Cheri.Cheri's best affordable point could move to point b if

Accepted Answer

A)  marginal utility increases. 
B)  total utility increases. 
C)  the price of a CD falls and the price of a book rises. 
D)  the price of a CD rises and the price of a book falls. 
E)  Cheri's budget increases. 
A)  marginal utility increases. 
B)  total utility increases. 
C)  the price of a CD falls and the price of a book rises. 
D)  the price of a CD rises and the price of a book falls. 
E)  Cheri's budget increases.

Question 14

For a consumer to maximize utility,in part the consumer must

Accepted Answer

A)  allocate the entire available budget. 
B)  make the marginal utility per dollar from each good as much different as possible for all goods. 
C)  make the marginal utility per dollar from each good as small as possible for all goods. 
D)  spend as little of the budget as possible. 
E)  Answers A and B are both correct. 
A)  allocate the entire available budget. 
B)  make the marginal utility per dollar from each good as much different as possible for all goods. 
C)  make the marginal utility per dollar from each good as small as possible for all goods. 
D)  spend as little of the budget as possible. 
E)  Answers A and B are both correct.

Question 15

When Bo is at his best affordable consumption point,his marginal rate of substitution is

Accepted Answer

A)  greater than the relative price. 
B)  equal to the relative price. 
C)  less than the relative price. 
D)  equal to one. 
E)  maximized. 
A)  greater than the relative price. 
B)  equal to the relative price. 
C)  less than the relative price. 
D)  equal to one. 
E)  maximized.

Question 16

Diminishing marginal utility means that

Accepted Answer

A)  marginal utility decreases as consumption decreases. 
B)  marginal utility increases as consumption increases. 
C)  marginal utility decreases as consumption increases. 
D)  total utility decreases as marginal utility decreases. 
E)  total utility decreases as marginal utility increases. 
A)  marginal utility decreases as consumption decreases. 
B)  marginal utility increases as consumption increases. 
C)  marginal utility decreases as consumption increases. 
D)  total utility decreases as marginal utility decreases. 
E)  total utility decreases as marginal utility increases.

Question 17

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.If Buffy increases her consumption of wooden stakes from 4 to 5 stakes,her marginal utility from the 5th stake is

Accepted Answer

A)  65. 
B)  7. 
C)  58. 
D)  7 ÷ 5 = 1.29. 
E)  None of the above answers is correct. 
A)  65. 
B)  7. 
C)  58. 
D)  7 ÷ 5 = 1.29. 
E)  None of the above answers is correct.

Question 18

$$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity of } \
\text { pizza }
\end{array} & \begin{array} { c } 
\text { Total utility } \
\text { from pizza }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Diet Pepsi }
\end{array} & \begin{array} { c } 
\text { Total utility } \
\text { from Diet } \
\text { Pepsi }
\end{array} \
\hline 0 & 0 & 0 & 0 \
\hline 1 & 24 & 1 & 14 \
\hline 2 & 44 & 2 & 26 \
\hline 3 & 60 & 3 & 36 \
\hline 4 & 72 & 4 & 44 \
\hline 5 & 76 & 5 & 50 \
\hline 6 & 79 & 6 & 54 \
\hline 7 & 80 & 7 & 56 \
\hline
\end{array}$$
-Suppose that you consume only pizza,which costs $4 per slice,and Diet Pepsi,which costs $2 each.The table above gives your utility from consuming these two goods.If your income is $14,which of the following consumption combinations will you choose?

Accepted Answer

A)  3 slices of pizza and 1 Diet Pepsi 
B)  2 slices of pizza and 3 Diet Pepsis 
C)  1 slice of pizza and 5 Diet Pepsis 
D)  0 slices of pizza and 7 Diet Pepsis 
E)  None of the above answers is correct. 
A)  3 slices of pizza and 1 Diet Pepsi 
B)  2 slices of pizza and 3 Diet Pepsis 
C)  1 slice of pizza and 5 Diet Pepsis 
D)  0 slices of pizza and 7 Diet Pepsis 
E)  None of the above answers is correct.

Question 19

In an indifference curve/budget line diagram,generally when the price of a good increases,the consumer purchases

Accepted Answer

A)  less of the good and moves to a lower indifference curve. 
B)  less of the good and moves to a higher indifference curve. 
C)  more of the good and moves to a higher indifference curve. 
D)  more of the good and moves to a lower indifference curve. 
E)  the same amount of the good and moves to a higher indifference curve. 
A)  less of the good and moves to a lower indifference curve. 
B)  less of the good and moves to a higher indifference curve. 
C)  more of the good and moves to a higher indifference curve. 
D)  more of the good and moves to a lower indifference curve. 
E)  the same amount of the good and moves to a higher indifference curve.

Question 20

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

Accepted Answer

A)  marginal utility per dollar from pizza decreases. 
B)  total utility increases. 
C)  purchases of pizza might increase. 
D)  marginal utility from all the slices of pizza he consumes decreases. 
E)  marginal utility per dollar from soda increases. 
A)  marginal utility per dollar from pizza decreases. 
B)  total utility increases. 
C)  purchases of pizza might increase. 
D)  marginal utility from all the slices of pizza he consumes decreases. 
E)  marginal utility per dollar from soda increases.

Why do consumers prefer higher indifference curves?

The figure above shows one of a consumer's indifference curves. -The marginal rate of substitution (MRS)at point C equals

The paradox of value refers to the

A budget line shows the

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 3rd slice is

-Which of the above figures reflects a decrease in the price of chicken?

Suppose the price of a pair of jeans is $25 and the price of a T-shirt is $15.The consumer's budget is entirely allocated.If the marginal utility from a pair of jeans is 100 units and the marginal utility from a T-shirt is 75 units,the consumer is

Quantity (rentals per week) Total utility Marginal utility 0 0 1 28 - 2 54 - 3 78 - 4 100 - 5 120 - 6 138 7 154 -Amy has the total utility values given above for video rentals a week.Complete the table by calculating her marginal utilities.

If the budget line rotates inward and becomes steeper,there is a

-The above figure shows one of Cheri's indifference curves.Suppose point a represents the best affordable point for Cheri.Cheri's best affordable point could move to point b if

For a consumer to maximize utility,in part the consumer must

When Bo is at his best affordable consumption point,his marginal rate of substitution is

Diminishing marginal utility means that

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.If Buffy increases her consumption of wooden stakes from 4 to 5 stakes,her marginal utility from the 5th stake is

In an indifference curve/budget line diagram,generally when the price of a good increases,the consumer purchases

Quantity Total utility Quantity Total utility 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 -The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.Suppose the price of a slice of pizza increases.As a result,Ali's

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The Economic Problem

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Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

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Exam 13: Consumer Choice and Demand

Why do consumers prefer higher indifference curves?

The figure above shows one of a consumer's indifference curves. -The marginal rate of substitution (MRS)at point C equals

The paradox of value refers to the

A budget line shows the

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 3rd slice is

-Which of the above figures reflects a decrease in the price of chicken?

Suppose the price of a pair of jeans is $25 and the price of a T-shirt is $15.The consumer's budget is entirely allocated.If the marginal utility from a pair of jeans is 100 units and the marginal utility from a T-shirt is 75 units,the consumer is

Quantity (rentals per week) Total utility Marginal utility 0 0 1 28 - 2 54 - 3 78 - 4 100 - 5 120 - 6 138 7 154 -Amy has the total utility values given above for video rentals a week.Complete the table by calculating her marginal utilities.

If the budget line rotates inward and becomes steeper,there is a

-The above figure shows one of Cheri's indifference curves.Suppose point a represents the best affordable point for Cheri.Cheri's best affordable point could move to point b if

For a consumer to maximize utility,in part the consumer must

When Bo is at his best affordable consumption point,his marginal rate of substitution is

Diminishing marginal utility means that

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.If Buffy increases her consumption of wooden stakes from 4 to 5 stakes,her marginal utility from the 5th stake is

In an indifference curve/budget line diagram,generally when the price of a good increases,the consumer purchases

Quantity Total utility Quantity Total utility 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 -The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.Suppose the price of a slice of pizza increases.As a result,Ali's

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