Question 1

-Which of the above figures reflects an increase in the consumer's budget?

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 2

In economics,utility

Accepted Answer

A)  always decreases as income increases. 
B)  equals opportunity cost. 
C)  is an index of satisfaction. 
D)  is measured by the same units as relative price. 
E)  and relative price are the same thing. 
A)  always decreases as income increases. 
B)  equals opportunity cost. 
C)  is an index of satisfaction. 
D)  is measured by the same units as relative price. 
E)  and relative price are the same thing.

Question 3

An indifference curve is a line that shows

Accepted Answer

A)  combinations of goods among which a consumer is indifferent. 
B)  different combinations of goods a consumer is able to buy. 
C)  the indifference of consumers for the budget constraint. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct. 
A)  combinations of goods among which a consumer is indifferent. 
B)  different combinations of goods a consumer is able to buy. 
C)  the indifference of consumers for the budget constraint. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct.

Question 4

A consumer's demand for tuna can be found from an indifference curve diagram by doing which of the following?

Accepted Answer

A)  observing what happens to the consumption of tuna for different income levels 
B)  finding where the budget line is tangent to an indifference curve for one price of tuna 
C)  allowing the price of tuna to change and observing the different best, affordable levels of tuna 
D)  changing the indifference curves and seeing the changes in the quantity of tuna the consumer demands 
E)  It is impossible to derive a demand curve from an indifference curve graph. 
A)  observing what happens to the consumption of tuna for different income levels 
B)  finding where the budget line is tangent to an indifference curve for one price of tuna 
C)  allowing the price of tuna to change and observing the different best, affordable levels of tuna 
D)  changing the indifference curves and seeing the changes in the quantity of tuna the consumer demands 
E)  It is impossible to derive a demand curve from an indifference curve graph.

Question 5

The slope of the budget line can be interpreted as which of the following?

Accepted Answer

A)  an opportunity cost 
B)  the consumer's budget divided by the price of the good measured on the y-axis 
C)  the consumer's budget divided by the price of the good measured on the x-axis 
D)  the number of units of the good measured on the y-axis plus the number of units of the good measured on the x-axis 
E)  the budget necessary to buy the combinations of goods on the budget line 
A)  an opportunity cost 
B)  the consumer's budget divided by the price of the good measured on the y-axis 
C)  the consumer's budget divided by the price of the good measured on the x-axis 
D)  the number of units of the good measured on the y-axis plus the number of units of the good measured on the x-axis 
E)  the budget necessary to buy the combinations of goods on the budget line

Question 6

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (slices of pizza) }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { utility }
\end{array} \
\hline 0 & 0 \
1 & 15 \
2 & 22 \
3 & 27 \
4 & 30 \
5 & 31
\end{array}$$
-The table above gives Matt's utility from consuming slices of pizza.As Matt consumes more slices of pizza,he

Accepted Answer

A)  obtains greater amounts of marginal utility. 
B)  obtains less total utility. 
C)  has diminishing marginal utility. 
D)  has diminishing total utility. 
E)  has unchanging marginal utility. 
A)  obtains greater amounts of marginal utility. 
B)  obtains less total utility. 
C)  has diminishing marginal utility. 
D)  has diminishing total utility. 
E)  has unchanging marginal utility.

Question 7

"The marginal rate of substitution of the good measured along the x-axis increases as a consumer moves downward along an indifference curve." Is the previous statement correct or not?

Accepted Answer

The statement is incorrect bec

Question 8

$$\begin{array} { c c c c } 
\text { Quantity } & \text { Total utility } & \text { Quantity } & \text { Total utility } \
\hline 0 & 0 & 0 & 0 \
1 & 8 & 1 & 10 \
2 & 14 & 2 & 19 \
3 & 18 & 3 & 27 \
4 & 21 & 4 & 34 \
5 & 23 & 5 & 40 \
6 & 24 & 6 & 45
\end{array}$$
-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 slice of pizza is

Accepted Answer

A)  7. 
B)  3.50. 
C)  34. 
D)  17.50. 
E)  27. 
A)  7. 
B)  3.50. 
C)  34. 
D)  17.50. 
E)  27.

Question 9

-Liz consumes two goods,candy bars and potato chips.Her budget is $4 per day.The price of a candy bar is $1.00 and the price of a bag of chips is 50 cents.Her utility is in the table above.How much marginal utility per dollar does the 3rd bag of potato chips give Liz?

Accepted Answer

A)  18 
B)  4 
C)  8 
D)  36 
E)  We need more information to be able to answer the question. 
A)  18 
B)  4 
C)  8 
D)  36 
E)  We need more information to be able to answer the question.

Question 10

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

Accepted Answer

A)  holds because his marginal utility from bananas decreases as Sam eats more bananas. 
B)  does not hold because Sam's total utility does not reach its maximum. 
C)  does not hold because Sam's marginal utility does not decrease to zero. 
D)  holds because Sam's total utility from bananas increases as Sam eats more bananas. 
E)  None of the above answers is correct because there are no data for marginal utility with which to answer the question. 
A)  holds because his marginal utility from bananas decreases as Sam eats more bananas. 
B)  does not hold because Sam's total utility does not reach its maximum. 
C)  does not hold because Sam's marginal utility does not decrease to zero. 
D)  holds because Sam's total utility from bananas increases as Sam eats more bananas. 
E)  None of the above answers is correct because there are no data for marginal utility with which to answer the question.

Question 11

As Sam moves rightward along his indifference curve,his marginal rate of substitution for the good on the horizontal axis

Accepted Answer

A)  is diminishing. 
B)  is increasing. 
C)  remains constant. 
D)  shows the change in his income. 
E)  first increases and then diminishes. 
A)  is diminishing. 
B)  is increasing. 
C)  remains constant. 
D)  shows the change in his income. 
E)  first increases and then diminishes.

Question 12

What is the difference between a budget line and an indifference curve?

Accepted Answer

A)  One is measured in dollars while the other in units of goods. 
B)  One shows what is possible while the other shows what is preferred. 
C)  One shows a positive relationship, and the other shows a negative relationship. 
D)  The budget line is bowed in toward the origin, and the indifference curves are linear. 
E)  There is no difference. 
A)  One is measured in dollars while the other in units of goods. 
B)  One shows what is possible while the other shows what is preferred. 
C)  One shows a positive relationship, and the other shows a negative relationship. 
D)  The budget line is bowed in toward the origin, and the indifference curves are linear. 
E)  There is no difference.

Question 13

If one of the products a consumer buys rises in price,the consumer's budget line will

Accepted Answer

A)  shift farther away from the origin of the graph and not change its slope. 
B)  rotate inward, closer to the origin. 
C)  vanish. 
D)  undergo no change. 
E)  shift farther away from the origin of the graph and become steeper. 
A)  shift farther away from the origin of the graph and not change its slope. 
B)  rotate inward, closer to the origin. 
C)  vanish. 
D)  undergo no change. 
E)  shift farther away from the origin of the graph and become steeper.

Question 14

A consumer is in equilibrium when the

Accepted Answer

A)  consumer is buying any combination of goods and services on his or her budget line. 
B)  consumer is buying the combination of goods and services on the budget line and on the highest attainable indifference curve. 
C)  marginal rate of substitution is as small as possible. 
D)  marginal rate of substitution is as large as possible. 
E)  marginal rate of substitution exceeds the relative price of the two goods by as much as possible. 
A)  consumer is buying any combination of goods and services on his or her budget line. 
B)  consumer is buying the combination of goods and services on the budget line and on the highest attainable indifference curve. 
C)  marginal rate of substitution is as small as possible. 
D)  marginal rate of substitution is as large as possible. 
E)  marginal rate of substitution exceeds the relative price of the two goods by as much as possible.

Question 15

Suppose the quantity of burgers is on the horizontal axis and the quantity of bags of French fries is measured on the vertical axis and Carol's indifference curves are drawn in the graph.As Carol consumes more

Accepted Answer

A)  burgers, moving along an indifference curve her marginal rate of substitution for burgers decreases. 
B)  bags of fries, moving along an indifference curve her marginal rate of substitution for burgers decreases. 
C)  burgers and bags of fries moving along an indifference curve, Carol reaches her best affordable point. 
D)  of either good, moving along an indifference curve her marginal rate of substitution for burgers increases. 
E)  of both goods, moving from one indifference curve to a higher indifference curve, her marginal rate of substitution definitely does not change. 
A)  burgers, moving along an indifference curve her marginal rate of substitution for burgers decreases. 
B)  bags of fries, moving along an indifference curve her marginal rate of substitution for burgers decreases. 
C)  burgers and bags of fries moving along an indifference curve, Carol reaches her best affordable point. 
D)  of either good, moving along an indifference curve her marginal rate of substitution for burgers increases. 
E)  of both goods, moving from one indifference curve to a higher indifference curve, her marginal rate of substitution definitely does not change.

Question 16

Reb buys fishing lures and steaks.If his budget does not change and the price of a fishing lure decreases,the maximum number of fishing lures he can purchase ________ and the maximum number of steaks he can purchase ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  increases; does not change 
D)  decreases; increases 
E)  does not change; does not change 
A)  increases; increases 
B)  increases; decreases 
C)  increases; does not change 
D)  decreases; increases 
E)  does not change; does not change

Question 17

If you get 40 units of utility from eating the first bag of pretzels,30 from the second bag,and 20 from the third bag,the total utility of three bags of pretzels is ________ units of utility.

Accepted Answer

A)  40 
B)  70 
C)  90 
D)  50 
E)  20 
A)  40 
B)  70 
C)  90 
D)  50 
E)  20

Question 18

Luke enjoys eating tuna sashimi and drinking Pepsi.His consumer equilibrium occurs where his budget line

Accepted Answer

A)  just touches the lowest indifference curve at one point. 
B)  just touches the highest indifference curve at one point. 
C)  touches every indifference curve. 
D)  is below every indifference curve. 
E)  More information about Luke's budget is needed to determine his consumer equilibrium. 
A)  just touches the lowest indifference curve at one point. 
B)  just touches the highest indifference curve at one point. 
C)  touches every indifference curve. 
D)  is below every indifference curve. 
E)  More information about Luke's budget is needed to determine his consumer equilibrium.

Question 19

Timmy makes $100 per week as a taxidermist.He spends all this income to buy pizza and hair gel.The price of a pizza is $10 and the price of a bottle of hair gel is $4.If Timmy buys 5 bottles of hair gel,then he buys ________ pizzas.

Accepted Answer

A)  10 
B)  4 
C)  8 
D)  20 
E)  None of the above answers is correct. 
A)  10 
B)  4 
C)  8 
D)  20 
E)  None of the above answers is correct.

Question 20

-George has a $600 annual entertainment budget that he uses to buy trips to the movies and dinners at local restaurants.The figure above shows indifference curves and budget lines for these two goods.The price of a movie is $15.
a.Along budget line BL₁,what is the price of a dinner?
b.What combination of dinners and movies will George select along budget line BL₁?
c.Budget line BL₂ represents a change in the price of dinners from that along BL₁.What is the new price of dinners along this budget line?
d.What combination of dinners and movies will George select along budget line BL₂?
e.Use the information in this problem to give two points on George's demand curve for dinners.

Accepted Answer

a.George can buy 20 dinners and his inco

-Which of the above figures reflects an increase in the consumer's budget?

In economics,utility

An indifference curve is a line that shows

A consumer's demand for tuna can be found from an indifference curve diagram by doing which of the following?

The slope of the budget line can be interpreted as which of the following?

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.As Matt consumes more slices of pizza,he

"The marginal rate of substitution of the good measured along the x-axis increases as a consumer moves downward along an indifference curve." Is the previous statement correct or not?

-Liz consumes two goods,candy bars and potato chips.Her budget is $4 per day.The price of a candy bar is $1.00 and the price of a bag of chips is 50 cents.Her utility is in the table above.How much marginal utility per dollar does the 3rd bag of potato chips give Liz?

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 total utility shows that the law of diminishing marginal utility

As Sam moves rightward along his indifference curve,his marginal rate of substitution for the good on the horizontal axis

What is the difference between a budget line and an indifference curve?

If one of the products a consumer buys rises in price,the consumer's budget line will

A consumer is in equilibrium when the

Suppose the quantity of burgers is on the horizontal axis and the quantity of bags of French fries is measured on the vertical axis and Carol's indifference curves are drawn in the graph.As Carol consumes more

Reb buys fishing lures and steaks.If his budget does not change and the price of a fishing lure decreases,the maximum number of fishing lures he can purchase and the maximum number of steaks he can purchase .

If you get 40 units of utility from eating the first bag of pretzels,30 from the second bag,and 20 from the third bag,the total utility of three bags of pretzels is ________ units of utility.

Luke enjoys eating tuna sashimi and drinking Pepsi.His consumer equilibrium occurs where his budget line

Timmy makes $100 per week as a taxidermist.He spends all this income to buy pizza and hair gel.The price of a pizza is $10 and the price of a bottle of hair gel is $4.If Timmy buys 5 bottles of hair gel,then he buys ________ pizzas.

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

-Which of the above figures reflects an increase in the consumer's budget?

In economics,utility

An indifference curve is a line that shows

A consumer's demand for tuna can be found from an indifference curve diagram by doing which of the following?

The slope of the budget line can be interpreted as which of the following?

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.As Matt consumes more slices of pizza,he

"The marginal rate of substitution of the good measured along the x-axis increases as a consumer moves downward along an indifference curve." Is the previous statement correct or not?

-Liz consumes two goods,candy bars and potato chips.Her budget is $4 per day.The price of a candy bar is $1.00 and the price of a bag of chips is 50 cents.Her utility is in the table above.How much marginal utility per dollar does the 3rd bag of potato chips give Liz?

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 total utility shows that the law of diminishing marginal utility

As Sam moves rightward along his indifference curve,his marginal rate of substitution for the good on the horizontal axis

What is the difference between a budget line and an indifference curve?

If one of the products a consumer buys rises in price,the consumer's budget line will

A consumer is in equilibrium when the

Suppose the quantity of burgers is on the horizontal axis and the quantity of bags of French fries is measured on the vertical axis and Carol's indifference curves are drawn in the graph.As Carol consumes more

Reb buys fishing lures and steaks.If his budget does not change and the price of a fishing lure decreases,the maximum number of fishing lures he can purchase ________ and the maximum number of steaks he can purchase ________.

If you get 40 units of utility from eating the first bag of pretzels,30 from the second bag,and 20 from the third bag,the total utility of three bags of pretzels is ________ units of utility.

Luke enjoys eating tuna sashimi and drinking Pepsi.His consumer equilibrium occurs where his budget line

Timmy makes $100 per week as a taxidermist.He spends all this income to buy pizza and hair gel.The price of a pizza is $10 and the price of a bottle of hair gel is $4.If Timmy buys 5 bottles of hair gel,then he buys ________ pizzas.

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

Reb buys fishing lures and steaks.If his budget does not change and the price of a fishing lure decreases,the maximum number of fishing lures he can purchase and the maximum number of steaks he can purchase .