Question 1

A preference map is a set of

Accepted Answer

A)  indifference curves. 
B)  budget lines. 
C)  demand curves. 
D)  substitution curves. 
E)  marginal rate of substitution curves. 
A)  indifference curves. 
B)  budget lines. 
C)  demand curves. 
D)  substitution curves. 
E)  marginal rate of substitution curves.

Question 2

For Jack,the total utility from three shirts is 50 units and the marginal utility of one more shirt is 5.The total utility of four shirts is

Accepted Answer

A)  45. 
B)  55. 
C)  55/4. 
D)  55/5. 
E)  None of the above answers is correct. 
A)  45. 
B)  55. 
C)  55/4. 
D)  55/5. 
E)  None of the above answers is correct.

Question 3

$$\begin{array} { | c | c | } 
\hline \text { Box of doughnuts } & \text { Homer's total utility } \
\hline 1 & 30 \
\hline 2 & 55 \
\hline 3 & 75 \
\hline 4 & 90 \
\hline 5 & 100 \
\hline 6 & 103 \
\hline
\end{array}$$
-The above table shows Homer's utility from boxes of doughnuts.As Homer's consumption of doughnuts increases,his

Accepted Answer

A)  marginal utility is positive and increasing. 
B)  marginal utility is positive but decreasing. 
C)  marginal utility is negative but increasing. 
D)  marginal utility is negative and decreasing. 
E)  total utility is not related to his marginal utility. 
A)  marginal utility is positive and increasing. 
B)  marginal utility is positive but decreasing. 
C)  marginal utility is negative but increasing. 
D)  marginal utility is negative and decreasing. 
E)  total utility is not related to his marginal utility.

Question 4

Gertrude has a $15 budget to spend on soda and crackers.Soda costs $1 per bottle and crackers cost 50¢ each.If the price of soda increases to $2 per bottle,the ________ rotates inward and there is a movement along the ________.

Accepted Answer

A)  budget line; demand curve for crackers 
B)  demand curve; indifference curve for crackers 
C)  budget line; demand curve for soda 
D)  demand curve; indifference curve for soda 
E)  indifference curves; demand curve for soda 
A)  budget line; demand curve for crackers 
B)  demand curve; indifference curve for crackers 
C)  budget line; demand curve for soda 
D)  demand curve; indifference curve for soda 
E)  indifference curves; demand curve for soda

Question 5

The marginal rate of substitution of one good for another is measured by moving

Accepted Answer

A)  along an indifference curve. 
B)  among different indifference curves. 
C)  along a budget line. 
D)  among different budget lines. 
E)  along a demand curve. 
A)  along an indifference curve. 
B)  among different indifference curves. 
C)  along a budget line. 
D)  among different budget lines. 
E)  along a demand curve.

Question 6

The magnitude of the slope of an indifference curve at a particular point measures the

Accepted Answer

A)  total utility. 
B)  marginal utility. 
C)  marginal rate of substitution. 
D)  total rate of substitution. 
E)  demand. 
A)  total utility. 
B)  marginal utility. 
C)  marginal rate of substitution. 
D)  total rate of substitution. 
E)  demand.

Question 7

The point where an indifference curve just touches the budget line at one point

Accepted Answer

A)  is the best affordable point. 
B)  is where the marginal rate of substitution exceeds the relative price by as much as possible. 
C)  is a point on the consumer's supply of spending curve. 
D)  cannot be possible because indifference curves always cross the budget line at two points. 
E)  None of the above answers is correct. 
A)  is the best affordable point. 
B)  is where the marginal rate of substitution exceeds the relative price by as much as possible. 
C)  is a point on the consumer's supply of spending curve. 
D)  cannot be possible because indifference curves always cross the budget line at two points. 
E)  None of the above answers is correct.

Question 8

If Raul's marginal utility per dollar from bread is 25 and the marginal utility per dollar from butter is 30,

Accepted Answer

A)  Raul should purchase more butter and less bread to increase his total utility. 
B)  Raul's marginal utility from butter will fall if he buys more butter. 
C)  Raul's marginal utility from bread will rise if he buys less bread. 
D)  Only answers B and C are correct. 
E)  Answers A, B, and C are correct. 
A)  Raul should purchase more butter and less bread to increase his total utility. 
B)  Raul's marginal utility from butter will fall if he buys more butter. 
C)  Raul's marginal utility from bread will rise if he buys less bread. 
D)  Only answers B and C are correct. 
E)  Answers A, B, and C are correct.

Question 9

Why does the paradox of value between diamonds and water arise?

Accepted Answer

A)  because water has a low price and a low total utility, while diamonds have a high price and a high total utility 
B)  because water has a low price and a low marginal utility, while diamonds have a high price and a high marginal utility 
C)  because necessities like water are higher priced than luxuries like diamonds 
D)  because diamonds have a higher value to people even though water is essential to life 
E)  because water has a low price and a low total utility, while diamonds have a high price but also a low total utility 
A)  because water has a low price and a low total utility, while diamonds have a high price and a high total utility 
B)  because water has a low price and a low marginal utility, while diamonds have a high price and a high marginal utility 
C)  because necessities like water are higher priced than luxuries like diamonds 
D)  because diamonds have a higher value to people even though water is essential to life 
E)  because water has a low price and a low total utility, while diamonds have a high price but also a low total utility

Question 10

A budget line

Accepted Answer

A)  represents combinations of goods a consumer desires. 
B)  marks the boundary between what a consumer can afford and cannot afford. 
C)  has a positive slope. 
D)  is the same as the production possibilities frontier. 
E)  is the same as a demand curve. 
A)  represents combinations of goods a consumer desires. 
B)  marks the boundary between what a consumer can afford and cannot afford. 
C)  has a positive slope. 
D)  is the same as the production possibilities frontier. 
E)  is the same as a demand curve.

Question 11

An increase in a consumer's budget

Accepted Answer

A)  shifts the budget line outward and does not change its slope. 
B)  shifts the budget line inward and does not change its slope. 
C)  rotates the budget line outward around the point where it intersects the x-axis. 
D)  rotates the budget line inward around the point where it intersects the x-axis. 
E)  rotates the budget line outward around the point where it intersects the y-axis. 
A)  shifts the budget line outward and does not change its slope. 
B)  shifts the budget line inward and does not change its slope. 
C)  rotates the budget line outward around the point where it intersects the x-axis. 
D)  rotates the budget line inward around the point where it intersects the x-axis. 
E)  rotates the budget line outward around the point where it intersects the y-axis.

Question 12

In order to maximize his or her utility,a consumer must allocate his or her entire budget and

Accepted Answer

A)  buy the combination of goods that makes the marginal utility per dollar from all goods as small as possible. 
B)  buy the combination of goods that equalizes the total utility per dollar from all goods. 
C)  do nothing else because when the entire budget is allocated, utility is maximized. 
D)  buy the combination of goods that equalizes the marginal utility per dollar from all goods. 
E)  buy the combination of goods that makes the marginal utility per dollar from all goods as large as possible. 
A)  buy the combination of goods that makes the marginal utility per dollar from all goods as small as possible. 
B)  buy the combination of goods that equalizes the total utility per dollar from all goods. 
C)  do nothing else because when the entire budget is allocated, utility is maximized. 
D)  buy the combination of goods that equalizes the marginal utility per dollar from all goods. 
E)  buy the combination of goods that makes the marginal utility per dollar from all goods as large as possible.

Question 13

What is the "principle of diminishing marginal utility"?

Accepted Answer

As the consumption of a good or service

Question 14

Which of the following is the best statement of the paradox of value?

Accepted Answer

A)  Why does the amount people are willing to pay for a good vary with the amount consumed? 
B)  Why do some goods like water, which is necessary for life, have a low price while other goods like diamonds have a high price? 
C)  What is the logical relationship between value and price? 
D)  Why is efficiency so valuable for a society? 
E)  None of the above states the paradox of value. 
A)  Why does the amount people are willing to pay for a good vary with the amount consumed? 
B)  Why do some goods like water, which is necessary for life, have a low price while other goods like diamonds have a high price? 
C)  What is the logical relationship between value and price? 
D)  Why is efficiency so valuable for a society? 
E)  None of the above states the paradox of value.

Question 15

Which of the following statements is correct?

Accepted Answer

A)  Consumers have the ability to buy everything they desire. 
B)  A consumer's budget line shows the limits to what a consumer can buy. 
C)  A consumer's budget line shows the goods with the highest marginal utilities. 
D)  Rich consumers are unaffected by prices. 
E)  A budget line changes only if the person's budget changes. 
A)  Consumers have the ability to buy everything they desire. 
B)  A consumer's budget line shows the limits to what a consumer can buy. 
C)  A consumer's budget line shows the goods with the highest marginal utilities. 
D)  Rich consumers are unaffected by prices. 
E)  A budget line changes only if the person's budget changes.

Question 16

Suppose Lizzie consumes soda and pizza.If the last bottle of soda she drinks provides 100 units of utility per dollar while the last slice of pizza she eats provides 300 units of utility per dollar,

Accepted Answer

A)  the demand curve for soda must have shifted outward. 
B)  the demand curve for pizza must have shifted inward. 
C)  Lizzie should buy more pizza and less soda to maximize her utility. 
D)  the indifference curve for soda and pizza must have rotated inward. 
E)  the marginal rate of substitution between soda and pizza equals 3. 
A)  the demand curve for soda must have shifted outward. 
B)  the demand curve for pizza must have shifted inward. 
C)  Lizzie should buy more pizza and less soda to maximize her utility. 
D)  the indifference curve for soda and pizza must have rotated inward. 
E)  the marginal rate of substitution between soda and pizza equals 3.

Question 17

In order to draw Lucky's budget line,we need to know

Accepted Answer

A)  only Lucky's budget. 
B)  only the prices of the goods Lucky consumes. 
C)  both Lucky's budget and the prices of the goods Lucky consumes. 
D)  Lucky's budget, the prices of the goods lucky consumes, and the utilities of the goods Lucky does not consume. 
E)  the utilities of the goods Lucky consumes. 
A)  only Lucky's budget. 
B)  only the prices of the goods Lucky consumes. 
C)  both Lucky's budget and the prices of the goods Lucky consumes. 
D)  Lucky's budget, the prices of the goods lucky consumes, and the utilities of the goods Lucky does not consume. 
E)  the utilities of the goods Lucky consumes.

Question 18

You are studying with a friend and your friend says "A budget line shows the various combinations of two goods that can be purchased with the buyer's income at current prices." Is your friend's assessment correct or not?

Accepted Answer

Your friend's descri

Question 19

If the slope of the budget line changes,there must have been

Accepted Answer

A)  a change in the consumer's preferences. 
B)  an increase in the consumer's income. 
C)  a change in the price of at least one good. 
D)  a change in the price of both goods. 
E)  None of these could cause a change in the slope of the budget line. 
A)  a change in the consumer's preferences. 
B)  an increase in the consumer's income. 
C)  a change in the price of at least one good. 
D)  a change in the price of both goods. 
E)  None of these could cause a change in the slope of the budget line.

Question 20

How are total utility and marginal utility related?

Accepted Answer

Marginal utility is

A preference map is a set of

For Jack,the total utility from three shirts is 50 units and the marginal utility of one more shirt is 5.The total utility of four shirts 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.As Homer's consumption of doughnuts increases,his

Gertrude has a $15 budget to spend on soda and crackers.Soda costs $1 per bottle and crackers cost 50¢ each.If the price of soda increases to $2 per bottle,the rotates inward and there is a movement along the .

The marginal rate of substitution of one good for another is measured by moving

The magnitude of the slope of an indifference curve at a particular point measures the

The point where an indifference curve just touches the budget line at one point

If Raul's marginal utility per dollar from bread is 25 and the marginal utility per dollar from butter is 30,

Why does the paradox of value between diamonds and water arise?

A budget line

An increase in a consumer's budget

In order to maximize his or her utility,a consumer must allocate his or her entire budget and

What is the "principle of diminishing marginal utility"?

Which of the following is the best statement of the paradox of value?

Which of the following statements is correct?

Suppose Lizzie consumes soda and pizza.If the last bottle of soda she drinks provides 100 units of utility per dollar while the last slice of pizza she eats provides 300 units of utility per dollar,

In order to draw Lucky's budget line,we need to know

You are studying with a friend and your friend says "A budget line shows the various combinations of two goods that can be purchased with the buyer's income at current prices." Is your friend's assessment correct or not?

If the slope of the budget line changes,there must have been

How are total utility and marginal utility related?

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

A preference map is a set of

For Jack,the total utility from three shirts is 50 units and the marginal utility of one more shirt is 5.The total utility of four shirts 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.As Homer's consumption of doughnuts increases,his

Gertrude has a $15 budget to spend on soda and crackers.Soda costs $1 per bottle and crackers cost 50¢ each.If the price of soda increases to $2 per bottle,the ________ rotates inward and there is a movement along the ________.

The marginal rate of substitution of one good for another is measured by moving

The magnitude of the slope of an indifference curve at a particular point measures the

The point where an indifference curve just touches the budget line at one point

If Raul's marginal utility per dollar from bread is 25 and the marginal utility per dollar from butter is 30,

Why does the paradox of value between diamonds and water arise?

A budget line

An increase in a consumer's budget

In order to maximize his or her utility,a consumer must allocate his or her entire budget and

What is the "principle of diminishing marginal utility"?

Which of the following is the best statement of the paradox of value?

Which of the following statements is correct?

Suppose Lizzie consumes soda and pizza.If the last bottle of soda she drinks provides 100 units of utility per dollar while the last slice of pizza she eats provides 300 units of utility per dollar,

In order to draw Lucky's budget line,we need to know

You are studying with a friend and your friend says "A budget line shows the various combinations of two goods that can be purchased with the buyer's income at current prices." Is your friend's assessment correct or not?

If the slope of the budget line changes,there must have been

How are total utility and marginal utility related?

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

Gertrude has a $15 budget to spend on soda and crackers.Soda costs $1 per bottle and crackers cost 50¢ each.If the price of soda increases to $2 per bottle,the rotates inward and there is a movement along the .