Question 1

The utility-maximizing rule says that consumers must

Accepted Answer

A)  only allocate the entire available budget. 
B)  only make the marginal utility per dollar the same for all goods. 
C)  allocate the entire available budget and make the marginal utility per dollar the same for all goods. 
D)  either allocate the entire available budget or make the marginal utility per dollar the same for all goods but not both. 
E)  None of the above answers are correct. 
A)  only allocate the entire available budget. 
B)  only make the marginal utility per dollar the same for all goods. 
C)  allocate the entire available budget and make the marginal utility per dollar the same for all goods. 
D)  either allocate the entire available budget or make the marginal utility per dollar the same for all goods but not both. 
E)  None of the above answers are correct.

Question 2

Suppose the consumer has allocated his or her entire budget.Which of the following conditions is also required for total utility to be maximized?

Accepted Answer

A)  Marginal utility has decreased to zero for all goods. 
B)  The least inexpensive combination of goods has been purchased. 
C)  The marginal utility for each good is equal. 
D)  The marginal utility divided by price for each good is equal. 
E)  The number of units of each good consumed must be the same. 
A)  Marginal utility has decreased to zero for all goods. 
B)  The least inexpensive combination of goods has been purchased. 
C)  The marginal utility for each good is equal. 
D)  The marginal utility divided by price for each good is equal. 
E)  The number of units of each good consumed must be the same.

Question 3

Suppose that Hank consumes only Mountain Dew and pizza.If Hank's total utility from all amounts of both Mountain Dew and pizza double from what they were before,then Hank's demand for

Accepted Answer

A)  both goods must double. 
B)  one of the goods must double. 
C)  both goods must decrease by one-half. 
D)  one of the goods must decrease by one-half. 
E)  neither good changes. 
A)  both goods must double. 
B)  one of the goods must double. 
C)  both goods must decrease by one-half. 
D)  one of the goods must decrease by one-half. 
E)  neither good changes.

Question 4

"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 5

-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 6

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 BL₂?

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 7

A consumption point inside the budget line

Accepted Answer

A)  is unaffordable. 
B)  is possible to afford but has some unspent income. 
C)  shows that the consumer has chosen to spend all of his or her income on both products. 
D)  shows that the consumer spends income on only one of the goods. 
E)  is affordable and, because it is inside the budget line, means that all the person's budget has been spent. 
A)  is unaffordable. 
B)  is possible to afford but has some unspent income. 
C)  shows that the consumer has chosen to spend all of his or her income on both products. 
D)  shows that the consumer spends income on only one of the goods. 
E)  is affordable and, because it is inside the budget line, means that all the person's budget has been spent.

Question 8

"If Ivan says he is indifferent between the consumption of a new pair of jeans or a set of earrings,he means that he does not want either product." Is the previous analysis correct? Explain your answer.

Accepted Answer

The analysis is incorrect.The

Question 9

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 10

One reason why water is cheap compared to diamonds is because the

Accepted Answer

A)  marginal utility of water is enormous. 
B)  marginal utility of water is small. 
C)  total utility of water is enormous. 
D)  total utility of water is small. 
E)  total utility of water and diamonds must be equal but the marginal utility of water is much lower than the marginal utility of diamonds. 
A)  marginal utility of water is enormous. 
B)  marginal utility of water is small. 
C)  total utility of water is enormous. 
D)  total utility of water is small. 
E)  total utility of water and diamonds must be equal but the marginal utility of water is much lower than the marginal utility of diamonds.

Question 11

If you consume hot dogs and hamburgers and your budget increases,while the prices of hot dogs and hamburgers do not change,then your budget line

Accepted Answer

A)  does not change. 
B)  shifts outward and its slope does not change. 
C)  rotates outward and its slope changes. 
D)  shifts inward and its slope does not change. 
E)  rotates inward and its slope changes. 
A)  does not change. 
B)  shifts outward and its slope does not change. 
C)  rotates outward and its slope changes. 
D)  shifts inward and its slope does not change. 
E)  rotates inward and its slope changes.

Question 12

If the price of a good rises and the consumer's budget remains the same,what happens to the consumer's consumption possibilities?

Accepted Answer

The consumer's consumption possibilities

Question 13

"Water is very inexpensive.Thus the marginal and total utility of water is small." Analyze the previous statements.

Accepted Answer

Parts of the statement are true but a ke

Question 14

In an indifference curve/budget line diagram,a consumer's equilibrium consumption combination will occur

Accepted Answer

A)  always inside the budget line. 
B)  always outside the budget line. 
C)  always on the budget line. 
D)  sometimes on and sometimes inside the budget line depending on the indifference curves. 
E)  at the origin. 
A)  always inside the budget line. 
B)  always outside the budget line. 
C)  always on the budget line. 
D)  sometimes on and sometimes inside the budget line depending on the indifference curves. 
E)  at the origin.

Question 15

Moving along an indifference curve the

Accepted Answer

A)  marginal rate of substitution is constant. 
B)  consumer does not prefer one consumption point to another. 
C)  marginal rate of substitution is equal to 0. 
D)  consumer prefers some of the consumption points to others. 
E)  marginal rate of substitution for a good increases as more of the good is consumed. 
A)  marginal rate of substitution is constant. 
B)  consumer does not prefer one consumption point to another. 
C)  marginal rate of substitution is equal to 0. 
D)  consumer prefers some of the consumption points to others. 
E)  marginal rate of substitution for a good increases as more of the good is consumed.

Question 16

The figure above shows the markets for water and diamonds.
-Based on the figures above,it is the case that the consumer surplus from water ________ the consumer surplus from diamonds and the marginal utility from water ________ the marginal utility from diamonds.

Accepted Answer

A)  is equal to; is equal to 
B)  is larger than; is equal to 
C)  is larger than; is larger than 
D)  is larger than; is smaller than 
E)  is smaller than; is smaller than 
A)  is equal to; is equal to 
B)  is larger than; is equal to 
C)  is larger than; is larger than 
D)  is larger than; is smaller than 
E)  is smaller than; is smaller than

Question 17

Any point above a given indifference curve ________ affordable and is ________ to any point on the indifference curve.

Accepted Answer

A)  is not; inferior 
B)  might or might not be; preferred 
C)  is not; preferred 
D)  might or might not be; inferior 
E)  is; preferred 
A)  is not; inferior 
B)  might or might not be; preferred 
C)  is not; preferred 
D)  might or might not be; inferior 
E)  is; preferred

Question 18

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 19

If a consumer obtains 20 units of utility for the first unit consumed,10 for the second,and 5 for the third,what is the total utility of consuming three units?

Accepted Answer

A)  20 units 
B)  30 units 
C)  35 units 
D)  5 units 
E)  None of the above answers is correct. 
A)  20 units 
B)  30 units 
C)  35 units 
D)  5 units 
E)  None of the above answers is correct.

Question 20

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

The utility-maximizing rule says that consumers must

Suppose the consumer has allocated his or her entire budget.Which of the following conditions is also required for total utility to be maximized?

Suppose that Hank consumes only Mountain Dew and pizza.If Hank's total utility from all amounts of both Mountain Dew and pizza double from what they were before,then Hank's demand for

"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?

-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

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 BL₂?

A consumption point inside the budget line

"If Ivan says he is indifferent between the consumption of a new pair of jeans or a set of earrings,he means that he does not want either product." Is the previous analysis correct? Explain your answer.

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

One reason why water is cheap compared to diamonds is because the

If you consume hot dogs and hamburgers and your budget increases,while the prices of hot dogs and hamburgers do not change,then your budget line

If the price of a good rises and the consumer's budget remains the same,what happens to the consumer's consumption possibilities?

"Water is very inexpensive.Thus the marginal and total utility of water is small." Analyze the previous statements.

In an indifference curve/budget line diagram,a consumer's equilibrium consumption combination will occur

Moving along an indifference curve the

The figure above shows the markets for water and diamonds. -Based on the figures above,it is the case that the consumer surplus from water the consumer surplus from diamonds and the marginal utility from water the marginal utility from diamonds.

Any point above a given indifference curve affordable and is to any point on the indifference curve.

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

If a consumer obtains 20 units of utility for the first unit consumed,10 for the second,and 5 for the third,what is the total utility of consuming three units?

Getting Started

The Usand 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

The utility-maximizing rule says that consumers must

Suppose the consumer has allocated his or her entire budget.Which of the following conditions is also required for total utility to be maximized?

Suppose that Hank consumes only Mountain Dew and pizza.If Hank's total utility from all amounts of both Mountain Dew and pizza double from what they were before,then Hank's demand for

"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?

-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

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 BL₂?

A consumption point inside the budget line

"If Ivan says he is indifferent between the consumption of a new pair of jeans or a set of earrings,he means that he does not want either product." Is the previous analysis correct? Explain your answer.

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

One reason why water is cheap compared to diamonds is because the

If you consume hot dogs and hamburgers and your budget increases,while the prices of hot dogs and hamburgers do not change,then your budget line

If the price of a good rises and the consumer's budget remains the same,what happens to the consumer's consumption possibilities?

"Water is very inexpensive.Thus the marginal and total utility of water is small." Analyze the previous statements.

In an indifference curve/budget line diagram,a consumer's equilibrium consumption combination will occur

Moving along an indifference curve the

The figure above shows the markets for water and diamonds. -Based on the figures above,it is the case that the consumer surplus from water ________ the consumer surplus from diamonds and the marginal utility from water ________ the marginal utility from diamonds.

Any point above a given indifference curve ________ affordable and is ________ to any point on the indifference curve.

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

If a consumer obtains 20 units of utility for the first unit consumed,10 for the second,and 5 for the third,what is the total utility of consuming three units?

Getting Started

The Usand 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

The figure above shows the markets for water and diamonds. -Based on the figures above,it is the case that the consumer surplus from water the consumer surplus from diamonds and the marginal utility from water the marginal utility from diamonds.

Any point above a given indifference curve affordable and is to any point on the indifference curve.