Question 1

We have asked Mac to rank his preferences between three market baskets,A,B,and C.If Mac prefers B to C but does not care if he gets A or B,then

Accepted Answer

A)  A is on a higher indifference curve than B. 
B)  B and C are on the same indifference curve. 
C)  Both A and B are on a higher indifference curve than C. 
D)  C is on a higher indifference curve than A. 
E)  B is on a higher indifference curve than C but it is not possible to determine whether C is on a higher, lower, or the same indifference curve as A. 
A)  A is on a higher indifference curve than B. 
B)  B and C are on the same indifference curve. 
C)  Both A and B are on a higher indifference curve than C. 
D)  C is on a higher indifference curve than A. 
E)  B is on a higher indifference curve than C but it is not possible to determine whether C is on a higher, lower, or the same indifference curve as A.

Question 2

At the best affordable point,

Accepted Answer

A)  the marginal rate of substitution reaches its minimum value. 
B)  relative prices reach their minimum value. 
C)  the marginal rate of substitution equals the relative price. 
D)  the marginal rate of substitution equals real income. 
E)  the marginal rate of substitution reaches its maximum value. 
A)  the marginal rate of substitution reaches its minimum value. 
B)  relative prices reach their minimum value. 
C)  the marginal rate of substitution equals the relative price. 
D)  the marginal rate of substitution equals real income. 
E)  the marginal rate of substitution reaches its maximum value.

Question 3

-The figure above shows a consumer's budget line between sodas and DVD rentals.Point d represents an

Accepted Answer

A)  affordable combination of sodas and DVDs that spends the entire budget. 
B)  affordable combination of sodas and DVDs that does not spend the entire budget. 
C)  unaffordable combination of sodas and DVDs. 
D)  affordable combination of sodas and DVDs but whether it spends the entire budget cannot be determined from the figure. 
E)  None of the above answers is correct. 
A)  affordable combination of sodas and DVDs that spends the entire budget. 
B)  affordable combination of sodas and DVDs that does not spend the entire budget. 
C)  unaffordable combination of sodas and DVDs. 
D)  affordable combination of sodas and DVDs but whether it spends the entire budget cannot be determined from the figure. 
E)  None of the above answers is correct.

Question 4

In the paradox of value between expensive diamonds and inexpensive water,we see that

Accepted Answer

A)  the consumer surpluses are very high for both goods. 
B)  diamonds have a low consumer surplus while water has a high consumer surplus. 
C)  diamonds have a high consumer surplus while water has a low consumer surplus. 
D)  the consumer surpluses are very low for both goods. 
E)  the consumer surpluses for the two goods cannot be compared. 
A)  the consumer surpluses are very high for both goods. 
B)  diamonds have a low consumer surplus while water has a high consumer surplus. 
C)  diamonds have a high consumer surplus while water has a low consumer surplus. 
D)  the consumer surpluses are very low for both goods. 
E)  the consumer surpluses for the two goods cannot be compared.

Question 5

Marginal utility per dollar is calculated by ________ the price of the good.

Accepted Answer

A)  multiplying the marginal utility from a good by 
B)  dividing the marginal utility from a good by 
C)  multiplying the total utility from a good by 
D)  dividing the total utility from a good by 
E)  averaging the marginal utility from the good with 
A)  multiplying the marginal utility from a good by 
B)  dividing the marginal utility from a good by 
C)  multiplying the total utility from a good by 
D)  dividing the total utility from a good by 
E)  averaging the marginal utility from the good with

Question 6

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

Accepted Answer

A)  rail 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 answer B and answer C are correct. 
E)  Answer A, answer B, and answer C are correct. 
A)  rail 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 answer B and answer C are correct. 
E)  Answer A, answer B, and answer C are correct.

Question 7

Explain how changes in the price of goods and the consumer's budget affect the budget line.

Accepted Answer

If the price of the good measured on the

Question 8

The solution to the paradox of value is found by looking at which of the following?

Accepted Answer

A)  total usefulness of different goods 
B)  the difference between marginal utility and total utility 
C)  relative prices and total utility 
D)  the difference between marginal utility and price 
E)  None of the above helps solve the paradox of value. 
A)  total usefulness of different goods 
B)  the difference between marginal utility and total utility 
C)  relative prices and total utility 
D)  the difference between marginal utility and price 
E)  None of the above helps solve the paradox of value.

Question 9

Diminishing marginal utility means that an increase in the consumption of a good leads to

Accepted Answer

A)  a decrease in total utility. 
B)  a decrease in marginal utility. 
C)  a decrease in the fall of the price of the good. 
D)  a decrease in the consumer's budget. 
E)  an increase in the consumer's budget. 
A)  a decrease in total utility. 
B)  a decrease in marginal utility. 
C)  a decrease in the fall of the price of the good. 
D)  a decrease in the consumer's budget. 
E)  an increase in the consumer's budget.

Question 10

-The figure above shows a consumer's budget line between sodas and DVD rentals.Point b represents an

Accepted Answer

A)  affordable combination of sodas and DVDs that spends the entire budget. 
B)  affordable combination of sodas and DVDs that does not spend the entire budget. 
C)  unaffordable combination of sodas and DVDs. 
D)  affordable combination of sodas and DVDs but whether it spends the entire budget cannot be determined from the figure. 
E)  None of the above answers is correct. 
A)  affordable combination of sodas and DVDs that spends the entire budget. 
B)  affordable combination of sodas and DVDs that does not spend the entire budget. 
C)  unaffordable combination of sodas and DVDs. 
D)  affordable combination of sodas and DVDs but whether it spends the entire budget cannot be determined from the figure. 
E)  None of the above answers is correct.

Question 11

13.6 Appendix Figures
   
The figure above shows three of a consumer's indifference curves.
-Which of the following are true?
i.Points C and G are equally preferred because they lie on the same indifference curve.
ii.Points C and J are equally preferred because on them the consumption of chewing gum is equal.
iii.Points G and J are equally preferred because on them the consumption of water is equal.

Accepted Answer

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

Question 12

-Give the data in the above table,what is the marginal utility of the third quart of ice cream?

Accepted Answer

A)  80 
B)  70 
C)  60 
D)  230 
E)  210 
A)  80 
B)  70 
C)  60 
D)  230 
E)  210

Question 13

The consumption of bottled water increased dramatically during the 1990s.If consumers' utility schedules for water remained constant over this time period,in order for consumers to stay in equilibrium,the price of bottled water must have ________.

Accepted Answer

A)  risen because marginal utility increased since people consumed more bottled water 
B)  fallen 
C)  remained constant because the marginal utility schedule did not change 
D)  risen because the supply of water must have increased 
E)  We don't have enough information to say what happened to the price. 
A)  risen because marginal utility increased since people consumed more bottled water 
B)  fallen 
C)  remained constant because the marginal utility schedule did not change 
D)  risen because the supply of water must have increased 
E)  We don't have enough information to say what happened to the price.

Question 14

You can use marginal utility theory to find the demand curve by changing

Accepted Answer

A)  only the price of one good. 
B)  only income. 
C)  the utility schedule. 
D)  only the prices of both goods. 
E)  income and the prices of both goods. 
A)  only the price of one good. 
B)  only income. 
C)  the utility schedule. 
D)  only the prices of both goods. 
E)  income and the prices of both goods.

Question 15

-The table above gives the utility Andy receives from different quantities of vanilla ice cream cones.Complete the table.

Accepted Answer

@#IMG-DLM& The compl

Question 16

If the total utility of 2 bags of chips is 25,the total utility of 3 bags is 33,and the total utility of 4 bags is 40 units,then the marginal utility of the 3rd and 4th bags are

Accepted Answer

A)  8 and 7, respectively. 
B)  12.5 and 11, respectively. 
C)  11 and 10, respectively. 
D)  58 and 73, respectively. 
E)  33 and 40, respectively. 
A)  8 and 7, respectively. 
B)  12.5 and 11, respectively. 
C)  11 and 10, respectively. 
D)  58 and 73, respectively. 
E)  33 and 40, respectively.

Question 17

If the price of steak rises,a consumer who had been maximizing his or her utility before will buy less steak because its

Accepted Answer

A)  total utility falls. 
B)  ratio of marginal utility to price is now less than that for other goods. 
C)  marginal utility has fallen. 
D)  ratio of marginal utility to total utility falls. 
E)  ratio of marginal utility to price is now larger than that for other goods. 
A)  total utility falls. 
B)  ratio of marginal utility to price is now less than that for other goods. 
C)  marginal utility has fallen. 
D)  ratio of marginal utility to total utility falls. 
E)  ratio of marginal utility to price is now larger than that for other goods.

Question 18

"Because the price of a diamond is much greater than the price of a gallon of water,the consumer surplus from diamonds is greater than the consumer surplus from water." Is the previous analysis correct? Explain your answer.

Accepted Answer

No,the analysis is incorrect.The paradox

Question 19

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 20

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each,steaks cost $10 each.With this level of income,which consumption points are not possible?

Accepted Answer

A)  200 lures, 0 steaks 
B)  100 lures, 60 steaks 
C)  80 lures, 20 steaks 
D)  0 lures, 50 steaks 
E)  50 lures, 50 steaks 
A)  200 lures, 0 steaks 
B)  100 lures, 60 steaks 
C)  80 lures, 20 steaks 
D)  0 lures, 50 steaks 
E)  50 lures, 50 steaks

We have asked Mac to rank his preferences between three market baskets,A,B,and C.If Mac prefers B to C but does not care if he gets A or B,then

At the best affordable point,

-The figure above shows a consumer's budget line between sodas and DVD rentals.Point d represents an

In the paradox of value between expensive diamonds and inexpensive water,we see that

Marginal utility per dollar is calculated by ________ the price of the good.

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

Explain how changes in the price of goods and the consumer's budget affect the budget line.

The solution to the paradox of value is found by looking at which of the following?

Diminishing marginal utility means that an increase in the consumption of a good leads to

-The figure above shows a consumer's budget line between sodas and DVD rentals.Point b represents an

-Give the data in the above table,what is the marginal utility of the third quart of ice cream?

The consumption of bottled water increased dramatically during the 1990s.If consumers' utility schedules for water remained constant over this time period,in order for consumers to stay in equilibrium,the price of bottled water must have ________.

You can use marginal utility theory to find the demand curve by changing

-The table above gives the utility Andy receives from different quantities of vanilla ice cream cones.Complete the table.

If the total utility of 2 bags of chips is 25,the total utility of 3 bags is 33,and the total utility of 4 bags is 40 units,then the marginal utility of the 3rd and 4th bags are

If the price of steak rises,a consumer who had been maximizing his or her utility before will buy less steak because its

"Because the price of a diamond is much greater than the price of a gallon of water,the consumer surplus from diamonds is greater than the consumer surplus from water." Is the previous analysis correct? Explain your answer.

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each,steaks cost $10 each.With this level of income,which consumption points are not possible?

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

We have asked Mac to rank his preferences between three market baskets,A,B,and C.If Mac prefers B to C but does not care if he gets A or B,then

At the best affordable point,

-The figure above shows a consumer's budget line between sodas and DVD rentals.Point d represents an

In the paradox of value between expensive diamonds and inexpensive water,we see that

Marginal utility per dollar is calculated by ________ the price of the good.

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

Explain how changes in the price of goods and the consumer's budget affect the budget line.

The solution to the paradox of value is found by looking at which of the following?

Diminishing marginal utility means that an increase in the consumption of a good leads to

-The figure above shows a consumer's budget line between sodas and DVD rentals.Point b represents an

-Give the data in the above table,what is the marginal utility of the third quart of ice cream?

The consumption of bottled water increased dramatically during the 1990s.If consumers' utility schedules for water remained constant over this time period,in order for consumers to stay in equilibrium,the price of bottled water must have ________.

You can use marginal utility theory to find the demand curve by changing

-The table above gives the utility Andy receives from different quantities of vanilla ice cream cones.Complete the table.

If the total utility of 2 bags of chips is 25,the total utility of 3 bags is 33,and the total utility of 4 bags is 40 units,then the marginal utility of the 3rd and 4th bags are

If the price of steak rises,a consumer who had been maximizing his or her utility before will buy less steak because its

"Because the price of a diamond is much greater than the price of a gallon of water,the consumer surplus from diamonds is greater than the consumer surplus from water." Is the previous analysis correct? Explain your answer.

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each,steaks cost $10 each.With this level of income,which consumption points are not possible?

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