Question 1

If the price of the good measured on the x-axis becomes relatively cheaper,the budget line will

Accepted Answer

A)  become vertical. 
B)  become steeper. 
C)  become flatter. 
D)  become horizontal. 
E)  shift rightward and not change its slope. 
A)  become vertical. 
B)  become steeper. 
C)  become flatter. 
D)  become horizontal. 
E)  shift rightward and not change its slope.

Question 2

Juan's marginal utility from strawberries is 200 and his marginal utility from cream is 100.Juan spends all his budget.The price of strawberries is $5 per pound and the price of cream is $5 per pint.To maximize his utility,Juan should

Accepted Answer

A)  buy more cream and fewer strawberries. 
B)  buy less cream and more strawberries. 
C)  buy more cream and more strawberries. 
D)  buy less cream and fewer strawberries. 
E)  change nothing because Juan is maximizing his utility now. 
A)  buy more cream and fewer strawberries. 
B)  buy less cream and more strawberries. 
C)  buy more cream and more strawberries. 
D)  buy less cream and fewer strawberries. 
E)  change nothing because Juan is maximizing his utility now.

Question 3

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 4

If a consumer has allocated his or her budget and found the combination of goods where all marginal utilities divided by price are equal,what would happen if the consumer were forced to consume some other combination of goods? The consumer

Accepted Answer

A)  will definitely have higher total utility. 
B)  will definitely have lower total utility. 
C)  will definitely not experience any change in total utility. 
D)  might be have higher, lower, or the same total utility but more information is needed to determine which. 
E)  None of the above answers is correct. 
A)  will definitely have higher total utility. 
B)  will definitely have lower total utility. 
C)  will definitely not experience any change in total utility. 
D)  might be have higher, lower, or the same total utility but more information is needed to determine which. 
E)  None of the above answers is correct.

Question 5

To maximize utility,why does a consumer consume the combination of goods that equates marginal utility per dollar from the different goods rather than just equating the marginal utility of the different goods?

Accepted Answer

The consumer equates the marginal utilit

Question 6

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 7

-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 8

When the price of a good a consumer buys rises,the consumer's budget line

Accepted Answer

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

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

Using Gabriel's budget line and his indifference curves between horseback riding lessons and baseball lessons,and then changing the prices of each activity holding his income constant,which of the following can be derived?

Accepted Answer

A)  Gabriel's demand curve for each activity 
B)  Gabriel's supply curve for each activity 
C)  Gabriel's marginal benefit for each activity 
D)  Gabriel's net gain for each activity 
E)  Both answers A and B are correct. 
A)  Gabriel's demand curve for each activity 
B)  Gabriel's supply curve for each activity 
C)  Gabriel's marginal benefit for each activity 
D)  Gabriel's net gain for each activity 
E)  Both answers A and B are correct.

Question 11

Normally shaped indifference curves are bowed towards the origin of the graph.The reason for this shape is

Accepted Answer

A)  that indifference curves farther away from the origin represent higher levels of utility. 
B)  diminishing marginal rate of substitution. 
C)  the law of demand. 
D)  that the marginal rate of substitution is constant along an indifference curve. 
E)  the principle of diminishing marginal rate of relative price. 
A)  that indifference curves farther away from the origin represent higher levels of utility. 
B)  diminishing marginal rate of substitution. 
C)  the law of demand. 
D)  that the marginal rate of substitution is constant along an indifference curve. 
E)  the principle of diminishing marginal rate of relative price.

Question 12

The maximum price a consumer is willing to pay for an extra unit of a good or service when total utility is maximized is known as

Accepted Answer

A)  demand. 
B)  marginal benefit. 
C)  quantity demanded. 
D)  total utility. 
E)  marginal utility. 
A)  demand. 
B)  marginal benefit. 
C)  quantity demanded. 
D)  total utility. 
E)  marginal utility.

Question 13

If Mark's marginal utility per dollar from the last taco is 15 and his marginal utility per dollar from the last burrito is 20 units,what should Mark do to increase his total utility?

Accepted Answer

Mark should buy more burritos and fewer

Question 14

A curve that shows combinations of goods among which a consumer does not prefer one combination to another is

Accepted Answer

A)  a budget line. 
B)  an indifference curve. 
C)  a production possibilities curve. 
D)  a demand curve. 
E)  a marginal rate of substitution curve. 
A)  a budget line. 
B)  an indifference curve. 
C)  a production possibilities curve. 
D)  a demand curve. 
E)  a marginal rate of substitution curve.

Question 15

Any point below a given indifference curve is

Accepted Answer

A)  inferior to any point on the indifference curve. 
B)  preferred to any point on the indifference curve. 
C)  definitely affordable. 
D)  definitely unaffordable. 
E)  More information is needed to determine if the point is or is not affordable and if the point is or is not preferred. 
A)  inferior to any point on the indifference curve. 
B)  preferred to any point on the indifference curve. 
C)  definitely affordable. 
D)  definitely unaffordable. 
E)  More information is needed to determine if the point is or is not affordable and if the point is or is not preferred.

Question 16

The marginal rate of substitution for the good on the horizontal axis is

Accepted Answer

A)  the consumer surplus. 
B)  the same as the consumer's budget line. 
C)  equal to the magnitude of the slope of the indifference curve. 
D)  equal to the magnitude of the slope of the consumer surplus curve. 
E)  equal to 1.0 if the indifference curves are linear. 
A)  the consumer surplus. 
B)  the same as the consumer's budget line. 
C)  equal to the magnitude of the slope of the indifference curve. 
D)  equal to the magnitude of the slope of the consumer surplus curve. 
E)  equal to 1.0 if the indifference curves are linear.

Question 17

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 18

Assume that there are two goods,x and y.The quantity of good x is measured on the x-axis and the quantity of good y is measured on the y-axis.If the price of good y rises,then the

Accepted Answer

A)  y-axis intercept of the budget line increases. 
B)  y-axis intercept of the budget line increases and the x-axis intercept of the budget line decreases. 
C)  y-axis intercept of the budget line decreases and the x-axis intercept does not change. 
D)  slope of the budget line changes. 
E)  Both answers C and D are correct. 
A)  y-axis intercept of the budget line increases. 
B)  y-axis intercept of the budget line increases and the x-axis intercept of the budget line decreases. 
C)  y-axis intercept of the budget line decreases and the x-axis intercept does not change. 
D)  slope of the budget line changes. 
E)  Both answers C and D are correct.

Question 19

One reason why the price of diamonds is so high is because the

Accepted Answer

A)  marginal utility of diamonds is zero. 
B)  marginal utility of diamonds is high. 
C)  marginal utility of diamonds is low. 
D)  total utility of diamonds is low. 
E)  total utility of diamonds is high. 
A)  marginal utility of diamonds is zero. 
B)  marginal utility of diamonds is high. 
C)  marginal utility of diamonds is low. 
D)  total utility of diamonds is low. 
E)  total utility of diamonds is high.

Question 20

The price of coffee increases because of low crop yields.If the consumer's utility schedule for coffee remains constant,we can predict that coffee consumption

Accepted Answer

A)  will increase. 
B)  will decrease. 
C)  will stay the same. 
D)  will increase if the marginal utility of coffee diminishes and will decrease if the marginal utility of coffee increases. 
E)  might change but we need more information to determine if it increased, decreased, or did not change. 
A)  will increase. 
B)  will decrease. 
C)  will stay the same. 
D)  will increase if the marginal utility of coffee diminishes and will decrease if the marginal utility of coffee increases. 
E)  might change but we need more information to determine if it increased, decreased, or did not change.

If the price of the good measured on the x-axis becomes relatively cheaper,the budget line will

Juan's marginal utility from strawberries is 200 and his marginal utility from cream is 100.Juan spends all his budget.The price of strawberries is $5 per pound and the price of cream is $5 per pint.To maximize his utility,Juan should

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

If a consumer has allocated his or her budget and found the combination of goods where all marginal utilities divided by price are equal,what would happen if the consumer were forced to consume some other combination of goods? The consumer

To maximize utility,why does a consumer consume the combination of goods that equates marginal utility per dollar from the different goods rather than just equating the marginal utility of the different goods?

In economics,utility

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

When the price of a good a consumer buys rises,the consumer's budget line

-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?

Using Gabriel's budget line and his indifference curves between horseback riding lessons and baseball lessons,and then changing the prices of each activity holding his income constant,which of the following can be derived?

Normally shaped indifference curves are bowed towards the origin of the graph.The reason for this shape is

The maximum price a consumer is willing to pay for an extra unit of a good or service when total utility is maximized is known as

If Mark's marginal utility per dollar from the last taco is 15 and his marginal utility per dollar from the last burrito is 20 units,what should Mark do to increase his total utility?

A curve that shows combinations of goods among which a consumer does not prefer one combination to another is

Any point below a given indifference curve is

The marginal rate of substitution for the good on the horizontal axis is

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

Assume that there are two goods,x and y.The quantity of good x is measured on the x-axis and the quantity of good y is measured on the y-axis.If the price of good y rises,then the

One reason why the price of diamonds is so high is because the

The price of coffee increases because of low crop yields.If the consumer's utility schedule for coffee remains constant,we can predict that coffee consumption

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

If the price of the good measured on the x-axis becomes relatively cheaper,the budget line will

Juan's marginal utility from strawberries is 200 and his marginal utility from cream is 100.Juan spends all his budget.The price of strawberries is $5 per pound and the price of cream is $5 per pint.To maximize his utility,Juan should

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

If a consumer has allocated his or her budget and found the combination of goods where all marginal utilities divided by price are equal,what would happen if the consumer were forced to consume some other combination of goods? The consumer

To maximize utility,why does a consumer consume the combination of goods that equates marginal utility per dollar from the different goods rather than just equating the marginal utility of the different goods?

In economics,utility

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

When the price of a good a consumer buys rises,the consumer's budget line

-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?

Using Gabriel's budget line and his indifference curves between horseback riding lessons and baseball lessons,and then changing the prices of each activity holding his income constant,which of the following can be derived?

Normally shaped indifference curves are bowed towards the origin of the graph.The reason for this shape is

The maximum price a consumer is willing to pay for an extra unit of a good or service when total utility is maximized is known as

If Mark's marginal utility per dollar from the last taco is 15 and his marginal utility per dollar from the last burrito is 20 units,what should Mark do to increase his total utility?

A curve that shows combinations of goods among which a consumer does not prefer one combination to another is

Any point below a given indifference curve is

The marginal rate of substitution for the good on the horizontal axis is

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

Assume that there are two goods,x and y.The quantity of good x is measured on the x-axis and the quantity of good y is measured on the y-axis.If the price of good y rises,then the

One reason why the price of diamonds is so high is because the

The price of coffee increases because of low crop yields.If the consumer's utility schedule for coffee remains constant,we can predict that coffee consumption

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