Question 1

-In the above figure,I is an indifference curve.Moving from point a to point b,

Accepted Answer

A)  the marginal rate of substitution for books decreases. 
B)  the budget line rotates inward. 
C)  the budget line rotates outward. 
D)  there is diminishing total utility. 
E)  the marginal rate of substitution for books increases. 
A)  the marginal rate of substitution for books decreases. 
B)  the budget line rotates inward. 
C)  the budget line rotates outward. 
D)  there is diminishing total utility. 
E)  the marginal rate of substitution for books increases.

Question 2

-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 3

Brenda's marginal utility per dollar from the second hamburger is 20.Her marginal utility from the third hamburger would be

Accepted Answer

A)  less than 20. 
B)  more than 20. 
C)  equal to 20. 
D)  not comparable to the marginal utility per dollar from the second hamburger. 
E)  some amount, but we need more information to determine how it compares to 20. 
A)  less than 20. 
B)  more than 20. 
C)  equal to 20. 
D)  not comparable to the marginal utility per dollar from the second hamburger. 
E)  some amount, but we need more information to determine how it compares to 20.

Question 4

Paula is currently spending all of her budget and she finds that the marginal utility per dollar from dresses exceeds the marginal utility per dollar from hats.To maximize her utility,Paula should therefore buy

Accepted Answer

A)  more dresses and fewer hats. 
B)  more hats and fewer dresses. 
C)  more dresses and hats. 
D)  fewer dresses and hats. 
E)  probably change her purchases but more information is needed to determine if she should buy more or fewer dresses and hats. 
A)  more dresses and fewer hats. 
B)  more hats and fewer dresses. 
C)  more dresses and hats. 
D)  fewer dresses and hats. 
E)  probably change her purchases but more information is needed to determine if she should buy more or fewer dresses and hats.

Question 5

For a consumer to maximize utility,in part the consumer must

Accepted Answer

A)  allocate the entire available budget. 
B)  make the marginal utility per dollar from each good as much different as possible for all goods. 
C)  make the marginal utility per dollar from each good as small as possible for all goods. 
D)  spend as little of the budget as possible. 
E)  Answers A and B are both correct. 
A)  allocate the entire available budget. 
B)  make the marginal utility per dollar from each good as much different as possible for all goods. 
C)  make the marginal utility per dollar from each good as small as possible for all goods. 
D)  spend as little of the budget as possible. 
E)  Answers A and B are both correct.

Question 6

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 7

-Suppose that you consume only pizza,which costs $4 per slice,and Diet Pepsi,which costs $2 each.The table above gives your utility from consuming these two goods.If your income is $14,which of the following consumption combinations will you choose?

Accepted Answer

A)  3 slices of pizza and 1 Diet Pepsi 
B)  2 slices of pizza and 3 Diet Pepsis 
C)  1 slice of pizza and 5 Diet Pepsis 
D)  0 slices of pizza and 7 Diet Pepsis 
E)  None of the above answers are correct. 
A)  3 slices of pizza and 1 Diet Pepsi 
B)  2 slices of pizza and 3 Diet Pepsis 
C)  1 slice of pizza and 5 Diet Pepsis 
D)  0 slices of pizza and 7 Diet Pepsis 
E)  None of the above answers are correct.

Question 8

Jen consumes 5 CDs and 2 tacos.She receives 500 units of utility from her 5th CD and 200 units of utility from her 2nd taco.The price of a CD is $10,the price of a taco is $4,and she is spending her entire budget.Which of the following is true regarding Jen's choices?

Accepted Answer

A)  Jen is consuming on her demand curve for tacos. 
B)  Jen is maximizing utility. 
C)  Jen is consuming on her demand curve for CDs. 
D)  Only answers A and B are correct 
E)  Answers A, B, and C are correct. 
A)  Jen is consuming on her demand curve for tacos. 
B)  Jen is maximizing utility. 
C)  Jen is consuming on her demand curve for CDs. 
D)  Only answers A and B are correct 
E)  Answers A, B, and C are correct.

Question 9

Suppose a consumer has $100 to spend on two goods,shoes and shirts.If the price of a pair of shoes is $20 per pair and the price of a shirt is $15 each,which of the following combinations is unaffordable to the consumer?

Accepted Answer

A)  5 pairs of shoes and 0 shirts 
B)  2 pairs of shoes and 4 shirts 
C)  0 pairs of shoes and 7 shirts 
D)  2 pairs of shoes and 3 shirts 
E)  0 pairs of shoes and 0 shirts 
A)  5 pairs of shoes and 0 shirts 
B)  2 pairs of shoes and 4 shirts 
C)  0 pairs of shoes and 7 shirts 
D)  2 pairs of shoes and 3 shirts 
E)  0 pairs of shoes and 0 shirts

Question 10

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 11

In a month,Samantha consumes the quantity of lobster dinners so that her marginal utility from a lobster dinner is 500 units.The price of a lobster dinner is $25.She also is consuming the quantity of spaghetti dinners so that its marginal utility is 300 units,while its price is $15.Samantha is allocating her entire budget.What should she do to maximize her total utility?

Accepted Answer

A)  consume more lobster dinners and fewer spaghetti dinners 
B)  consume more spaghetti dinners and fewer lobster dinners 
C)  consume the current combination of lobster and spaghetti dinners 
D)  consume fewer lobster dinners and fewer spaghetti dinners 
E)  Not enough information is given to answer the question. 
A)  consume more lobster dinners and fewer spaghetti dinners 
B)  consume more spaghetti dinners and fewer lobster dinners 
C)  consume the current combination of lobster and spaghetti dinners 
D)  consume fewer lobster dinners and fewer spaghetti dinners 
E)  Not enough information is given to answer the question.

Question 12

-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.For Liz to maximize her utility,what combination of candy bars and potato chips should she eat?

Accepted Answer

A)  4 candy bars and 0 bags of potato chips 
B)  3 candy bars and 2 bags of potato chips 
C)  2 candy bars and 4 bags of potato chips 
D)  1 candy bar and 5 bags of potato chips 
E)  None of the above answers are correct. 
A)  4 candy bars and 0 bags of potato chips 
B)  3 candy bars and 2 bags of potato chips 
C)  2 candy bars and 4 bags of potato chips 
D)  1 candy bar and 5 bags of potato chips 
E)  None of the above answers are correct.

Question 13

Which of the following is shown by a budget line?
i.The combinations of goods a person can afford
ii.The production possibilities for a person
iii.The combinations of goods a person cannot afford

Accepted Answer

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

Question 14

The paradox of value refers to the

Accepted Answer

A)  utility maximizing rule. 
B)  fact that water is vital but cheap while diamonds are relatively useless but expensive. 
C)  fact that consumers have different preferences and utility schedules. 
D)  law of demand. 
E)  issue of why the consumer surplus from water equals the consumer surplus from diamonds. 
A)  utility maximizing rule. 
B)  fact that water is vital but cheap while diamonds are relatively useless but expensive. 
C)  fact that consumers have different preferences and utility schedules. 
D)  law of demand. 
E)  issue of why the consumer surplus from water equals the consumer surplus from diamonds.

Question 15

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 16

-Chase has a budget of $14 which he must allocate between steak and cranberry juice.The table gives his marginal utility and the marginal utility per dollar for both of those goods.The price of steak is $10 per serving and the price of cranberry juice is $2 per serving.To maximize his utility,Chase should buy

Accepted Answer

A)  2 servings of steak and 2 servings of cranberry juice. 
B)  2 servings of steak and 4 servings of cranberry juice. 
C)  1 serving of steak because this has the highest marginal utility. 
D)  1 serving of steak and 2 servings of cranberry juice. 
E)  4 servings of steak and 4 servings of cranberry juice. 
A)  2 servings of steak and 2 servings of cranberry juice. 
B)  2 servings of steak and 4 servings of cranberry juice. 
C)  1 serving of steak because this has the highest marginal utility. 
D)  1 serving of steak and 2 servings of cranberry juice. 
E)  4 servings of steak and 4 servings of cranberry juice.

Question 17

To resolve the paradox of value,you must

Accepted Answer

A)  compare price elasticities of demand across goods. 
B)  distinguish between marginal and total utility. 
C)  sacrifice efficiency. 
D)  minimize consumer surplus. 
E)  distinguish between marginal utility and price. 
A)  compare price elasticities of demand across goods. 
B)  distinguish between marginal and total utility. 
C)  sacrifice efficiency. 
D)  minimize consumer surplus. 
E)  distinguish between marginal utility and price.

Question 18

Which of the following statements is FALSE?

Accepted Answer

A)  A consumer has only one indifference curve. 
B)  A consumer possesses a preference map. 
C)  An indifference curve is a curve that shows the combination of goods among which a consumer is indifferent. 
D)  The marginal rate of substitution is equal to the magnitude of the slope of the indifference curve. 
E)  Diminishing marginal rate of substitution means that the marginal rate of substitution decreases as more of the good is consumed. 
A)  A consumer has only one indifference curve. 
B)  A consumer possesses a preference map. 
C)  An indifference curve is a curve that shows the combination of goods among which a consumer is indifferent. 
D)  The marginal rate of substitution is equal to the magnitude of the slope of the indifference curve. 
E)  Diminishing marginal rate of substitution means that the marginal rate of substitution decreases as more of the good is consumed.

Question 19

-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 20

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.As Buffy uses more stakes,the marginal utility of a stake ________ and as she uses more cloves of garlic,the marginal utility of a clove of garlic ________.

Accepted Answer

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

-In the above figure,I is an indifference curve.Moving from point a to point b,

-The table above gives Matt's utility from consuming slices of pizza.As Matt consumes more slices of pizza,he

Brenda's marginal utility per dollar from the second hamburger is 20.Her marginal utility from the third hamburger would be

Paula is currently spending all of her budget and she finds that the marginal utility per dollar from dresses exceeds the marginal utility per dollar from hats.To maximize her utility,Paula should therefore buy

For a consumer to maximize utility,in part the consumer must

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

-Suppose that you consume only pizza,which costs $4 per slice,and Diet Pepsi,which costs $2 each.The table above gives your utility from consuming these two goods.If your income is $14,which of the following consumption combinations will you choose?

Jen consumes 5 CDs and 2 tacos.She receives 500 units of utility from her 5th CD and 200 units of utility from her 2nd taco.The price of a CD is $10,the price of a taco is $4,and she is spending her entire budget.Which of the following is true regarding Jen's choices?

Suppose a consumer has $100 to spend on two goods,shoes and shirts.If the price of a pair of shoes is $20 per pair and the price of a shirt is $15 each,which of the following combinations is unaffordable to the consumer?

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

-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.For Liz to maximize her utility,what combination of candy bars and potato chips should she eat?

Which of the following is shown by a budget line? i.The combinations of goods a person can afford ii.The production possibilities for a person iii.The combinations of goods a person cannot afford

The paradox of value refers to the

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?

To resolve the paradox of value,you must

Which of the following statements is FALSE?

-Sam's total utility for bananas is in the table above.Sam's total utility shows that the law of diminishing marginal utility

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.As Buffy uses more stakes,the marginal utility of a stake and as she uses more cloves of garlic,the marginal utility of a clove of garlic .

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

-In the above figure,I is an indifference curve.Moving from point a to point b,

-The table above gives Matt's utility from consuming slices of pizza.As Matt consumes more slices of pizza,he

Brenda's marginal utility per dollar from the second hamburger is 20.Her marginal utility from the third hamburger would be

Paula is currently spending all of her budget and she finds that the marginal utility per dollar from dresses exceeds the marginal utility per dollar from hats.To maximize her utility,Paula should therefore buy

For a consumer to maximize utility,in part the consumer must

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

-Suppose that you consume only pizza,which costs $4 per slice,and Diet Pepsi,which costs $2 each.The table above gives your utility from consuming these two goods.If your income is $14,which of the following consumption combinations will you choose?

Jen consumes 5 CDs and 2 tacos.She receives 500 units of utility from her 5th CD and 200 units of utility from her 2nd taco.The price of a CD is $10,the price of a taco is $4,and she is spending her entire budget.Which of the following is true regarding Jen's choices?

Suppose a consumer has $100 to spend on two goods,shoes and shirts.If the price of a pair of shoes is $20 per pair and the price of a shirt is $15 each,which of the following combinations is unaffordable to the consumer?

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

-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.For Liz to maximize her utility,what combination of candy bars and potato chips should she eat?

Which of the following is shown by a budget line? i.The combinations of goods a person can afford ii.The production possibilities for a person iii.The combinations of goods a person cannot afford

The paradox of value refers to the

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?

To resolve the paradox of value,you must

Which of the following statements is FALSE?

-Sam's total utility for bananas is in the table above.Sam's total utility shows that the law of diminishing marginal utility

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.As Buffy uses more stakes,the marginal utility of a stake ________ and as she uses more cloves of garlic,the marginal utility of a clove of garlic ________.

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 table above shows Buffy's utility from wooden stakes and cloves of garlic.As Buffy uses more stakes,the marginal utility of a stake and as she uses more cloves of garlic,the marginal utility of a clove of garlic .