Question 1

If you win money in a casino you may be more likely to spend that money than your hard-earned cash. This is called:

Accepted Answer

A) compartmentalizing 
B) self control 
C) rule of thumb 
D) anchoring 
A) compartmentalizing 
B) self control 
C) rule of thumb 
D) anchoring A

Question 2

Suppose Carrie's utility function for clams is as follows: If she consumes 1 clam, she gets 10 units of total utility; for 2 clams, she gets 18 units of total utility; for 3 clams, she gets 24 units of total utility; for 4 clams, she gets 28 units of total utility; for 5 clams, she gets 30 units of total utility; and for 6 clams, she gets 26 units of total utility.

Accepted Answer

A) Carrie gets 9 units of marginal utility for the 2nd clam. 
B) Carrie gets 8 units of marginal utility for the 3rd clam. 
C) Carrie gets 7 units of marginal utility for the 4th clam. 
D) None of the above are true. 
A) Carrie gets 9 units of marginal utility for the 2nd clam. 
B) Carrie gets 8 units of marginal utility for the 3rd clam. 
C) Carrie gets 7 units of marginal utility for the 4th clam. 
D) None of the above are true. D

Question 3

Exhibit
A consumer is faced with choosing between hamburgers and milkshakes that are priced at $2 and $1, respectively. The marginal utility derived from each of the two goods is as follows:
  
-Refer to Exhibit. How many hamburgers and milkshakes will be consumed if the consumer maximizes his utility subject to $14 of income each week?

Accepted Answer

A) 4 hamburgers and 5 milkshakes 
B) 5 hamburgers and 4 milkshakes 
C) 4 hamburgers and 3 milkshakes 
D)  3 hamburgers and 4 milkshakes 
A) 4 hamburgers and 5 milkshakes 
B) 5 hamburgers and 4 milkshakes 
C) 4 hamburgers and 3 milkshakes 
D)  3 hamburgers and 4 milkshakes B

Question 4

When people make decisions based on pieces of information they are already given when they make a purchase, it is called

Accepted Answer

A) self control 
B) compartmentalizing 
C) anchoring 
D) endowment effect 
A) self control 
B) compartmentalizing 
C) anchoring 
D) endowment effect

Question 5

​Exhibit
​
  
-Refer to Exhibit. Which budget line depicts an increase in income?

Accepted Answer

A) (1) 
B) (2) 
C) (3) 
D) (4) 
A) (1) 
B) (2) 
C) (3) 
D) (4)

Question 6

​Exhibit
​
  
-Refer to Exhibit. Which budget line depicts a decrease in income?

Accepted Answer

A) (1) 
B) (2) 
C) (3) 
D) (4) 
A) (1) 
B) (2) 
C) (3) 
D) (4)

Question 7

When people alter their preferences when a choice is presented in a certain way, it is called:

Accepted Answer

A) anchoring 
B) framing 
C) the endowment effect 
D) compartmentalizing 
A) anchoring 
B) framing 
C) the endowment effect 
D) compartmentalizing

Question 8

Exhibit
A consumer is faced with choosing between hamburgers and milkshakes that are priced at $2 and $1, respectively. The marginal utility derived from each of the two goods is as follows:
  
-Refer to Exhibit. How many hamburgers and milkshakes will be consumed each if the consumer maximizes his utility subject to $11 of income each week?

Accepted Answer

A) 5 hamburgers and 1 milkshake 
B) 1 hamburger and 5 milkshakes 
C) 4 hamburgers and 3 milkshakes 
D) 3 hamburgers and 4 milkshakes 
A) 5 hamburgers and 1 milkshake 
B) 1 hamburger and 5 milkshakes 
C) 4 hamburgers and 3 milkshakes 
D) 3 hamburgers and 4 milkshakes

Question 9

If the price of pizza increases, the quantity of pizza demanded will fall because some consumers will switch to tacos, hamburgers, or submarine sanwiches. This is called the:

Accepted Answer

A) income effect 
B) the alternative effect 
C) the substitution effect 
D) the normal good effect 
A) income effect 
B) the alternative effect 
C) the substitution effect 
D) the normal good effect

Question 10

The idea that when we own something we value it more than other people do is called:

Accepted Answer

A) self control 
B) anchoring 
C) compartmentalizing 
D) the endowment effect 
A) self control 
B) anchoring 
C) compartmentalizing 
D) the endowment effect

Question 11

A price increase for pizza will reduce the quantity of pizza demanded because it reduces a buyer's purchasing power. This is called :

Accepted Answer

A) income effect 
B) the alternative effect 
C) the substitution effect 
D) the normal good effect 
A) income effect 
B) the alternative effect 
C) the substitution effect 
D) the normal good effect

Question 12

Suppose Carrie's utility function for clams is as follows: If she consumes 1 clam, she gets 10 units of total utility; for 2 clams, she gets 18 units of total utility; for 3 clams, she gets 24 units of total utility; for 4 clams, she gets 28 units of total utility; for 5 clams, she gets 30 units of total utility; and for 6 clams, she gets 26 units of total utility.

Accepted Answer

A) Carrie gets 6 units of marginal utility for the 5th clam. 
B) Carrie gets 6 units of marginal utility for the 3rd clam. 
C) Carrie would never choose to consume the 6th clam. 
D) Both b. and c. are true. 
A) Carrie gets 6 units of marginal utility for the 5th clam. 
B) Carrie gets 6 units of marginal utility for the 3rd clam. 
C) Carrie would never choose to consume the 6th clam. 
D) Both b. and c. are true.

Question 13

​Exhibit
​
  
-Refer to Exhibit. Which budget line depicts a decrease in the price of X?

Accepted Answer

A) (1) 
B) (2) 
C) (3) 
D) (4) 
A) (1) 
B) (2) 
C) (3) 
D) (4)

Question 14

One of the ugly stepsisters argues that she, rather than Cinderella, should go to the ball because she will derive more utility from it than Cinderella. An economist would:

Accepted Answer

A) agree, since the ugly stepsister's reasoning is sound. 
B) want to know how much utility each will receive from attending the ball in order to determine which woman should attend. 
C) point out that making interpersonal utility comparisons is not possible. 
D) ask how many balls each woman has attended in order to calculate the marginal utility that each would derive from attending, and then decide who should go to the ball. 
A) agree, since the ugly stepsister's reasoning is sound. 
B) want to know how much utility each will receive from attending the ball in order to determine which woman should attend. 
C) point out that making interpersonal utility comparisons is not possible. 
D) ask how many balls each woman has attended in order to calculate the marginal utility that each would derive from attending, and then decide who should go to the ball.

Question 15

The law of diminishing marginal utility means that:

Accepted Answer

A) marginal utility is maximized when consumers get the same amount of total utility from every good they consume. 
B) total utility is maximized when consumers get the same amount of marginal utility from the last unit of every good they consume. 
C) beyond some point, added units of a product provide lower and lower amounts of marginal utility. 
D) a consumer would get less utility from the last unit of a good consumed when that good costs $3 than when it costs $1. 
A) marginal utility is maximized when consumers get the same amount of total utility from every good they consume. 
B) total utility is maximized when consumers get the same amount of marginal utility from the last unit of every good they consume. 
C) beyond some point, added units of a product provide lower and lower amounts of marginal utility. 
D) a consumer would get less utility from the last unit of a good consumed when that good costs $3 than when it costs $1.

If you win money in a casino you may be more likely to spend that money than your hard-earned cash. This is called:

When people make decisions based on pieces of information they are already given when they make a purchase, it is called

Exhibit -Refer to Exhibit. Which budget line depicts an increase in income?

Exhibit -Refer to Exhibit. Which budget line depicts a decrease in income?

When people alter their preferences when a choice is presented in a certain way, it is called:

If the price of pizza increases, the quantity of pizza demanded will fall because some consumers will switch to tacos, hamburgers, or submarine sanwiches. This is called the:

The idea that when we own something we value it more than other people do is called:

A price increase for pizza will reduce the quantity of pizza demanded because it reduces a buyer's purchasing power. This is called :

Exhibit -Refer to Exhibit. Which budget line depicts a decrease in the price of X?

One of the ugly stepsisters argues that she, rather than Cinderella, should go to the ball because she will derive more utility from it than Cinderella. An economist would:

The law of diminishing marginal utility means that:

Market Failure, Market Efficiency and Welfare

Elasticities

Market in Motion and Price Controls

Demand Supply and Market Equilibrium

Economics Eight Powerful Ideas and the Role and Method of Economics

International Finance

International Trade, Income Poverty and Health Care

The Markets for Labor Capital and Land

Oligopoly and Strategic Behavior

Monopolistic Competition, Product Differentiation, Monopoly and Antitrust

Firms in Perfectly Competitive Markets

The Firm Production and Costs

Filters

Exam 13: Consumer Choice Theory

If you win money in a casino you may be more likely to spend that money than your hard-earned cash. This is called:

When people make decisions based on pieces of information they are already given when they make a purchase, it is called

​Exhibit ​ -Refer to Exhibit. Which budget line depicts an increase in income?

​Exhibit ​ -Refer to Exhibit. Which budget line depicts a decrease in income?

When people alter their preferences when a choice is presented in a certain way, it is called:

If the price of pizza increases, the quantity of pizza demanded will fall because some consumers will switch to tacos, hamburgers, or submarine sanwiches. This is called the:

The idea that when we own something we value it more than other people do is called:

A price increase for pizza will reduce the quantity of pizza demanded because it reduces a buyer's purchasing power. This is called :

​Exhibit ​ -Refer to Exhibit. Which budget line depicts a decrease in the price of X?

One of the ugly stepsisters argues that she, rather than Cinderella, should go to the ball because she will derive more utility from it than Cinderella. An economist would:

The law of diminishing marginal utility means that:

Market Failure, Market Efficiency and Welfare

Elasticities

Market in Motion and Price Controls

Demand Supply and Market Equilibrium

Economics Eight Powerful Ideas and the Role and Method of Economics

International Finance

International Trade, Income Poverty and Health Care

The Markets for Labor Capital and Land

Oligopoly and Strategic Behavior

Monopolistic Competition, Product Differentiation, Monopoly and Antitrust

Firms in Perfectly Competitive Markets

The Firm Production and Costs

Filters

Exhibit -Refer to Exhibit. Which budget line depicts an increase in income?

Exhibit -Refer to Exhibit. Which budget line depicts a decrease in income?

Exhibit -Refer to Exhibit. Which budget line depicts a decrease in the price of X?