Question 1

Behavioral economics refers to the study of situations

Accepted Answer

A) where consumers and firms appear to make choices that are appropriate to reach their goals. 
B) where consumers and firms appear to value fairness when they make choices. 
C) where consumers and firms disobey the laws of demand and supply. 
D) where consumers and firms do not appear to be making choices that are economically rational. 
A) where consumers and firms appear to make choices that are appropriate to reach their goals. 
B) where consumers and firms appear to value fairness when they make choices. 
C) where consumers and firms disobey the laws of demand and supply. 
D) where consumers and firms do not appear to be making choices that are economically rational.

Question 2

A study discussed in the Making the Connection feature in the text found that there is ________ that some consumers are not well aware of prices, even for goods they buy regularly.

Accepted Answer

A) no evidence 
B) substantial evidence 
C) little evidence 
D) no reason to believe 
A) no evidence 
B) substantial evidence 
C) little evidence 
D) no reason to believe

Question 3

Marge buys 5 CDs and 7 DVDs.The marginal utility of the 5th CD and the marginal utility of the 7th DVD are both equal to 30 utils.Can we say that this is the optimal combination of CDs and DVDs for Marge?

Accepted Answer

A) No. We need to know her preferences for CDs and DVDs. 
B) Yes. 
C) No. For this to be the optimal combination, the total utility from her purchase of CDs needs to equal the total utility from her purchase of DVDs. 
D) No. If this was the optimal combination, the marginal utility per dollar of the 5th CD and the 7th DVD would be equal. 
A) No. We need to know her preferences for CDs and DVDs. 
B) Yes. 
C) No. For this to be the optimal combination, the total utility from her purchase of CDs needs to equal the total utility from her purchase of DVDs. 
D) No. If this was the optimal combination, the marginal utility per dollar of the 5th CD and the 7th DVD would be equal.

Question 4

Which of the following is not a characteristic of indifference curves?

Accepted Answer

A) Indifference curves cannot intersect. 
B) Indifference curves are usually bowed in, or convex. 
C) The slope of an indifference curve is negative. 
D) The closer to the origin, the greater the utility level. 
A) Indifference curves cannot intersect. 
B) Indifference curves are usually bowed in, or convex. 
C) The slope of an indifference curve is negative. 
D) The closer to the origin, the greater the utility level.

Question 5

The income effect of a price change refers to

Accepted Answer

A) the change in demand that occurs when consumer income changes. 
B) the change in the quantity demanded that results from a change in price, making the good more or less expensive relative to other goods, holding everything else constant. 
C) the change in demand that occurs when both income and price change. 
D) the change in the quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding everything else constant. 
A) the change in demand that occurs when consumer income changes. 
B) the change in the quantity demanded that results from a change in price, making the good more or less expensive relative to other goods, holding everything else constant. 
C) the change in demand that occurs when both income and price change. 
D) the change in the quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding everything else constant.

Question 6

Arnold Kim began blogging about Apple products during his fourth year of medical school.Kim's Website, MacRumors.com, became so successful that he decided to give up his medical career and work full time on his Website, despite the nearly $200,000 he had invested in his education.In making his decision, Kim decided to ignore the money and time he spent on his education.Economists would say that Kim made a

Accepted Answer

A) rational decision to ignore these sunk costs. 
B) poor decision since he had already invested his time and money on his medical career. 
C) poor decision since doctors are in greater demand than bloggers. 
D) hasty decision by not waiting to recoup his financial investment before giving up his medical career. 
A) rational decision to ignore these sunk costs. 
B) poor decision since he had already invested his time and money on his medical career. 
C) poor decision since doctors are in greater demand than bloggers. 
D) hasty decision by not waiting to recoup his financial investment before giving up his medical career.

Question 7

What is behavioral economics?

Accepted Answer

A) the study of how people make wealth-maximizing decisions 
B) the study of how people behave in the face of scarcity 
C) the study of situations in which people act in ways that are not economically rational 
D) the study of how people make decisions at the margin 
A) the study of how people make wealth-maximizing decisions 
B) the study of how people behave in the face of scarcity 
C) the study of situations in which people act in ways that are not economically rational 
D) the study of how people make decisions at the margin

Question 8

Which of the following statements is false?

Accepted Answer

A) There is an indifference curve associated with any combination of goods selected by a consumer. 
B) A consumer is indifferent among all consumption bundles along a given budget line. 
C) All consumption bundles along a given indifference curve are equally desirable. 
D) Consumption bundles that lie on higher indifference curves yield higher utility. 
A) There is an indifference curve associated with any combination of goods selected by a consumer. 
B) A consumer is indifferent among all consumption bundles along a given budget line. 
C) All consumption bundles along a given indifference curve are equally desirable. 
D) Consumption bundles that lie on higher indifference curves yield higher utility.

Question 9

Figure 10-7
   
The above panels show various combinations of indifference curves and budget constraints for two products: Popcorn and Candy.
-Refer to Figure 10-7.Which diagram demonstrates an increase in total utility following a decrease in the price of popcorn?

Accepted Answer

A) the movement from d to e in Panel A 
B) the movement from f to g in Panel B 
C) the movement from h to k in Panel C 
D) none of the above 
A) the movement from d to e in Panel A 
B) the movement from f to g in Panel B 
C) the movement from h to k in Panel C 
D) none of the above

Question 10

If Paul decides to buy a $60 ticket to a Cirque du Soleil show rather than a $45 ticket for a Blue Man Group performance, we can conclude that

Accepted Answer

A) the marginal utility per dollar spent on Cirque du Soleil is lower than the marginal utility per dollar spent on Blue Man Group. 
B) Paul's demand for a ticket to see Cirque du Soleil is more elastic than his demand for a ticket to see Blue Man Group. 
C) Paul is not making a rational choice. 
D) the marginal utility per dollar spent on Cirque du Soleil is higher than the marginal utility per dollar spent on Blue Man Group. 
A) the marginal utility per dollar spent on Cirque du Soleil is lower than the marginal utility per dollar spent on Blue Man Group. 
B) Paul's demand for a ticket to see Cirque du Soleil is more elastic than his demand for a ticket to see Blue Man Group. 
C) Paul is not making a rational choice. 
D) the marginal utility per dollar spent on Cirque du Soleil is higher than the marginal utility per dollar spent on Blue Man Group.

Question 11

Table 10-2
   
Table 10-2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods.
-Refer to Table 10-2.What is Keira's marginal utility per dollar spent on the third cup of soup?

Accepted Answer

A) 72 utils 
B) 36 utils 
C) 12 utils 
D) 6 utils 
A) 72 utils 
B) 36 utils 
C) 12 utils 
D) 6 utils

Question 12

Which of the following refers to the increase in the usefulness of a product as the number of consumers who use it increases?

Accepted Answer

A) positive externalities 
B) network externalities 
C) external marginal utility 
D) the impact of celebrity endorsements 
A) positive externalities 
B) network externalities 
C) external marginal utility 
D) the impact of celebrity endorsements

Question 13

Table 10-7
   
Table 10-7 shows Antonio's utility from beer and pizza.
-Refer to Table 10-7.What is Antonio's marginal utility from consuming the fifth beer?

Accepted Answer

A) 4 utils 
B) 13.6 utils 
C) 69 utils 
D) 134 utils 
A) 4 utils 
B) 13.6 utils 
C) 69 utils 
D) 134 utils

Question 14

Figure 10-7
   
The above panels show various combinations of indifference curves and budget constraints for two products: Popcorn and Candy.
-Refer to Figure 10-7.A change in the price of popcorn only is shown in

Accepted Answer

A) Panel A. 
B) Panel B. 
C) Panel C. 
D) none of the above panels. 
A) Panel A. 
B) Panel B. 
C) Panel C. 
D) none of the above panels.

Question 15

The demand curve for an inferior good can never be downward sloping.

Accepted Answer

A) True 
 B)False

Question 16

If a consumer always buys goods rationally, then

Accepted Answer

A) the total utilities of the different goods consumed will be equal. 
B) the average utilities of the different goods consumed will be equal. 
C) the marginal utility per dollar spent on all goods will be equal. 
D) the marginal utility of the different goods consumed will be equal. 
A) the total utilities of the different goods consumed will be equal. 
B) the average utilities of the different goods consumed will be equal. 
C) the marginal utility per dollar spent on all goods will be equal. 
D) the marginal utility of the different goods consumed will be equal.

Question 17

Which of the following is an experiment which tests whether fairness is important in consumer decision making?

Accepted Answer

A) the fair trade principle 
B) the ultimatum game 
C) the preferential treatment game 
D) the behavioral experiment 
A) the fair trade principle 
B) the ultimatum game 
C) the preferential treatment game 
D) the behavioral experiment

Question 18

Figure 10-4
  
-Refer to Figure 10-4.Best friends Laurel and Hardy both enjoy watching romantic comedies and science fiction movies.Based on the diagrams above what can you conclude about their movie preferences?

Accepted Answer

A) They have identical movie preferences. 
B) Hardy enjoys romantic comedies more than Laurel. 
C) Hardy enjoys science fiction movies more than Laurel. 
D) The diagrams do not provide any information about relative preferences. 
A) They have identical movie preferences. 
B) Hardy enjoys romantic comedies more than Laurel. 
C) Hardy enjoys science fiction movies more than Laurel. 
D) The diagrams do not provide any information about relative preferences.

Question 19

An item has utility for a consumer if it

Accepted Answer

A) is scarce. 
B) has a high price. 
C) is something everyone else wants. 
D) generates enjoyment or satisfaction. 
A) is scarce. 
B) has a high price. 
C) is something everyone else wants. 
D) generates enjoyment or satisfaction.

Question 20

A common mistake made by consumers is the failure to take into account the monetary costs of their actions.

Accepted Answer

A) True 
 B)False

Behavioral economics refers to the study of situations

A study discussed in the Making the Connection feature in the text found that there is ________ that some consumers are not well aware of prices, even for goods they buy regularly.

Marge buys 5 CDs and 7 DVDs.The marginal utility of the 5th CD and the marginal utility of the 7th DVD are both equal to 30 utils.Can we say that this is the optimal combination of CDs and DVDs for Marge?

Which of the following is not a characteristic of indifference curves?

The income effect of a price change refers to

What is behavioral economics?

Which of the following statements is false?

Figure 10-7 The above panels show various combinations of indifference curves and budget constraints for two products: Popcorn and Candy. -Refer to Figure 10-7.Which diagram demonstrates an increase in total utility following a decrease in the price of popcorn?

If Paul decides to buy a $60 ticket to a Cirque du Soleil show rather than a $45 ticket for a Blue Man Group performance, we can conclude that

Table 10-2 Table 10-2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods. -Refer to Table 10-2.What is Keira's marginal utility per dollar spent on the third cup of soup?

Which of the following refers to the increase in the usefulness of a product as the number of consumers who use it increases?

Table 10-7 Table 10-7 shows Antonio's utility from beer and pizza. -Refer to Table 10-7.What is Antonio's marginal utility from consuming the fifth beer?

Figure 10-7 The above panels show various combinations of indifference curves and budget constraints for two products: Popcorn and Candy. -Refer to Figure 10-7.A change in the price of popcorn only is shown in

The demand curve for an inferior good can never be downward sloping.

If a consumer always buys goods rationally, then

Which of the following is an experiment which tests whether fairness is important in consumer decision making?

Figure 10-4 -Refer to Figure 10-4.Best friends Laurel and Hardy both enjoy watching romantic comedies and science fiction movies.Based on the diagrams above what can you conclude about their movie preferences?

An item has utility for a consumer if it

A common mistake made by consumers is the failure to take into account the monetary costs of their actions.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Exam 10: Consumer Choice and Behavioral Economics

Behavioral economics refers to the study of situations

A study discussed in the Making the Connection feature in the text found that there is ________ that some consumers are not well aware of prices, even for goods they buy regularly.

Marge buys 5 CDs and 7 DVDs.The marginal utility of the 5th CD and the marginal utility of the 7th DVD are both equal to 30 utils.Can we say that this is the optimal combination of CDs and DVDs for Marge?

Which of the following is not a characteristic of indifference curves?

The income effect of a price change refers to

What is behavioral economics?

Which of the following statements is false?

Figure 10-7 The above panels show various combinations of indifference curves and budget constraints for two products: Popcorn and Candy. -Refer to Figure 10-7.Which diagram demonstrates an increase in total utility following a decrease in the price of popcorn?

If Paul decides to buy a $60 ticket to a Cirque du Soleil show rather than a $45 ticket for a Blue Man Group performance, we can conclude that

Table 10-2 Table 10-2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods. -Refer to Table 10-2.What is Keira's marginal utility per dollar spent on the third cup of soup?

Which of the following refers to the increase in the usefulness of a product as the number of consumers who use it increases?

Table 10-7 Table 10-7 shows Antonio's utility from beer and pizza. -Refer to Table 10-7.What is Antonio's marginal utility from consuming the fifth beer?

Figure 10-7 The above panels show various combinations of indifference curves and budget constraints for two products: Popcorn and Candy. -Refer to Figure 10-7.A change in the price of popcorn only is shown in

The demand curve for an inferior good can never be downward sloping.

If a consumer always buys goods rationally, then

Which of the following is an experiment which tests whether fairness is important in consumer decision making?

Figure 10-4 -Refer to Figure 10-4.Best friends Laurel and Hardy both enjoy watching romantic comedies and science fiction movies.Based on the diagrams above what can you conclude about their movie preferences?

An item has utility for a consumer if it

A common mistake made by consumers is the failure to take into account the monetary costs of their actions.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters