Question 1

Total utility

Accepted Answer

A) cannot decrease as a person consumes more and more of a good. 
B) has a constant rate of increase as a person consumes more and more of a good. 
C) is equal to the sum of the marginal utilities of all units consumed. 
D) is negative when marginal utility is declining. 
A) cannot decrease as a person consumes more and more of a good. 
B) has a constant rate of increase as a person consumes more and more of a good. 
C) is equal to the sum of the marginal utilities of all units consumed. 
D) is negative when marginal utility is declining.

Question 2

Results of the ultimatum game indicate that most people value fairness enough that they will refuse to participate in a transaction they consider unfair, even if they are worse off financially as a result.

Accepted Answer

A) True 
 B)False

Question 3

The income effect of a price increase causes a decrease in the quantity of a normal good demanded.

Accepted Answer

A) True 
 B)False

Question 4

Table 10-6
   
Table 10-6 lists Jay's marginal utilities for burgers and Pepsi. Jay has $7 to spend on these two goods. The price of a burger is $2 and the price of a can of Pepsi is $1.
-Refer to Table 10-6.What is Jay's optimal consumption bundle?

Accepted Answer

A) 1 burger and 2 cans of Pepsi 
B) 2 burgers and 3 cans of Pepsi 
C) 3 burgers and 1 can of Pepsi 
D) 3 burgers and 2 cans of Pepsi 
A) 1 burger and 2 cans of Pepsi 
B) 2 burgers and 3 cans of Pepsi 
C) 3 burgers and 1 can of Pepsi 
D) 3 burgers and 2 cans of Pepsi

Question 5

Which of the following is held constant along an indifference curve?

Accepted Answer

A) the prices of the goods in question 
B) the marginal rate of substitution between the two goods in question 
C) the marginal utility derived from consuming any bundle of goods on the indifference curve 
D) the total utility derived from consuming any bundle of goods on the indifference curve 
A) the prices of the goods in question 
B) the marginal rate of substitution between the two goods in question 
C) the marginal utility derived from consuming any bundle of goods on the indifference curve 
D) the total utility derived from consuming any bundle of goods on the indifference curve

Question 6

The income effect of an increase in the price of peaches is

Accepted Answer

A) the change in the quantity of peaches demanded that results from the price increase, making peaches more expensive than other fruit, holding constant the effect of the price change on consumer purchasing power. 
B) the change in the demand for peaches as a result of the change in the price of peaches, holding all other factors constant. 
C) the change in the quantity of other fruit demanded that results from the impact of the price change on purchasing power, holding all other factors constant. 
D) the change in the quantity of peaches demanded that results from the effect of the change in price on consumer purchasing power, holding all other factors constant. 
A) the change in the quantity of peaches demanded that results from the price increase, making peaches more expensive than other fruit, holding constant the effect of the price change on consumer purchasing power. 
B) the change in the demand for peaches as a result of the change in the price of peaches, holding all other factors constant. 
C) the change in the quantity of other fruit demanded that results from the impact of the price change on purchasing power, holding all other factors constant. 
D) the change in the quantity of peaches demanded that results from the effect of the change in price on consumer purchasing power, holding all other factors constant.

Question 7

In their surveys of consumers, Daniel Kahneman, Jack Knetsch and Richard Thaler found that

Accepted Answer

A) most people considered it unfair for firms to raise their prices because of an increase in their costs, but fair to raise their prices after an increase in demand. 
B) most people considered any increase in price to be unfair as it led to an increase in profits. 
C) most people believed that low-income people were hurt most by increases in prices. 
D) most people considered an increase in price by firms following an increase in their costs to be fair but believed it was unfair for firms to raise their prices because of an increase in demand. 
A) most people considered it unfair for firms to raise their prices because of an increase in their costs, but fair to raise their prices after an increase in demand. 
B) most people considered any increase in price to be unfair as it led to an increase in profits. 
C) most people believed that low-income people were hurt most by increases in prices. 
D) most people considered an increase in price by firms following an increase in their costs to be fair but believed it was unfair for firms to raise their prices because of an increase in demand.

Question 8

Behavioral economics is the study of situations in which people make rational choices.

Accepted Answer

A) True 
 B)False

Question 9

All but one of the following people were awarded a Nobel prize for their contributions to experimental economics and their explorations of the influence fairness has on consumer decision-making.Which person did not receive a Nobel Prize for this work?

Accepted Answer

A) Vernon Smith 
B) Alan Krueger 
C) Daniel Kahneman 
D) Maurice Allais 
A) Vernon Smith 
B) Alan Krueger 
C) Daniel Kahneman 
D) Maurice Allais

Question 10

In the utility maximizing model, consumer preferences are assumed to be transitive.What does this mean?

Accepted Answer

A) that consumers prefer more of a good to less 
B) that consumers have the freedom to change their preferences from time to time 
C) that consumers have preferences that are relatively consistent in the time period under consideration 
D) that consumers go through cycles in their consumption behavior 
A) that consumers prefer more of a good to less 
B) that consumers have the freedom to change their preferences from time to time 
C) that consumers have preferences that are relatively consistent in the time period under consideration 
D) that consumers go through cycles in their consumption behavior

Question 11

Figure 10-5
  
-Refer to Figure 10-5.What is the marginal rate of substitution for one bar of chocolate between g and h?

Accepted Answer

A)    of a cookie 
B)    of a cookie 
C) 2 cookies 
D) 3 cookies 
A)    of a cookie 
B)    of a cookie 
C) 2 cookies 
D) 3 cookies

Question 12

The endowment effect is the tendency of people to be unwilling to sell a good they already own even if they are offered a price greater than they would be willing to pay to buy the good if they did not already own it.

Accepted Answer

A) True 
 B)False

Question 13

What must be true in terms of the income effect, the substitution effect, and the type of good for the good's demand curve to be upward sloping?

Accepted Answer

The income effect would have t

Question 14

Utility is

Accepted Answer

A) easily measured in units called utils. 
B) subjective and difficult to measure. 
C) the consumption of a quasi-public good like electricity or natural gas. 
D) the production of a quasi-public good like electricity or natural gas. 
A) easily measured in units called utils. 
B) subjective and difficult to measure. 
C) the consumption of a quasi-public good like electricity or natural gas. 
D) the production of a quasi-public good like electricity or natural gas.

Question 15

If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the second candy bar is

Accepted Answer

A) 25 utils. 
B) 20 utils. 
C) 5 utils. 
D) unknown as more information is needed to determine the answer. 
A) 25 utils. 
B) 20 utils. 
C) 5 utils. 
D) unknown as more information is needed to determine the answer.

Question 16

Table 10-4
  
-Refer to Table 10-4.For steak and cheese sandwiches and grilled chicken sandwiches, the table contains the values of the marginal utility (MU)and marginal utility per dollar (MU/P)for Mabel Jarvis.Mabel has $14 to spend on steak and cheese sandwiches and grilled chicken sandwiches.Which of the following statements is false?

Accepted Answer

A) The price of steak and cheese sandwiches is $4. The price of grilled chicken sandwiches is $2. 
B) If Mabel maximizes her utility, she will buy three grilled chicken sandwiches. 
C) If Mabel maximizes her utility, she will buy two steak and cheese sandwiches. 
D) We do not have enough information to determine how many sandwiches Mabel will buy to maximize her utility. 
A) The price of steak and cheese sandwiches is $4. The price of grilled chicken sandwiches is $2. 
B) If Mabel maximizes her utility, she will buy three grilled chicken sandwiches. 
C) If Mabel maximizes her utility, she will buy two steak and cheese sandwiches. 
D) We do not have enough information to determine how many sandwiches Mabel will buy to maximize her utility.

Question 17

If your total satisfaction increases when you consume another unit, your marginal utility must be

Accepted Answer

A) increasing. 
B) decreasing. 
C) negative. 
D) positive. 
A) increasing. 
B) decreasing. 
C) negative. 
D) positive.

Question 18

What is a Giffen good?

Accepted Answer

A Giffen good is something con

Question 19

Table 10-7
   
Table 10-7 shows Antonio's utility from beer and pizza.
-Refer to Table 10-7.Suppose Antonio has $10 to spend and the price of beer = $2 per glass and the price of pizza = $2 per slice.How many of each good will he consume when he maximizes his utility?

Accepted Answer

A) 2 glasses of beer, 1 slice of pizza 
B) 2 glasses of beer, 3 slices of pizza 
C) 3 glasses of beer, 2 slices of pizza 
D) 4 glasses of beer, 5 slices of pizza 
A) 2 glasses of beer, 1 slice of pizza 
B) 2 glasses of beer, 3 slices of pizza 
C) 3 glasses of beer, 2 slices of pizza 
D) 4 glasses of beer, 5 slices of pizza

Question 20

Figure 10-6
  
-Refer to Figure 10-6.Suppose the price of pizza increases while the price of hamburger remains constant.Then, the consumer's

Accepted Answer

A) indifference curve becomes more concave away from the origin. 
B) indifference curve becomes straighter. 
C) budget constraint moves inward toward the origin on the pizza axis while the hamburger intercept remains the same. 
D) budget constraint moves outward away from the origin on the pizza axis while the hamburger intercept remains the same. 
A) indifference curve becomes more concave away from the origin. 
B) indifference curve becomes straighter. 
C) budget constraint moves inward toward the origin on the pizza axis while the hamburger intercept remains the same. 
D) budget constraint moves outward away from the origin on the pizza axis while the hamburger intercept remains the same.

Total utility

Results of the ultimatum game indicate that most people value fairness enough that they will refuse to participate in a transaction they consider unfair, even if they are worse off financially as a result.

The income effect of a price increase causes a decrease in the quantity of a normal good demanded.

Table 10-6 Table 10-6 lists Jay's marginal utilities for burgers and Pepsi. Jay has $7 to spend on these two goods. The price of a burger is $2 and the price of a can of Pepsi is $1. -Refer to Table 10-6.What is Jay's optimal consumption bundle?

Which of the following is held constant along an indifference curve?

The income effect of an increase in the price of peaches is

In their surveys of consumers, Daniel Kahneman, Jack Knetsch and Richard Thaler found that

Behavioral economics is the study of situations in which people make rational choices.

All but one of the following people were awarded a Nobel prize for their contributions to experimental economics and their explorations of the influence fairness has on consumer decision-making.Which person did not receive a Nobel Prize for this work?

In the utility maximizing model, consumer preferences are assumed to be transitive.What does this mean?

Figure 10-5 -Refer to Figure 10-5.What is the marginal rate of substitution for one bar of chocolate between g and h?

The endowment effect is the tendency of people to be unwilling to sell a good they already own even if they are offered a price greater than they would be willing to pay to buy the good if they did not already own it.

What must be true in terms of the income effect, the substitution effect, and the type of good for the good's demand curve to be upward sloping?

Utility is

If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the second candy bar is

If your total satisfaction increases when you consume another unit, your marginal utility must be

What is a Giffen good?

Table 10-7 Table 10-7 shows Antonio's utility from beer and pizza. -Refer to Table 10-7.Suppose Antonio has $10 to spend and the price of beer = $2 per glass and the price of pizza = $2 per slice.How many of each good will he consume when he maximizes his utility?

Figure 10-6 -Refer to Figure 10-6.Suppose the price of pizza increases while the price of hamburger remains constant.Then, the consumer's

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

Total utility

Results of the ultimatum game indicate that most people value fairness enough that they will refuse to participate in a transaction they consider unfair, even if they are worse off financially as a result.

The income effect of a price increase causes a decrease in the quantity of a normal good demanded.

Table 10-6 Table 10-6 lists Jay's marginal utilities for burgers and Pepsi. Jay has $7 to spend on these two goods. The price of a burger is $2 and the price of a can of Pepsi is $1. -Refer to Table 10-6.What is Jay's optimal consumption bundle?

Which of the following is held constant along an indifference curve?

The income effect of an increase in the price of peaches is

In their surveys of consumers, Daniel Kahneman, Jack Knetsch and Richard Thaler found that

Behavioral economics is the study of situations in which people make rational choices.

All but one of the following people were awarded a Nobel prize for their contributions to experimental economics and their explorations of the influence fairness has on consumer decision-making.Which person did not receive a Nobel Prize for this work?

In the utility maximizing model, consumer preferences are assumed to be transitive.What does this mean?

Figure 10-5 -Refer to Figure 10-5.What is the marginal rate of substitution for one bar of chocolate between g and h?

The endowment effect is the tendency of people to be unwilling to sell a good they already own even if they are offered a price greater than they would be willing to pay to buy the good if they did not already own it.

What must be true in terms of the income effect, the substitution effect, and the type of good for the good's demand curve to be upward sloping?

Utility is

If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the second candy bar is

If your total satisfaction increases when you consume another unit, your marginal utility must be

What is a Giffen good?

Table 10-7 Table 10-7 shows Antonio's utility from beer and pizza. -Refer to Table 10-7.Suppose Antonio has $10 to spend and the price of beer = $2 per glass and the price of pizza = $2 per slice.How many of each good will he consume when he maximizes his utility?

Figure 10-6 -Refer to Figure 10-6.Suppose the price of pizza increases while the price of hamburger remains constant.Then, the consumer's

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