Question 1

Marginal utility has a negative slope.This is because of the

Accepted Answer

A) optimal purchase rule. 
B) law of increasing costs. 
C) law of diminishing marginal utility. 
D) marginal rate of substitution. 
A) optimal purchase rule. 
B) law of increasing costs. 
C) law of diminishing marginal utility. 
D) marginal rate of substitution.

Question 2

Jason considers a crystal bowl, a silver dish, and a pewter figurine, each priced $45 at the local gift shop.He chooses the silver dish because, according to economic theory

Accepted Answer

A) his marginal utility per dollar is greatest. 
B) his total utility is minimized. 
C) his marginal utility is equal to his total utility. 
D) silver costs more per ounce than pewter. 
A) his marginal utility per dollar is greatest. 
B) his total utility is minimized. 
C) his marginal utility is equal to his total utility. 
D) silver costs more per ounce than pewter.

Question 3

Figure 5-1
  
-In Figure 5-1 from the text, if the price of pizzas is $8:
a.how many pizzas will the consumer purchase?
b.what is the payment for the optimal number of pizzas?
c.how much consumer surplus will the consumer receive?

Accepted Answer

a.The consumer will purchase 5 pizzas at

Question 4

Economic theory has traditionally focused on optimality in decision-making.​

Accepted Answer

A) True 
 B)False

Question 5

An increase in income produces a parallel, outward shift in the budget line.

Accepted Answer

A) True 
 B)False

Question 6

Figure 5-6
  
-A shift in the budget line in Figure 5-6 from AB to AC indicates

Accepted Answer

A) the price of wine coolers has risen. 
B) income has increased. 
C) the price of beer has fallen. 
D) the price of wine coolers has fallen. 
E) All of the above are correct. 
A) the price of wine coolers has risen. 
B) income has increased. 
C) the price of beer has fallen. 
D) the price of wine coolers has fallen. 
E) All of the above are correct.

Question 7

Rolls Royce may actually sell fewer cars at lower prices due to the "snob effect."

Accepted Answer

A) True 
 B)False

Question 8

An individual's demand curve for a good is ____ her marginal utility curve for the good.

Accepted Answer

A) based on 
B) the mirror image around the vertical axis of 
C) twice as steep as 
D) half as steep as 
A) based on 
B) the mirror image around the vertical axis of 
C) twice as steep as 
D) half as steep as

Question 9

The slope of an indifference curve is called the

Accepted Answer

A) bliss gradient. 
B) happiness slope. 
C) average transformation rate. 
D) marginal rate of substitution. 
A) bliss gradient. 
B) happiness slope. 
C) average transformation rate. 
D) marginal rate of substitution.

Question 10

For most goods and most people, marginal utility probably

Accepted Answer

A) continues to increase as larger quantities are purchased. 
B) plummets after the first few units but soon begins to rise. 
C) declines as consumption increases. 
D) is negative after the first unit of a good is purchased. 
E) is positive and rising for most goods. 
A) continues to increase as larger quantities are purchased. 
B) plummets after the first few units but soon begins to rise. 
C) declines as consumption increases. 
D) is negative after the first unit of a good is purchased. 
E) is positive and rising for most goods.

Question 11

The law of diminishing marginal utility explains why

Accepted Answer

A) most individual demand curves are straight lines. 
B) the consumer's optimal purchase is at the tangency of an indifference curve and the budget line. 
C) most individual demand curves slope downward. 
D) marginal utility falls when total utility falls. 
A) most individual demand curves are straight lines. 
B) the consumer's optimal purchase is at the tangency of an indifference curve and the budget line. 
C) most individual demand curves slope downward. 
D) marginal utility falls when total utility falls.

Question 12

The slope of an indifference curve at all points reflects

Accepted Answer

A) the terms by which the consumer can trade off goods in the market. 
B) the relative prices of the two goods. 
C) the willingness of the consumer to trade one good for another. 
D) consumer income relative to the price of a good. 
E) the relative price ratio of the two goods. 
A) the terms by which the consumer can trade off goods in the market. 
B) the relative prices of the two goods. 
C) the willingness of the consumer to trade one good for another. 
D) consumer income relative to the price of a good. 
E) the relative price ratio of the two goods.

Question 13

The law of diminishing marginal utility is consistent with the consumer behavior that produces a negatively sloped demand curve.

Accepted Answer

A) True 
 B)False

Question 14

Figure 5-16
  
-In Figure 5-16, Adam is

Accepted Answer

A) better off at C than at D and able to afford either C or D. 
B) better off at D than at C but only able to afford C. 
C) equally well off at C and D and able to afford either C or D. 
D) equally well off at C and D but only able to afford C. 
A) better off at C than at D and able to afford either C or D. 
B) better off at D than at C but only able to afford C. 
C) equally well off at C and D and able to afford either C or D. 
D) equally well off at C and D but only able to afford C.

Question 15

-Table 5-1 gives information on George's total utility from consuming milkshakes and sandwiches.If George's income this week is $15, milkshakes are $3 each, and sandwiches $2, he will maximize his utility if he buys

Accepted Answer

A) three milkshakes and two sandwiches. 
B) three milkshakes and three sandwiches. 
C) no milkshakes and as many sandwiches as possible. 
D) two milkshakes and three sandwiches. 
A) three milkshakes and two sandwiches. 
B) three milkshakes and three sandwiches. 
C) no milkshakes and as many sandwiches as possible. 
D) two milkshakes and three sandwiches.

Question 16

All points on an indifference curve represent combinations of two goods that are equally desirable to the consumer.

Accepted Answer

A) True 
 B)False

Question 17

A consumer will consume the combination of goods at the point of tangency between the budget line and the indifference curve.

Accepted Answer

A) True 
 B)False

Question 18

Scarcity raises both price and marginal utility but generally reduces total utility.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following observations is not true of a budget line?

Accepted Answer

A) It indicates what choices are available to the consumer. 
B) It is a curve of constant expenditure. 
C) Its slope reports the market terms on which the consumer can trade one good for another. 
D) It helps examine the consumer's preferences. 
A) It indicates what choices are available to the consumer. 
B) It is a curve of constant expenditure. 
C) Its slope reports the market terms on which the consumer can trade one good for another. 
D) It helps examine the consumer's preferences.

Question 20

A budget line is a straight line designed to show

Accepted Answer

A) how income is related to hours worked. 
B) all combinations of two goods that can be purchased with a given income. 
C) the way a homemaker should divide money among several commodities. 
D) that if more money is spent on one good, the breadwinner must work all the harder to maintain a satisfactory level of living. 
E) preferences for goods and services. 
A) how income is related to hours worked. 
B) all combinations of two goods that can be purchased with a given income. 
C) the way a homemaker should divide money among several commodities. 
D) that if more money is spent on one good, the breadwinner must work all the harder to maintain a satisfactory level of living. 
E) preferences for goods and services.

Exam 5: Consumer Choice: Individual and Market Demand

Marginal utility has a negative slope.This is because of the

Jason considers a crystal bowl, a silver dish, and a pewter figurine, each priced $45 at the local gift shop.He chooses the silver dish because, according to economic theory

Figure 5-1 -In Figure 5-1 from the text, if the price of pizzas is $8: a.how many pizzas will the consumer purchase? b.what is the payment for the optimal number of pizzas? c.how much consumer surplus will the consumer receive?

Economic theory has traditionally focused on optimality in decision-making.​

An increase in income produces a parallel, outward shift in the budget line.

Figure 5-6 -A shift in the budget line in Figure 5-6 from AB to AC indicates

Rolls Royce may actually sell fewer cars at lower prices due to the "snob effect."

An individual's demand curve for a good is ____ her marginal utility curve for the good.

The slope of an indifference curve is called the

For most goods and most people, marginal utility probably

The law of diminishing marginal utility explains why

The slope of an indifference curve at all points reflects

The law of diminishing marginal utility is consistent with the consumer behavior that produces a negatively sloped demand curve.

Figure 5-16 -In Figure 5-16, Adam is

-Table 5-1 gives information on George's total utility from consuming milkshakes and sandwiches.If George's income this week is $15, milkshakes are $3 each, and sandwiches $2, he will maximize his utility if he buys

All points on an indifference curve represent combinations of two goods that are equally desirable to the consumer.

A consumer will consume the combination of goods at the point of tangency between the budget line and the indifference curve.

Scarcity raises both price and marginal utility but generally reduces total utility.

Which of the following observations is not true of a budget line?

A budget line is a straight line designed to show

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Filters

Economic theory has traditionally focused on optimality in decision-making.