Question 1

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 2

Consider a downward-sloping demand curve.When the price of a normal good increases, the income and substitution effects

Accepted Answer

A) work in the same direction to increase quantity demanded. 
B) work in the same direction to decrease quantity demanded. 
C) work in opposite directions and quantity demanded increases. 
D) work in opposite directions and quantity demanded decreases. 
A) work in the same direction to increase quantity demanded. 
B) work in the same direction to decrease quantity demanded. 
C) work in opposite directions and quantity demanded increases. 
D) work in opposite directions and quantity demanded decreases.

Question 3

Why do many film processing companies have a policy of printing every picture on a roll of film or a memory card, even if the picture is very fuzzy and customers are allowed to ask for refunds on any pictures they do not like?

Accepted Answer

The processing companies are taking adva

Question 4

The enjoyment or satisfaction people receive from consuming goods and services is called utility.

Accepted Answer

A) True 
 B)False

Question 5

When the price of summer tank tops falls and you buy more of them because they are relatively less expensive, this is called

Accepted Answer

A) the substitution effect. 
B) the income effect. 
C) the deadweight loss effect. 
D) the elasticity effect. 
A) the substitution effect. 
B) the income effect. 
C) the deadweight loss effect. 
D) the elasticity effect.

Question 6

What is the common feature displayed by the following items?
A.eating in a newly opened "fusion" cuisine restaurant
B.attending a Red Sox game in Fenway Park
C.wearing Lucky Brand designer jeans

Accepted Answer

A) They are all highly inelastic goods. 
B) The consumption of these goods takes place privately. 
C) The consumption of these goods takes place publicly. 
D) They tend to be consumed by better educated people. 
A) They are all highly inelastic goods. 
B) The consumption of these goods takes place privately. 
C) The consumption of these goods takes place publicly. 
D) They tend to be consumed by better educated people.

Question 7

The endowment effect suggests that that people

Accepted Answer

A) have a strong attachment to their entitlement, regardless of whether they paid to acquire it. 
B) have a strong sense of fairness. 
C) are concerned about the welfare of others. 
D) act in ways to distort market prices. 
A) have a strong attachment to their entitlement, regardless of whether they paid to acquire it. 
B) have a strong sense of fairness. 
C) are concerned about the welfare of others. 
D) act in ways to distort market prices.

Question 8

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 9

Figure 10-4
  
-Refer to Figure 10-4.What is the marginal rate of substitution for one bar of chocolate between h and j?

Accepted Answer

A) 1/8 of a cookie. 
B) 1/4 of a cookie. 
C) 2 cookies. 
D) 4 cookies. 
A) 1/8 of a cookie. 
B) 1/4 of a cookie. 
C) 2 cookies. 
D) 4 cookies.

Question 10

Suppose Renee can increase her total utility from consuming video rentals and books by buying one more book and renting one fewer video.Which of the following is true?

Accepted Answer

A) The marginal utility of video rentals is negative. 
B) The marginal utility per dollar spent on books exceeds that of video rentals. 
C) The marginal utility of the last book consumed exceeds the marginal utility of the last video rental consumed. 
D) The marginal utility of the last video rental consumed exceeds the marginal utility of the last book consumed. 
A) The marginal utility of video rentals is negative. 
B) The marginal utility per dollar spent on books exceeds that of video rentals. 
C) The marginal utility of the last book consumed exceeds the marginal utility of the last video rental consumed. 
D) The marginal utility of the last video rental consumed exceeds the marginal utility of the last book consumed.

Question 11

Total utility is maximized in the consumption of two goods by

Accepted Answer

A) equating the marginal utility for each good consumed. 
B) equating the marginal utility per dollar for each good consumed. 
C) equating the total utility of each good divided by its price. 
D) maximizing expenditure on each good. 
A) equating the marginal utility for each good consumed. 
B) equating the marginal utility per dollar for each good consumed. 
C) equating the total utility of each good divided by its price. 
D) maximizing expenditure on each good.

Question 12

Economists have shown that when the ultimatum game experiment is carried out, both allocators and recipients act as if fairness is important.

Accepted Answer

A) True 
 B)False

Question 13

A consumer's budget constraint is

Accepted Answer

A) the limited income that a consumer has to spend on goods and services. 
B) the rate at which the consumer must give up one good to purchase an additional unit of the other goods in the market. 
C) the price ratio a consumer faces in the marketplace. 
D) the extent to which one's preferences are limited by one's income. 
A) the limited income that a consumer has to spend on goods and services. 
B) the rate at which the consumer must give up one good to purchase an additional unit of the other goods in the market. 
C) the price ratio a consumer faces in the marketplace. 
D) the extent to which one's preferences are limited by one's income.

Question 14

A standard which came to the market first, such as the QWERTY letter layout in typewriters, can become entrenched (this layout is still used for computer keyboards today).What is this phenomenon called?

Accepted Answer

A) network externalities 
B) path dependency 
C) sunk cost 
D) comparative advantage 
A) network externalities 
B) path dependency 
C) sunk cost 
D) comparative advantage

Question 15

Economists do not think it is possible to compare the relative utility that two people get from consuming an additional unit of a particular good.

Accepted Answer

A) True 
 B)False

Question 16

One reason that consumers and businesses might not act rationally is

Accepted Answer

A) it is difficult to obtain enough information about the elasticities of demand and supply. 
B) they may not realize their actions are inconsistent with their goals. 
C) consumer tastes change constantly. 
D) they do not always value fairness when they make choices. 
A) it is difficult to obtain enough information about the elasticities of demand and supply. 
B) they may not realize their actions are inconsistent with their goals. 
C) consumer tastes change constantly. 
D) they do not always value fairness when they make choices.

Question 17

Many people leave their servers tips in restaurants, even when they are not likely to visit the restaurant again.This is evidence that

Accepted Answer

A) people would rather pay for good service at an inexpensive restaurant than pay higher prices and receive poor service at an expensive restaurant. 
B) people enjoy eating at restaurants more than eating at home. 
C) people treat others fairly even if doing so makes them worse off financially. 
D) there has been an improvement in the service people receive in restaurants over time, partly because the restaurant industry has become more competitive. 
A) people would rather pay for good service at an inexpensive restaurant than pay higher prices and receive poor service at an expensive restaurant. 
B) people enjoy eating at restaurants more than eating at home. 
C) people treat others fairly even if doing so makes them worse off financially. 
D) there has been an improvement in the service people receive in restaurants over time, partly because the restaurant industry has become more competitive.

Question 18

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.If Jay can eat all the burgers he wants for free, how many burgers will he consume?

Accepted Answer

A) 7 burgers 
B) 6 burgers 
C) 5 burgers 
D) 3 burgers 
A) 7 burgers 
B) 6 burgers 
C) 5 burgers 
D) 3 burgers

Question 19

Marv Pilson has $50 worth of groceries in a shopping cart at his local Shop 'n Save.Assume that the marginal utility per dollar of the liter bottles of soft drink in Marv's cart equals 50.The marginal utility per dollar of the boxes of cereal in Marv's cart equals 20.Marv has only $50 to spend, but has not yet paid for his groceries.How can Marv increase his total utility without spending more than $50?

Accepted Answer

A) Marv should substitute his favorite soft drink or the cereal in his cart for generic brands that have lower prices. 
B) Marv should buy more boxes of cereal and fewer bottles of soft drink. 
C) Marv should buy fewer boxes of cereal and more bottles of soft drink. 
D) Marv should buy fewer boxes of cereal and fewer bottles of soft drink. He can then spend more on other items. 
A) Marv should substitute his favorite soft drink or the cereal in his cart for generic brands that have lower prices. 
B) Marv should buy more boxes of cereal and fewer bottles of soft drink. 
C) Marv should buy fewer boxes of cereal and more bottles of soft drink. 
D) Marv should buy fewer boxes of cereal and fewer bottles of soft drink. He can then spend more on other items.

Question 20

The economic model of consumer behavior predicts that

Accepted Answer

A) consumers will try to earn as much income as they can over their lifetimes. 
B) consumers will choose to buy the combination of goods and services that make them as well off as possible from those combinations that their budgets allow them to buy. 
C) consumers will try to accumulate as many goods and services as they can before they die. 
D) consumers divide their time between consumption and leisure activities in order to maximize social welfare. 
A) consumers will try to earn as much income as they can over their lifetimes. 
B) consumers will choose to buy the combination of goods and services that make them as well off as possible from those combinations that their budgets allow them to buy. 
C) consumers will try to accumulate as many goods and services as they can before they die. 
D) consumers divide their time between consumption and leisure activities in order to maximize social welfare.

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

Consider a downward-sloping demand curve.When the price of a normal good increases, the income and substitution effects

Why do many film processing companies have a policy of printing every picture on a roll of film or a memory card, even if the picture is very fuzzy and customers are allowed to ask for refunds on any pictures they do not like?

The enjoyment or satisfaction people receive from consuming goods and services is called utility.

When the price of summer tank tops falls and you buy more of them because they are relatively less expensive, this is called

What is the common feature displayed by the following items? A.eating in a newly opened "fusion" cuisine restaurant B.attending a Red Sox game in Fenway Park C.wearing Lucky Brand designer jeans

The endowment effect suggests that that people

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 10-4 -Refer to Figure 10-4.What is the marginal rate of substitution for one bar of chocolate between h and j?

Suppose Renee can increase her total utility from consuming video rentals and books by buying one more book and renting one fewer video.Which of the following is true?

Total utility is maximized in the consumption of two goods by

Economists have shown that when the ultimatum game experiment is carried out, both allocators and recipients act as if fairness is important.

A consumer's budget constraint is

A standard which came to the market first, such as the QWERTY letter layout in typewriters, can become entrenched (this layout is still used for computer keyboards today).What is this phenomenon called?

Economists do not think it is possible to compare the relative utility that two people get from consuming an additional unit of a particular good.

One reason that consumers and businesses might not act rationally is

Many people leave their servers tips in restaurants, even when they are not likely to visit the restaurant again.This is evidence that

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.If Jay can eat all the burgers he wants for free, how many burgers will he consume?

The economic model of consumer behavior predicts that

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 More Realistic Setting

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

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Exam 10: Consumer Choice and Behavioral Economics

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

Consider a downward-sloping demand curve.When the price of a normal good increases, the income and substitution effects

Why do many film processing companies have a policy of printing every picture on a roll of film or a memory card, even if the picture is very fuzzy and customers are allowed to ask for refunds on any pictures they do not like?

The enjoyment or satisfaction people receive from consuming goods and services is called utility.

When the price of summer tank tops falls and you buy more of them because they are relatively less expensive, this is called

What is the common feature displayed by the following items? A.eating in a newly opened "fusion" cuisine restaurant B.attending a Red Sox game in Fenway Park C.wearing Lucky Brand designer jeans

The endowment effect suggests that that people

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 10-4 -Refer to Figure 10-4.What is the marginal rate of substitution for one bar of chocolate between h and j?

Suppose Renee can increase her total utility from consuming video rentals and books by buying one more book and renting one fewer video.Which of the following is true?

Total utility is maximized in the consumption of two goods by

Economists have shown that when the ultimatum game experiment is carried out, both allocators and recipients act as if fairness is important.

A consumer's budget constraint is

A standard which came to the market first, such as the QWERTY letter layout in typewriters, can become entrenched (this layout is still used for computer keyboards today).What is this phenomenon called?

Economists do not think it is possible to compare the relative utility that two people get from consuming an additional unit of a particular good.

One reason that consumers and businesses might not act rationally is

Many people leave their servers tips in restaurants, even when they are not likely to visit the restaurant again.This is evidence that

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.If Jay can eat all the burgers he wants for free, how many burgers will he consume?

The economic model of consumer behavior predicts that

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 More Realistic Setting

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