Question 1

A point where the budget line is just touching an indifference curve at one point is

Accepted Answer

A) the least affordable point. 
B) the best affordable point. 
C) on the lowest attainable indifference curve. 
D) Both answers B and C are correct. 
E) Both answers A and C are correct. 
A) the least affordable point. 
B) the best affordable point. 
C) on the lowest attainable indifference curve. 
D) Both answers B and C are correct. 
E) Both answers A and C are correct.

Question 2

In economics, utility

Accepted Answer

A) always decreases as income increases. 
B) equals opportunity cost. 
C) is an index of satisfaction. 
D) is measured by the same units as relative price. 
E) and relative price are the same thing. 
A) always decreases as income increases. 
B) equals opportunity cost. 
C) is an index of satisfaction. 
D) is measured by the same units as relative price. 
E) and relative price are the same thing.

Question 3

-The figure above shows Sarah's budget line.Sarah earns $500 per week selling baskets made out of tree vines.With this money she buys sushi and rose bushes.Each piece of sushi costs $1 and each rose bush costs $10.Sarah will be at what point on her budget line if she spends $300 per week on rose bushes?

Accepted Answer

A) Point a 
B) Point b 
C) Point c 
D) Point f 
E) Point e 
A) Point a 
B) Point b 
C) Point c 
D) Point f 
E) Point e

Question 4

-The table above gives Jessie's marginal utility and total utility from tacos.Complete the table.

Accepted Answer

@#IMG-DLM& The compl

Question 5

Paula is currently spending all of her budget and she finds that the marginal utility per dollar from dresses exceeds the marginal utility per dollar from hats.To maximize her utility, Paula should therefore buy

Accepted Answer

A) more dresses and fewer hats. 
B) more hats and fewer dresses. 
C) more dresses and hats. 
D) fewer dresses and hats. 
E) probably change her purchases but more information is needed to determine if she should buy more or fewer dresses and hats. 
A) more dresses and fewer hats. 
B) more hats and fewer dresses. 
C) more dresses and hats. 
D) fewer dresses and hats. 
E) probably change her purchases but more information is needed to determine if she should buy more or fewer dresses and hats.

Question 6

Explain how changes in the price of goods and the consumer's budget affect the budget line.

Accepted Answer

If the price of the good measured on the

Question 7

-The figure above contains several budget lines for Sarah, who uses her income to purchase two goods, cheese and crackers.
a∙A movement between which two budget lines represents an increase in Sarah's budget for cheese and crackers?
b∙A movement between which two budget lines represents an increase in the price of a pound of cheese?
c∙A movement between which two budget lines represents an increase in the price of a box of crackers?

Accepted Answer

a∙A movement from BL₁ to BL₃ shows an in

Question 8

-Based on the figure above, which of the following would lead the consumer's budget line to shift from BL₀ to BL₁?

Accepted Answer

A) A rise in the price of water. 
B) A fall in the price of water. 
C) A rise in the price of water and the price of gum. 
D) A decrease in the consumer's budget. 
E) An increase in the consumer's budget. 
A) A rise in the price of water. 
B) A fall in the price of water. 
C) A rise in the price of water and the price of gum. 
D) A decrease in the consumer's budget. 
E) An increase in the consumer's budget.

Question 9

In the above figure, I is an indifference curve.Moving from point a to point b,

Accepted Answer

A) the marginal rate of substitution for books decreases. 
B) the budget line rotates inward. 
C) the budget line rotates outward. 
D) there is diminishing total utility. 
E) the marginal rate of substitution for books increases. 
A) the marginal rate of substitution for books decreases. 
B) the budget line rotates inward. 
C) the budget line rotates outward. 
D) there is diminishing total utility. 
E) the marginal rate of substitution for books increases.

Question 10

Any point below a given indifference curve is

Accepted Answer

A) inferior to any point on the indifference curve. 
B) preferred to any point on the indifference curve. 
C) definitely affordable. 
D) definitely unaffordable. 
E) More information is needed to determine if the point is or is not affordable and if the point is or is not preferred. 
A) inferior to any point on the indifference curve. 
B) preferred to any point on the indifference curve. 
C) definitely affordable. 
D) definitely unaffordable. 
E) More information is needed to determine if the point is or is not affordable and if the point is or is not preferred.

Question 11

Suppose Lizzie consumes soda and pizza.If the last bottle of soda she drinks provides 100 units of utility per dollar while the last slice of pizza she eats provides 300 units of utility per dollar,

Accepted Answer

A) the demand curve for soda must have shifted outward. 
B) the demand curve for pizza must have shifted inward. 
C) Lizzie should buy more pizza and less soda to maximize her utility. 
D) the indifference curve for soda and pizza must have rotated inward. 
E) the marginal rate of substitution between soda and pizza equals 3. 
A) the demand curve for soda must have shifted outward. 
B) the demand curve for pizza must have shifted inward. 
C) Lizzie should buy more pizza and less soda to maximize her utility. 
D) the indifference curve for soda and pizza must have rotated inward. 
E) the marginal rate of substitution between soda and pizza equals 3.

Question 12

Assume that there are two goods, x and y.The quantity of good x is measured on the x-axis and the quantity of good y is measured on the y-axis.If the price of good y rises, then the

Accepted Answer

A) y-axis intercept of the budget line increases. 
B) y-axis intercept of the budget line increases and the x-axis intercept of the budget line decreases. 
C) y-axis intercept of the budget line decreases and the x-axis intercept does not change. 
D) slope of the budget line changes. 
E) Both answers C and D are correct. 
A) y-axis intercept of the budget line increases. 
B) y-axis intercept of the budget line increases and the x-axis intercept of the budget line decreases. 
C) y-axis intercept of the budget line decreases and the x-axis intercept does not change. 
D) slope of the budget line changes. 
E) Both answers C and D are correct.

Question 13

The utility-maximizing rule says that consumers must

Accepted Answer

A) only allocate the entire available budget. 
B) only make the marginal utility per dollar the same for all goods. 
C) allocate the entire available budget and make the marginal utility per dollar the same for all goods. 
D) either allocate the entire available budget or make the marginal utility per dollar the same for all goods but not both. 
E) None of the above answers are correct. 
A) only allocate the entire available budget. 
B) only make the marginal utility per dollar the same for all goods. 
C) allocate the entire available budget and make the marginal utility per dollar the same for all goods. 
D) either allocate the entire available budget or make the marginal utility per dollar the same for all goods but not both. 
E) None of the above answers are correct.

Question 14

-Which of the above figures reflects an increase in the price of chicken?

Accepted Answer

A) Figure A 
B) Figure B 
C) Figure C 
D) Figure D 
E) Both Figure B and Figure C 
A) Figure A 
B) Figure B 
C) Figure C 
D) Figure D 
E) Both Figure B and Figure C

Question 15

If Joan consumes 1 dinner roll, she has total utility of 15; if she consumes 2, she has total utility of 27; if she consumes 3, she has total utility of 37; and if she consumes 4, she has total utility of 45.What is the marginal utility of the fourth dinner roll consumed?

Accepted Answer

A) 124 units of utility 
B) 45 units of utility 
C) 11.25 units of utility 
D) 8 units of utility 
E) 37 units of utility 
A) 124 units of utility 
B) 45 units of utility 
C) 11.25 units of utility 
D) 8 units of utility 
E) 37 units of utility

Question 16

If a consumer obtains 20 units of utility for the first unit consumed, 10 for the second, and 5 for the third, what is the total utility of consuming three units?

Accepted Answer

A) 20 units 
B) 30 units 
C) 35 units 
D) 5 units 
E) None of the above answers is correct. 
A) 20 units 
B) 30 units 
C) 35 units 
D) 5 units 
E) None of the above answers is correct.

Question 17

Diminishing marginal utility means that

Accepted Answer

A) marginal utility decreases as consumption decreases. 
B) marginal utility increases as consumption increases. 
C) marginal utility decreases as consumption increases. 
D) total utility decreases as marginal utility decreases. 
E) total utility decreases as marginal utility increases. 
A) marginal utility decreases as consumption decreases. 
B) marginal utility increases as consumption increases. 
C) marginal utility decreases as consumption increases. 
D) total utility decreases as marginal utility decreases. 
E) total utility decreases as marginal utility increases.

Question 18

Nadir and Nina consume the same goods.If Nadir has more income than Nina, then Nina's budget line will

Accepted Answer

A) lie to the left of Nadir's budget line. 
B) be steeper than Nadir's budget line. 
C) lie to the right of Nadir's budget line. 
D) be flatter than Nadir's budget line. 
E) More information is needed to determine how Nina's and Nadir's budget lines compare. 
A) lie to the left of Nadir's budget line. 
B) be steeper than Nadir's budget line. 
C) lie to the right of Nadir's budget line. 
D) be flatter than Nadir's budget line. 
E) More information is needed to determine how Nina's and Nadir's budget lines compare.

Question 19

Samantha has a budget of $40 and buys beef jerky and fried pork rinds.Her budget does not change and the price of both beef jerky and fried pork rinds increases.As a result,

Accepted Answer

A) Samantha's consumption possibilities have decreased. 
B) Samantha's budget line shifts inward. 
C) Samantha can still buy the combination of beef jerky and fried pork rinds she was initially consuming because her budget did not change. 
D) Answers A and B are correct. 
E) Answers A and C are correct. 
A) Samantha's consumption possibilities have decreased. 
B) Samantha's budget line shifts inward. 
C) Samantha can still buy the combination of beef jerky and fried pork rinds she was initially consuming because her budget did not change. 
D) Answers A and B are correct. 
E) Answers A and C are correct.

Question 20

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each, steaks cost $10 each.If Reb purchases 124 lures per week, how many steaks can he buy?

Accepted Answer

A) 620 
B) 38 
C) 123 
D) 380 
E) 100 
A) 620 
B) 38 
C) 123 
D) 380 
E) 100

A point where the budget line is just touching an indifference curve at one point is

In economics, utility

-The table above gives Jessie's marginal utility and total utility from tacos.Complete the table.

Paula is currently spending all of her budget and she finds that the marginal utility per dollar from dresses exceeds the marginal utility per dollar from hats.To maximize her utility, Paula should therefore buy

Explain how changes in the price of goods and the consumer's budget affect the budget line.

-Based on the figure above, which of the following would lead the consumer's budget line to shift from BL₀ to BL₁?

In the above figure, I is an indifference curve.Moving from point a to point b,

Any point below a given indifference curve is

Suppose Lizzie consumes soda and pizza.If the last bottle of soda she drinks provides 100 units of utility per dollar while the last slice of pizza she eats provides 300 units of utility per dollar,

Assume that there are two goods, x and y.The quantity of good x is measured on the x-axis and the quantity of good y is measured on the y-axis.If the price of good y rises, then the

The utility-maximizing rule says that consumers must

-Which of the above figures reflects an increase in the price of chicken?

If Joan consumes 1 dinner roll, she has total utility of 15; if she consumes 2, she has total utility of 27; if she consumes 3, she has total utility of 37; and if she consumes 4, she has total utility of 45.What is the marginal utility of the fourth dinner roll consumed?

If a consumer obtains 20 units of utility for the first unit consumed, 10 for the second, and 5 for the third, what is the total utility of consuming three units?

Diminishing marginal utility means that

Nadir and Nina consume the same goods.If Nadir has more income than Nina, then Nina's budget line will

Samantha has a budget of $40 and buys beef jerky and fried pork rinds.Her budget does not change and the price of both beef jerky and fried pork rinds increases.As a result,

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each, steaks cost $10 each.If Reb purchases 124 lures per week, how many steaks can he buy?

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 13: Consumer Choice and Demand

A point where the budget line is just touching an indifference curve at one point is

In economics, utility

-The table above gives Jessie's marginal utility and total utility from tacos.Complete the table.

Paula is currently spending all of her budget and she finds that the marginal utility per dollar from dresses exceeds the marginal utility per dollar from hats.To maximize her utility, Paula should therefore buy

Explain how changes in the price of goods and the consumer's budget affect the budget line.

-Based on the figure above, which of the following would lead the consumer's budget line to shift from BL₀ to BL₁?

In the above figure, I is an indifference curve.Moving from point a to point b,

Any point below a given indifference curve is

Suppose Lizzie consumes soda and pizza.If the last bottle of soda she drinks provides 100 units of utility per dollar while the last slice of pizza she eats provides 300 units of utility per dollar,

Assume that there are two goods, x and y.The quantity of good x is measured on the x-axis and the quantity of good y is measured on the y-axis.If the price of good y rises, then the

The utility-maximizing rule says that consumers must

-Which of the above figures reflects an increase in the price of chicken?

If Joan consumes 1 dinner roll, she has total utility of 15; if she consumes 2, she has total utility of 27; if she consumes 3, she has total utility of 37; and if she consumes 4, she has total utility of 45.What is the marginal utility of the fourth dinner roll consumed?

If a consumer obtains 20 units of utility for the first unit consumed, 10 for the second, and 5 for the third, what is the total utility of consuming three units?

Diminishing marginal utility means that

Nadir and Nina consume the same goods.If Nadir has more income than Nina, then Nina's budget line will

Samantha has a budget of $40 and buys beef jerky and fried pork rinds.Her budget does not change and the price of both beef jerky and fried pork rinds increases.As a result,

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each, steaks cost $10 each.If Reb purchases 124 lures per week, how many steaks can he buy?

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters