Question 1

Normally shaped indifference curves are bowed towards the origin of the graph.The reason for this shape is

Accepted Answer

A) that indifference curves farther away from the origin represent higher levels of utility. 
B) diminishing marginal rate of substitution. 
C) the law of demand. 
D) that the marginal rate of substitution is constant along an indifference curve. 
E) the principle of diminishing marginal rate of relative price. 
A) that indifference curves farther away from the origin represent higher levels of utility. 
B) diminishing marginal rate of substitution. 
C) the law of demand. 
D) that the marginal rate of substitution is constant along an indifference curve. 
E) the principle of diminishing marginal rate of relative price.

Question 2

You are studying with a friend and your friend says "A budget line shows the various combinations of two goods that can be purchased with the buyer's income at current prices." Is your friend's assessment correct or not?

Accepted Answer

Your friend's descri

Question 3

Jen consumes 5 CDs and 2 tacos.She receives 500 units of utility from her 5th CD and 200 units of utility from her 2nd taco.The price of a CD is $10, the price of a taco is $4, and she is spending her entire budget.Which of the following is true regarding Jen's choices?

Accepted Answer

A) Jen is consuming on her demand curve for tacos. 
B) Jen is maximizing utility. 
C) Jen is consuming on her demand curve for CDs. 
D) Only answers A and B are correct 
E) Answers A, B, and C are correct. 
A) Jen is consuming on her demand curve for tacos. 
B) Jen is maximizing utility. 
C) Jen is consuming on her demand curve for CDs. 
D) Only answers A and B are correct 
E) Answers A, B, and C are correct.

Question 4

Suppose Abe is allocating his entire income and he receives 100 units of utility per dollar from the tenth slice of pizza and 200 units of utility per dollar from his second soda.Is Abe maximizing his utility? Should Abe change his consumption of pizza and soda?

Accepted Answer

Abe is not maximizing his utility becaus

Question 5

The consumption of bottled water increased dramatically during the 1990s.If consumers' utility schedules for water remained constant over this time period, in order for consumers to stay in equilibrium, the price of bottled water must have ________.

Accepted Answer

A) risen because marginal utility increased since people consumed more bottled water 
B) fallen 
C) remained constant because the marginal utility schedule did not change 
D) risen because the supply of water must have increased 
E) We don't have enough information to say what happened to the price. 
A) risen because marginal utility increased since people consumed more bottled water 
B) fallen 
C) remained constant because the marginal utility schedule did not change 
D) risen because the supply of water must have increased 
E) We don't have enough information to say what happened to the price.

Question 6

Sushi costs $3 per piece.Cynthia's total utility after eating one piece is 30 and her total utility after eating 2 pieces is 51, so her marginal utility per dollar from the second piece is

Accepted Answer

A) 17. 
B) 10. 
C) 51. 
D) 7. 
E) 21. 
A) 17. 
B) 10. 
C) 51. 
D) 7. 
E) 21.

Question 7

Why do consumers prefer higher indifference curves?

Accepted Answer

When comparing two indifference curves,

Question 8

-Which of the above figures reflects a decrease in the price of chicken?

Accepted Answer

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

Question 9

What does the term "indifferent" mean and what is its relationship to an indifference curve?

Accepted Answer

Indifferent means that the consumer does

Question 10

-Chase has a budget of $14 which he must allocate between steak and cranberry juice.The table gives his marginal utility and the marginal utility per dollar for both of those goods.The price of steak is $10 per serving and the price of cranberry juice is $2 per serving.To maximize his utility, Chase should buy

Accepted Answer

A) 2 servings of steak and 2 servings of cranberry juice. 
B) 2 servings of steak and 4 servings of cranberry juice. 
C) 1 serving of steak because this has the highest marginal utility. 
D) 1 serving of steak and 2 servings of cranberry juice. 
E) 4 servings of steak and 4 servings of cranberry juice. 
A) 2 servings of steak and 2 servings of cranberry juice. 
B) 2 servings of steak and 4 servings of cranberry juice. 
C) 1 serving of steak because this has the highest marginal utility. 
D) 1 serving of steak and 2 servings of cranberry juice. 
E) 4 servings of steak and 4 servings of cranberry juice.

Question 11

In the paradox of value between expensive diamonds and inexpensive water, we see that

Accepted Answer

A) the consumer surpluses are very high for both goods. 
B) diamonds have a low consumer surplus while water has a high consumer surplus. 
C) diamonds have a high consumer surplus while water has a low consumer surplus. 
D) the consumer surpluses are very low for both goods. 
E) the consumer surpluses for the two goods cannot be compared. 
A) the consumer surpluses are very high for both goods. 
B) diamonds have a low consumer surplus while water has a high consumer surplus. 
C) diamonds have a high consumer surplus while water has a low consumer surplus. 
D) the consumer surpluses are very low for both goods. 
E) the consumer surpluses for the two goods cannot be compared.

Question 12

As more of a good is consumed, the marginal utility of an additional unit ________, so consumers are willing to pay ________ for an additional unit.

Accepted Answer

A) decreases; less 
B) increases; less 
C) decreases; more 
D) increases; more 
E) does not change; less 
A) decreases; less 
B) increases; less 
C) decreases; more 
D) increases; more 
E) does not change; less

Question 13

Does the fact that diamonds, which we do not need to survive, are more expensive than water, which is a necessity, constitute a violation of utility maximization?

Accepted Answer

No, the fact that diamonds are less usef

Question 14

A curve that shows combinations of goods among which a consumer does not prefer one combination to another is

Accepted Answer

A) a budget line. 
B) an indifference curve. 
C) a production possibilities curve. 
D) a demand curve. 
E) a marginal rate of substitution curve. 
A) a budget line. 
B) an indifference curve. 
C) a production possibilities curve. 
D) a demand curve. 
E) a marginal rate of substitution curve.

Question 15

-Based on the figures above, it is the case that the consumer surplus from water ________ the consumer surplus from diamonds and the marginal utility from water ________ the marginal utility from diamonds.

Accepted Answer

A) is equal to; is equal to 
B) is larger than; is equal to 
C) is larger than; is larger than 
D) is larger than; is smaller than 
E) is smaller than; is smaller than 
A) is equal to; is equal to 
B) is larger than; is equal to 
C) is larger than; is larger than 
D) is larger than; is smaller than 
E) is smaller than; is smaller than

Question 16

If the price of steak rises, a consumer who had been maximizing his or her utility before will buy less steak because its

Accepted Answer

A) total utility falls. 
B) ratio of marginal utility to price is now less than that for other goods. 
C) marginal utility has fallen. 
D) ratio of marginal utility to total utility falls. 
E) ratio of marginal utility to price is now larger than that for other goods. 
A) total utility falls. 
B) ratio of marginal utility to price is now less than that for other goods. 
C) marginal utility has fallen. 
D) ratio of marginal utility to total utility falls. 
E) ratio of marginal utility to price is now larger than that for other goods.

Question 17

The above figure shows one of Cheri's indifference curves.Suppose point a represents the best affordable point for Cheri.Cheri's best affordable point could move to point b if

Accepted Answer

A) marginal utility increases. 
B) total utility increases. 
C) the price of a CD falls and the price of a book rises. 
D) the price of a CD rises and the price of a book falls. 
E) Cheri's budget increases. 
A) marginal utility increases. 
B) total utility increases. 
C) the price of a CD falls and the price of a book rises. 
D) the price of a CD rises and the price of a book falls. 
E) Cheri's budget increases.

Question 18

Timmy makes $100 per week as a taxidermist.He spends all this income to buy pizza and hair gel.The price of a pizza is $10 and the price of a bottle of hair gel is $4.If Timmy buys 5 bottles of hair gel, then he buys ________ pizzas.

Accepted Answer

A) 10 
B) 4 
C) 8 
D) 20 
E) None of the above answers is correct. 
A) 10 
B) 4 
C) 8 
D) 20 
E) None of the above answers is correct.

Question 19

"If Ivan says he is indifferent between the consumption of a new pair of jeans or a set of earrings, he means that he does not want either product." Is the previous analysis correct? Explain your answer.

Accepted Answer

The analysis is incorrect.The

Question 20

In order to maximize his or her utility, a consumer must allocate his or her entire budget and

Accepted Answer

A) buy the combination of goods that makes the marginal utility per dollar from all goods as small as possible. 
B) buy the combination of goods that equalizes the total utility per dollar from all goods. 
C) do nothing else because when the entire budget is allocated, utility is maximized. 
D) buy the combination of goods that equalizes the marginal utility per dollar from all goods. 
E) buy the combination of goods that makes the marginal utility per dollar from all goods as large as possible. 
A) buy the combination of goods that makes the marginal utility per dollar from all goods as small as possible. 
B) buy the combination of goods that equalizes the total utility per dollar from all goods. 
C) do nothing else because when the entire budget is allocated, utility is maximized. 
D) buy the combination of goods that equalizes the marginal utility per dollar from all goods. 
E) buy the combination of goods that makes the marginal utility per dollar from all goods as large as possible.

Normally shaped indifference curves are bowed towards the origin of the graph.The reason for this shape is

You are studying with a friend and your friend says "A budget line shows the various combinations of two goods that can be purchased with the buyer's income at current prices." Is your friend's assessment correct or not?

Jen consumes 5 CDs and 2 tacos.She receives 500 units of utility from her 5th CD and 200 units of utility from her 2nd taco.The price of a CD is $10, the price of a taco is $4, and she is spending her entire budget.Which of the following is true regarding Jen's choices?

Suppose Abe is allocating his entire income and he receives 100 units of utility per dollar from the tenth slice of pizza and 200 units of utility per dollar from his second soda.Is Abe maximizing his utility? Should Abe change his consumption of pizza and soda?

The consumption of bottled water increased dramatically during the 1990s.If consumers' utility schedules for water remained constant over this time period, in order for consumers to stay in equilibrium, the price of bottled water must have ________.

Sushi costs $3 per piece.Cynthia's total utility after eating one piece is 30 and her total utility after eating 2 pieces is 51, so her marginal utility per dollar from the second piece is

Why do consumers prefer higher indifference curves?

-Which of the above figures reflects a decrease in the price of chicken?

What does the term "indifferent" mean and what is its relationship to an indifference curve?

In the paradox of value between expensive diamonds and inexpensive water, we see that

As more of a good is consumed, the marginal utility of an additional unit , so consumers are willing to pay for an additional unit.

Does the fact that diamonds, which we do not need to survive, are more expensive than water, which is a necessity, constitute a violation of utility maximization?

A curve that shows combinations of goods among which a consumer does not prefer one combination to another is

-Based on the figures above, it is the case that the consumer surplus from water the consumer surplus from diamonds and the marginal utility from water the marginal utility from diamonds.

If the price of steak rises, a consumer who had been maximizing his or her utility before will buy less steak because its

The above figure shows one of Cheri's indifference curves.Suppose point a represents the best affordable point for Cheri.Cheri's best affordable point could move to point b if

Timmy makes $100 per week as a taxidermist.He spends all this income to buy pizza and hair gel.The price of a pizza is $10 and the price of a bottle of hair gel is $4.If Timmy buys 5 bottles of hair gel, then he buys ________ pizzas.

"If Ivan says he is indifferent between the consumption of a new pair of jeans or a set of earrings, he means that he does not want either product." Is the previous analysis correct? Explain your answer.

In order to maximize his or her utility, a consumer must allocate his or her entire budget and

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

Normally shaped indifference curves are bowed towards the origin of the graph.The reason for this shape is

You are studying with a friend and your friend says "A budget line shows the various combinations of two goods that can be purchased with the buyer's income at current prices." Is your friend's assessment correct or not?

Jen consumes 5 CDs and 2 tacos.She receives 500 units of utility from her 5th CD and 200 units of utility from her 2nd taco.The price of a CD is $10, the price of a taco is $4, and she is spending her entire budget.Which of the following is true regarding Jen's choices?

Suppose Abe is allocating his entire income and he receives 100 units of utility per dollar from the tenth slice of pizza and 200 units of utility per dollar from his second soda.Is Abe maximizing his utility? Should Abe change his consumption of pizza and soda?

The consumption of bottled water increased dramatically during the 1990s.If consumers' utility schedules for water remained constant over this time period, in order for consumers to stay in equilibrium, the price of bottled water must have ________.

Sushi costs $3 per piece.Cynthia's total utility after eating one piece is 30 and her total utility after eating 2 pieces is 51, so her marginal utility per dollar from the second piece is

Why do consumers prefer higher indifference curves?

-Which of the above figures reflects a decrease in the price of chicken?

What does the term "indifferent" mean and what is its relationship to an indifference curve?

In the paradox of value between expensive diamonds and inexpensive water, we see that

As more of a good is consumed, the marginal utility of an additional unit ________, so consumers are willing to pay ________ for an additional unit.

Does the fact that diamonds, which we do not need to survive, are more expensive than water, which is a necessity, constitute a violation of utility maximization?

A curve that shows combinations of goods among which a consumer does not prefer one combination to another is

-Based on the figures above, it is the case that the consumer surplus from water ________ the consumer surplus from diamonds and the marginal utility from water ________ the marginal utility from diamonds.

If the price of steak rises, a consumer who had been maximizing his or her utility before will buy less steak because its

The above figure shows one of Cheri's indifference curves.Suppose point a represents the best affordable point for Cheri.Cheri's best affordable point could move to point b if

Timmy makes $100 per week as a taxidermist.He spends all this income to buy pizza and hair gel.The price of a pizza is $10 and the price of a bottle of hair gel is $4.If Timmy buys 5 bottles of hair gel, then he buys ________ pizzas.

"If Ivan says he is indifferent between the consumption of a new pair of jeans or a set of earrings, he means that he does not want either product." Is the previous analysis correct? Explain your answer.

In order to maximize his or her utility, a consumer must allocate his or her entire budget and

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

As more of a good is consumed, the marginal utility of an additional unit , so consumers are willing to pay for an additional unit.

-Based on the figures above, it is the case that the consumer surplus from water the consumer surplus from diamonds and the marginal utility from water the marginal utility from diamonds.