Question 1

________ leads to a decrease in marginal utility per dollar for soda.

Accepted Answer

A) Increasing marginal utility 
B) The diminishing marginal rate of substitution as fewer sodas are consumed 
C) An outward shift in the indifference curves for soda 
D) An increase in the price of soda 
E) A fall in the price of soda 
A) Increasing marginal utility 
B) The diminishing marginal rate of substitution as fewer sodas are consumed 
C) An outward shift in the indifference curves for soda 
D) An increase in the price of soda 
E) A fall in the price of soda

Question 2

Gertrude has a $15 budget to spend on soda and crackers.Soda costs $1 per bottle and crackers cost 50¢ each.The quantity of soda is measured on the vertical axis.If the price of soda increases to $2 per bottle and the price of crackers increase to $1 each, the

Accepted Answer

A) indifference curves shift inward. 
B) indifference curves shift outward. 
C) budget line shifts inward. 
D) budget line shifts outward. 
E) demand curve for soda shifts leftward. 
A) indifference curves shift inward. 
B) indifference curves shift outward. 
C) budget line shifts inward. 
D) budget line shifts outward. 
E) demand curve for soda shifts leftward.

Question 3

The paradox of value with respect to water and diamonds can be explained using consumer surplus because

Accepted Answer

A) water is cheap but provides a large consumer surplus, while diamonds are expensive with a small consumer surplus. 
B) diamonds are in large supply relative to their demand, while water is scarce in supply relative to its demand. 
C) water is cheap but provides a small consumer surplus, while diamonds are expensive but provide a large consumer surplus. 
D) the total consumer surplus from diamonds is greater than the total consumer surplus from water. 
E) None of the above answers is correct. 
A) water is cheap but provides a large consumer surplus, while diamonds are expensive with a small consumer surplus. 
B) diamonds are in large supply relative to their demand, while water is scarce in supply relative to its demand. 
C) water is cheap but provides a small consumer surplus, while diamonds are expensive but provide a large consumer surplus. 
D) the total consumer surplus from diamonds is greater than the total consumer surplus from water. 
E) None of the above answers is correct.

Question 4

-Which point is most preferred?

Accepted Answer

A) Point C only. 
B) Point J only. 
C) Point G only. 
D) Point C and G are tied for the most preferred. 
E) More information is needed to determine which point is most preferred. 
A) Point C only. 
B) Point J only. 
C) Point G only. 
D) Point C and G are tied for the most preferred. 
E) More information is needed to determine which point is most preferred.

Question 5

In an indifference curve/budget line diagram, generally when the price of a good increases, the consumer purchases

Accepted Answer

A) less of the good and moves to a lower indifference curve. 
B) less of the good and moves to a higher indifference curve. 
C) more of the good and moves to a higher indifference curve. 
D) more of the good and moves to a lower indifference curve. 
E) the same amount of the good and moves to a higher indifference curve. 
A) less of the good and moves to a lower indifference curve. 
B) less of the good and moves to a higher indifference curve. 
C) more of the good and moves to a higher indifference curve. 
D) more of the good and moves to a lower indifference curve. 
E) the same amount of the good and moves to a higher indifference curve.

Question 6

You are studying with a friend, and your friend says "To maximize utility, a consumer must consume the combination of goods so that the marginal utility of good X equals the marginal utility of good Y." Explain whether your friend's statement is correct or incorrect.

Accepted Answer

Your friend's statement is inc

Question 7

-Sam's total utility for bananas is in the table above.Sam's total utility shows that the law of diminishing marginal utility

Accepted Answer

A) holds because his marginal utility from bananas decreases as Sam eats more bananas. 
B) does not hold because Sam's total utility does not reach its maximum. 
C) does not hold because Sam's marginal utility does not decrease to zero. 
D) holds because Sam's total utility from bananas increases as Sam eats more bananas. 
E) None of the above answers is correct because there are no data for marginal utility with which to answer the question. 
A) holds because his marginal utility from bananas decreases as Sam eats more bananas. 
B) does not hold because Sam's total utility does not reach its maximum. 
C) does not hold because Sam's marginal utility does not decrease to zero. 
D) holds because Sam's total utility from bananas increases as Sam eats more bananas. 
E) None of the above answers is correct because there are no data for marginal utility with which to answer the question.

Question 8

-The table above gives Matt's utility from consuming slices of pizza.His marginal utility from the 3rd slice is

Accepted Answer

A) 27 units. 
B) 5 units. 
C) 9 units. 
D) 11 units. 
E) None of the above answers is correct. 
A) 27 units. 
B) 5 units. 
C) 9 units. 
D) 11 units. 
E) None of the above answers is correct.

Question 9

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.With this level of income, which consumption points are not possible?

Accepted Answer

A) 200 lures, 0 steaks 
B) 100 lures, 60 steaks 
C) 80 lures, 20 steaks 
D) 0 lures, 50 steaks 
E) 50 lures, 50 steaks 
A) 200 lures, 0 steaks 
B) 100 lures, 60 steaks 
C) 80 lures, 20 steaks 
D) 0 lures, 50 steaks 
E) 50 lures, 50 steaks

Question 10

The point where the budget line intersects the y-axis represents a combination of goods that contains

Accepted Answer

A) some of both goods. 
B) only the good measured on the y-axis. 
C) only the good measured on the x-axis. 
D) no goods. 
E) the quantity of the good measured on the y-axis that has zero marginal utility. 
A) some of both goods. 
B) only the good measured on the y-axis. 
C) only the good measured on the x-axis. 
D) no goods. 
E) the quantity of the good measured on the y-axis that has zero marginal utility.

Question 11

The paradox of value refers to the

Accepted Answer

A) utility maximizing rule. 
B) fact that water is vital but cheap while diamonds are relatively useless but expensive. 
C) fact that consumers have different preferences and utility schedules. 
D) law of demand. 
E) issue of why the consumer surplus from water equals the consumer surplus from diamonds. 
A) utility maximizing rule. 
B) fact that water is vital but cheap while diamonds are relatively useless but expensive. 
C) fact that consumers have different preferences and utility schedules. 
D) law of demand. 
E) issue of why the consumer surplus from water equals the consumer surplus from diamonds.

Question 12

How can restaurants offer all-you-can-eat specials without fear of going bankrupt?

Accepted Answer

The restaurants that engage in this busi

Question 13

-Liz consumes two goods, candy bars and potato chips.Her budget is $4 per day.The price of a candy bar is $1.00 and the price of a bag of chips is 50 cents.Her utility is in the table above.For Liz to maximize her utility, what combination of candy bars and potato chips should she eat?

Accepted Answer

A) 4 candy bars and 0 bags of potato chips 
B) 3 candy bars and 2 bags of potato chips 
C) 2 candy bars and 4 bags of potato chips 
D) 1 candy bar and 5 bags of potato chips 
E) None of the above answers are correct. 
A) 4 candy bars and 0 bags of potato chips 
B) 3 candy bars and 2 bags of potato chips 
C) 2 candy bars and 4 bags of potato chips 
D) 1 candy bar and 5 bags of potato chips 
E) None of the above answers are correct.

Question 14

-The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.Suppose the price of a slice of pizza increases.As a result, Ali's

Accepted Answer

A) marginal utility per dollar from pizza decreases. 
B) total utility increases. 
C) purchases of pizza might increase. 
D) marginal utility from all the slices of pizza he consumes decreases. 
E) marginal utility per dollar from soda increases. 
A) marginal utility per dollar from pizza decreases. 
B) total utility increases. 
C) purchases of pizza might increase. 
D) marginal utility from all the slices of pizza he consumes decreases. 
E) marginal utility per dollar from soda increases.

Question 15

The marginal rate of substitution for the good on the horizontal axis is

Accepted Answer

A) the consumer surplus. 
B) the same as the consumer's budget line. 
C) equal to the magnitude of the slope of the indifference curve. 
D) equal to the magnitude of the slope of the consumer surplus curve. 
E) equal to 1.0 if the indifference curves are linear. 
A) the consumer surplus. 
B) the same as the consumer's budget line. 
C) equal to the magnitude of the slope of the indifference curve. 
D) equal to the magnitude of the slope of the consumer surplus curve. 
E) equal to 1.0 if the indifference curves are linear.

Question 16

Consider an indifference curve for sodas and pizza, drawn in a figure with sodas measured along the horizontal axis.Moving downward along the indifference curve, the

Accepted Answer

A) marginal utility per dollar for sodas must increase. 
B) marginal utility per dollar for pizza must increase. 
C) consumer remains indifferent among the different combinations of soda and pizza. 
D) the level of total utility must change. 
E) marginal rate of substitution is constant. 
A) marginal utility per dollar for sodas must increase. 
B) marginal utility per dollar for pizza must increase. 
C) consumer remains indifferent among the different combinations of soda and pizza. 
D) the level of total utility must change. 
E) marginal rate of substitution is constant.

Question 17

At all points on a demand curve, the
I∙consumer's budget has been allocated to maximize total utility.
Ii∙quantity is the quantity demanded at each price when total utility is maximized.
Iii∙price represents the marginal benefit the consumer gets from an extra unit of a good.

Accepted Answer

A) i only 
B) ii only 
C) i and ii 
D) i and iii 
E) i, ii, and iii 
A) i only 
B) ii only 
C) i and ii 
D) i and iii 
E) i, ii, and iii

Question 18

The figure above shows one of a consumer's indifference curves.
-The marginal rate of substitution (MRS)at point C equals

Accepted Answer

A) 4. 
B) 8. 
C) 2. 
D) 1/2. 
E) More information is needed to calculate the MRS. 
A) 4. 
B) 8. 
C) 2. 
D) 1/2. 
E) More information is needed to calculate the MRS.

Question 19

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.The marginal utility of which clove of garlic is the largest?

Accepted Answer

A) the first clove 
B) the second clove 
C) the fifth clove 
D) the third clove 
E) The marginal utility of all cloves is the same. 
A) the first clove 
B) the second clove 
C) the fifth clove 
D) the third clove 
E) The marginal utility of all cloves is the same.

Question 20

The figure above shows one of a consumer's indifference curves.
-The marginal rate of substitution (MRS)at point G equals

Accepted Answer

A) 4. 
B) 8. 
C) 2. 
D) 1/2. 
E) More information is needed to calculate the MRS. 
A) 4. 
B) 8. 
C) 2. 
D) 1/2. 
E) More information is needed to calculate the MRS.

________ leads to a decrease in marginal utility per dollar for soda.

Gertrude has a $15 budget to spend on soda and crackers.Soda costs $1 per bottle and crackers cost 50¢ each.The quantity of soda is measured on the vertical axis.If the price of soda increases to $2 per bottle and the price of crackers increase to $1 each, the

The paradox of value with respect to water and diamonds can be explained using consumer surplus because

-Which point is most preferred?

In an indifference curve/budget line diagram, generally when the price of a good increases, the consumer purchases

You are studying with a friend, and your friend says "To maximize utility, a consumer must consume the combination of goods so that the marginal utility of good X equals the marginal utility of good Y." Explain whether your friend's statement is correct or incorrect.

-Sam's total utility for bananas is in the table above.Sam's total utility shows that the law of diminishing marginal utility

-The table above gives Matt's utility from consuming slices of pizza.His marginal utility from the 3rd slice is

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.With this level of income, which consumption points are not possible?

The point where the budget line intersects the y-axis represents a combination of goods that contains

The paradox of value refers to the

How can restaurants offer all-you-can-eat specials without fear of going bankrupt?

-Liz consumes two goods, candy bars and potato chips.Her budget is $4 per day.The price of a candy bar is $1.00 and the price of a bag of chips is 50 cents.Her utility is in the table above.For Liz to maximize her utility, what combination of candy bars and potato chips should she eat?

-The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.Suppose the price of a slice of pizza increases.As a result, Ali's

The marginal rate of substitution for the good on the horizontal axis is

Consider an indifference curve for sodas and pizza, drawn in a figure with sodas measured along the horizontal axis.Moving downward along the indifference curve, the

At all points on a demand curve, the I∙consumer's budget has been allocated to maximize total utility. Ii∙quantity is the quantity demanded at each price when total utility is maximized. Iii∙price represents the marginal benefit the consumer gets from an extra unit of a good.

The figure above shows one of a consumer's indifference curves. -The marginal rate of substitution (MRS)at point C equals

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.The marginal utility of which clove of garlic is the largest?

The figure above shows one of a consumer's indifference curves. -The marginal rate of substitution (MRS)at point G equals

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

________ leads to a decrease in marginal utility per dollar for soda.

Gertrude has a $15 budget to spend on soda and crackers.Soda costs $1 per bottle and crackers cost 50¢ each.The quantity of soda is measured on the vertical axis.If the price of soda increases to $2 per bottle and the price of crackers increase to $1 each, the

The paradox of value with respect to water and diamonds can be explained using consumer surplus because

-Which point is most preferred?

In an indifference curve/budget line diagram, generally when the price of a good increases, the consumer purchases

You are studying with a friend, and your friend says "To maximize utility, a consumer must consume the combination of goods so that the marginal utility of good X equals the marginal utility of good Y." Explain whether your friend's statement is correct or incorrect.

-Sam's total utility for bananas is in the table above.Sam's total utility shows that the law of diminishing marginal utility

-The table above gives Matt's utility from consuming slices of pizza.His marginal utility from the 3rd slice is

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.With this level of income, which consumption points are not possible?

The point where the budget line intersects the y-axis represents a combination of goods that contains

The paradox of value refers to the

How can restaurants offer all-you-can-eat specials without fear of going bankrupt?

-Liz consumes two goods, candy bars and potato chips.Her budget is $4 per day.The price of a candy bar is $1.00 and the price of a bag of chips is 50 cents.Her utility is in the table above.For Liz to maximize her utility, what combination of candy bars and potato chips should she eat?

-The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.Suppose the price of a slice of pizza increases.As a result, Ali's

The marginal rate of substitution for the good on the horizontal axis is

Consider an indifference curve for sodas and pizza, drawn in a figure with sodas measured along the horizontal axis.Moving downward along the indifference curve, the

At all points on a demand curve, the I∙consumer's budget has been allocated to maximize total utility. Ii∙quantity is the quantity demanded at each price when total utility is maximized. Iii∙price represents the marginal benefit the consumer gets from an extra unit of a good.

The figure above shows one of a consumer's indifference curves. -The marginal rate of substitution (MRS)at point C equals

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.The marginal utility of which clove of garlic is the largest?

The figure above shows one of a consumer's indifference curves. -The marginal rate of substitution (MRS)at point G equals

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