Question 1

One reason why water is cheap compared to diamonds is because the

Accepted Answer

A) marginal utility of water is enormous. 
B) marginal utility of water is small. 
C) total utility of water is enormous. 
D) total utility of water is small. 
E) total utility of water and diamonds must be equal but the marginal utility of water is much lower than the marginal utility of diamonds. 
A) marginal utility of water is enormous. 
B) marginal utility of water is small. 
C) total utility of water is enormous. 
D) total utility of water is small. 
E) total utility of water and diamonds must be equal but the marginal utility of water is much lower than the marginal utility of diamonds.

Question 2

Suppose a consumer has $100 to spend on two goods, shoes and shirts.If the price of a pair of shoes is $20 per pair and the price of a shirt is $15 each, which of the following combinations is unaffordable to the consumer?

Accepted Answer

A) 5 pairs of shoes and 0 shirts 
B) 2 pairs of shoes and 4 shirts 
C) 0 pairs of shoes and 7 shirts 
D) 2 pairs of shoes and 3 shirts 
E) 0 pairs of shoes and 0 shirts 
A) 5 pairs of shoes and 0 shirts 
B) 2 pairs of shoes and 4 shirts 
C) 0 pairs of shoes and 7 shirts 
D) 2 pairs of shoes and 3 shirts 
E) 0 pairs of shoes and 0 shirts

Question 3

Which of the following is the best statement of the paradox of value?

Accepted Answer

A) Why does the amount people are willing to pay for a good vary with the amount consumed? 
B) Why do some goods like water, which is necessary for life, have a low price while other goods like diamonds have a high price? 
C) What is the logical relationship between value and price? 
D) Why is efficiency so valuable for a society? 
E) None of the above states the paradox of value. 
A) Why does the amount people are willing to pay for a good vary with the amount consumed? 
B) Why do some goods like water, which is necessary for life, have a low price while other goods like diamonds have a high price? 
C) What is the logical relationship between value and price? 
D) Why is efficiency so valuable for a society? 
E) None of the above states the paradox of value.

Question 4

-The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.The price of pizza is $2 per slice and the price of soda is $1 per bottle.His marginal utility from the 4th bottle of soda is

Accepted Answer

A) 21. 
B) 3. 
C) 3 units for soda ÷ 7 units for pizza. 
D) 34. 
E) 5.25. 
A) 21. 
B) 3. 
C) 3 units for soda ÷ 7 units for pizza. 
D) 34. 
E) 5.25.

Question 5

In an indifference curve/budget line diagram, at the consumer equilibrium the slope of the budget line

Accepted Answer

A) equals the slope of the indifference curve. 
B) is greater than the slope of the indifference curve. 
C) is less than the slope of the indifference curve. 
D) may be greater than, equal to, or less than the slope of the indifference curve. 
E) has nothing to do with the equilibrium. 
A) equals the slope of the indifference curve. 
B) is greater than the slope of the indifference curve. 
C) is less than the slope of the indifference curve. 
D) may be greater than, equal to, or less than the slope of the indifference curve. 
E) has nothing to do with the equilibrium.

Question 6

Marginal utility is the

Accepted Answer

A) change in total utility that results from a one-unit increase in the quantity of a good consumed. 
B) total benefit from the consumption of a good or service. 
C) quantity of a good a consumer prefers. 
D) average utility per unit consumed. 
E) change in total utility that results from a one dollar increase in the price of a good consumed. 
A) change in total utility that results from a one-unit increase in the quantity of a good consumed. 
B) total benefit from the consumption of a good or service. 
C) quantity of a good a consumer prefers. 
D) average utility per unit consumed. 
E) change in total utility that results from a one dollar increase in the price of a good consumed.

Question 7

-The table above gives Matt's utility from consuming slices of pizza.His marginal utility from the 4th slice is

Accepted Answer

A) 30 units. 
B) 3 units. 
C) 94 units. 
D) 23.5 units. 
E) 7.5 units. 
A) 30 units. 
B) 3 units. 
C) 94 units. 
D) 23.5 units. 
E) 7.5 units.

Question 8

One reason why the price of diamonds is so high is because the

Accepted Answer

A) marginal utility of diamonds is zero. 
B) marginal utility of diamonds is high. 
C) marginal utility of diamonds is low. 
D) total utility of diamonds is low. 
E) total utility of diamonds is high. 
A) marginal utility of diamonds is zero. 
B) marginal utility of diamonds is high. 
C) marginal utility of diamonds is low. 
D) total utility of diamonds is low. 
E) total utility of diamonds is high.

Question 9

An increase in the price of a good

Accepted Answer

A) rotates the budget line inward and changes its slope. 
B) rotates the budget line outward and changes its slope. 
C) results in a movement downward along the budget line. 
D) results in a movement upward along the budget line. 
E) shifts the budget line inward and does not change its slope. 
A) rotates the budget line inward and changes its slope. 
B) rotates the budget line outward and changes its slope. 
C) results in a movement downward along the budget line. 
D) results in a movement upward along the budget line. 
E) shifts the budget line inward and does not change its slope.

Question 10

-The above table shows Homer's utility from boxes of doughnuts.The marginal utility that Homer receives from the third box of doughnuts is equal to

Accepted Answer

A) 75. 
B) 25. 
C) 20. 
D) 3. 
E) 50. 
A) 75. 
B) 25. 
C) 20. 
D) 3. 
E) 50.

Question 11

Marginal utility is the change in total utility that results from

Accepted Answer

A) an increase in the price of the good. 
B) a change in the budget line. 
C) a one-unit change in the quantity of a good consumed. 
D) a decrease in the price of the good. 
E) an increase in the consumer's income. 
A) an increase in the price of the good. 
B) a change in the budget line. 
C) a one-unit change in the quantity of a good consumed. 
D) a decrease in the price of the good. 
E) an increase in the consumer's income.

Question 12

Moving downward along a demand curve, so that the price falls and the quantity demanded increases, the marginal utility of each additional unit of the good consumed

Accepted Answer

A) always increases. 
B) always decreases. 
C) stays the same. 
D) could increase, decrease, or stay the same. 
E) at first increases and then decreases. 
A) always increases. 
B) always decreases. 
C) stays the same. 
D) could increase, decrease, or stay the same. 
E) at first increases and then decreases.

Question 13

The maximum price a consumer is willing to pay for an extra unit of a good or service when total utility is maximized is known as

Accepted Answer

A) demand. 
B) marginal benefit. 
C) quantity demanded. 
D) total utility. 
E) marginal utility. 
A) demand. 
B) marginal benefit. 
C) quantity demanded. 
D) total utility. 
E) marginal utility.

Question 14

If you get 40 units of utility from eating the first bag of pretzels, 30 from the second bag, and 20 from the third bag, the total utility of three bags of pretzels is ________ units of utility.

Accepted Answer

A) 40 
B) 70 
C) 90 
D) 50 
E) 20 
A) 40 
B) 70 
C) 90 
D) 50 
E) 20

Question 15

Suppose you have one point on a demand curve.To plot another point for this demand curve using a group of indifference curves,

Accepted Answer

A) transfer all points from the indifference curve to the corresponding demand curve. 
B) horizontally sum the indifference curves. 
C) change the price of a good, rotate the budget line, and find the new best affordable point. This new price and quantity is another point on the demand curve. 
D) calculate the marginal rates of substitution from the indifference curve and transfer these values to the demand curve. 
E) transfer the budget line so that it becomes the demand curve. 
A) transfer all points from the indifference curve to the corresponding demand curve. 
B) horizontally sum the indifference curves. 
C) change the price of a good, rotate the budget line, and find the new best affordable point. This new price and quantity is another point on the demand curve. 
D) calculate the marginal rates of substitution from the indifference curve and transfer these values to the demand curve. 
E) transfer the budget line so that it becomes the demand curve.

Question 16

Which of the following describes what happens to a consumer's budget line if that consumer's budget increases? The budget line

Accepted Answer

A) becomes steeper. 
B) becomes more horizontal. 
C) shifts farther away from the origin of the graph. 
D) shifts closer to the origin of the graph. 
E) does not change. 
A) becomes steeper. 
B) becomes more horizontal. 
C) shifts farther away from the origin of the graph. 
D) shifts closer to the origin of the graph. 
E) does not change.

Question 17

A consumer is in equilibrium when the

Accepted Answer

A) consumer is buying any combination of goods and services on his or her budget line. 
B) consumer is buying the combination of goods and services on the budget line and on the highest attainable indifference curve. 
C) marginal rate of substitution is as small as possible. 
D) marginal rate of substitution is as large as possible. 
E) marginal rate of substitution exceeds the relative price of the two goods by as much as possible. 
A) consumer is buying any combination of goods and services on his or her budget line. 
B) consumer is buying the combination of goods and services on the budget line and on the highest attainable indifference curve. 
C) marginal rate of substitution is as small as possible. 
D) marginal rate of substitution is as large as possible. 
E) marginal rate of substitution exceeds the relative price of the two goods by as much as possible.

Question 18

Why does gold, which is a relatively nonessential item, have a higher price than water, which is essential to life?

Accepted Answer

Gold has a high price and a high margina

Question 19

-Based on the figure above, which of the following would lead the consumer's budget line to shift from BL₀ to BL₂?

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 20

Moving along an indifference curve the

Accepted Answer

A) marginal rate of substitution is constant. 
B) consumer does not prefer one consumption point to another. 
C) marginal rate of substitution is equal to 0. 
D) consumer prefers some of the consumption points to others. 
E) marginal rate of substitution for a good increases as more of the good is consumed. 
A) marginal rate of substitution is constant. 
B) consumer does not prefer one consumption point to another. 
C) marginal rate of substitution is equal to 0. 
D) consumer prefers some of the consumption points to others. 
E) marginal rate of substitution for a good increases as more of the good is consumed.

One reason why water is cheap compared to diamonds is because the

Suppose a consumer has $100 to spend on two goods, shoes and shirts.If the price of a pair of shoes is $20 per pair and the price of a shirt is $15 each, which of the following combinations is unaffordable to the consumer?

Which of the following is the best statement of the paradox of value?

-The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.The price of pizza is $2 per slice and the price of soda is $1 per bottle.His marginal utility from the 4th bottle of soda is

In an indifference curve/budget line diagram, at the consumer equilibrium the slope of the budget line

Marginal utility is the

-The table above gives Matt's utility from consuming slices of pizza.His marginal utility from the 4th slice is

One reason why the price of diamonds is so high is because the

An increase in the price of a good

-The above table shows Homer's utility from boxes of doughnuts.The marginal utility that Homer receives from the third box of doughnuts is equal to

Marginal utility is the change in total utility that results from

Moving downward along a demand curve, so that the price falls and the quantity demanded increases, the marginal utility of each additional unit of the good consumed

The maximum price a consumer is willing to pay for an extra unit of a good or service when total utility is maximized is known as

If you get 40 units of utility from eating the first bag of pretzels, 30 from the second bag, and 20 from the third bag, the total utility of three bags of pretzels is ________ units of utility.

Suppose you have one point on a demand curve.To plot another point for this demand curve using a group of indifference curves,

Which of the following describes what happens to a consumer's budget line if that consumer's budget increases? The budget line

A consumer is in equilibrium when the

Why does gold, which is a relatively nonessential item, have a higher price than water, which is essential to life?

-Based on the figure above, which of the following would lead the consumer's budget line to shift from BL₀ to BL₂?

Moving along an indifference curve the

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

One reason why water is cheap compared to diamonds is because the

Suppose a consumer has $100 to spend on two goods, shoes and shirts.If the price of a pair of shoes is $20 per pair and the price of a shirt is $15 each, which of the following combinations is unaffordable to the consumer?

Which of the following is the best statement of the paradox of value?

-The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.The price of pizza is $2 per slice and the price of soda is $1 per bottle.His marginal utility from the 4th bottle of soda is

In an indifference curve/budget line diagram, at the consumer equilibrium the slope of the budget line

Marginal utility is the

-The table above gives Matt's utility from consuming slices of pizza.His marginal utility from the 4th slice is

One reason why the price of diamonds is so high is because the

An increase in the price of a good

-The above table shows Homer's utility from boxes of doughnuts.The marginal utility that Homer receives from the third box of doughnuts is equal to

Marginal utility is the change in total utility that results from

Moving downward along a demand curve, so that the price falls and the quantity demanded increases, the marginal utility of each additional unit of the good consumed

The maximum price a consumer is willing to pay for an extra unit of a good or service when total utility is maximized is known as

If you get 40 units of utility from eating the first bag of pretzels, 30 from the second bag, and 20 from the third bag, the total utility of three bags of pretzels is ________ units of utility.

Suppose you have one point on a demand curve.To plot another point for this demand curve using a group of indifference curves,

Which of the following describes what happens to a consumer's budget line if that consumer's budget increases? The budget line

A consumer is in equilibrium when the

Why does gold, which is a relatively nonessential item, have a higher price than water, which is essential to life?

-Based on the figure above, which of the following would lead the consumer's budget line to shift from BL₀ to BL₂?

Moving along an indifference curve the

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