Question 1

If a consumer reallocates his or her spending away from Good A and towards Good B, then the consumer's total utility will increase if:

Accepted Answer

A) MUA/PA > MUB/PB. B) MUA/PA 0 and MUB/PB > 0. D) MUA/PA < 0 and MUB/PB < 0. A) MUA/PA > MUB/PB. B) MUA/PA 0 and MUB/PB > 0. D) MUA/PA < 0 and MUB/PB < 0.

Question 2

If marginal utility is positive, then as consumption increases:

Accepted Answer

A) the consumer will not experience diminishing marginal utility. 
B) total utility will not change. 
C) total utility will increase. 
D) the demand curve will have a positive slope. 
A) the consumer will not experience diminishing marginal utility. 
B) total utility will not change. 
C) total utility will increase. 
D) the demand curve will have a positive slope.

Question 3

Casey earns $150 a week and consumes only fish and shrimp. The price of fish is $3 a pound and the price of shrimp is $5 a pound. Suppose the price of fish decreased to $1.50 a pound, and the price of shrimp remains $5 a pound. At Casey's original income of $150 per week, Casey can now buy a maximum of ________ pounds fish or a maximum of ________ pounds shrimp.

Accepted Answer

A) 10; 30 
B) 30; 50 
C) 30; 100 
D) 100; 30 
A) 10; 30 
B) 30; 50 
C) 30; 100 
D) 100; 30

Question 4

Refer to the accompanying figure. When Jeff goes from watching 3 to 4 movies a day, his total utility:

Accepted Answer

A) increases. 
B) decreases. 
C) does not change. 
D) gets close to zero. 
A) increases. 
B) decreases. 
C) does not change. 
D) gets close to zero.

Question 5

Angela is currently playing five games of pool and bowling three games. At this level of consumption, her marginal utility from a game of pool is 10 and her marginal utility from bowling a game is 6. If both pool and bowling cost $1 a game, Angela should:

Accepted Answer

A) bowl more and play pool less. 
B) just go home. 
C) bowl only. 
D) bowl less and play pool more. 
A) bowl more and play pool less. 
B) just go home. 
C) bowl only. 
D) bowl less and play pool more.

Question 6

Refer to the accompanying figure. If Laura and Chris are the only two consumers in this market, then when the price of hamburger decreases from $2.50 to $2.00 per pound, the quantity demanded in the market will ________ by ________ pound(s)per week.

Accepted Answer

A) decrease; 1.5 
B) increase; 1.5 
C) decrease; 1 
D) increase; 1 
A) decrease; 1.5 
B) increase; 1.5 
C) decrease; 1 
D) increase; 1

Question 7

The law of demand indicates that as the cost of an activity:

Accepted Answer

A) falls, less of the activity will occur. 
B) rises, more of the activity will occur. 
C) rises, the level of the activity may or may not increase depending on the individual. 
D) rises, less of the activity will occur. 
A) falls, less of the activity will occur. 
B) rises, more of the activity will occur. 
C) rises, the level of the activity may or may not increase depending on the individual. 
D) rises, less of the activity will occur.

Question 8

Refer to the accompanying figure. Suppose a consumer protection group convinces the government to impose price controls in this market. If the government requires cheese to be sold for less than the equilibrium price, then, relative to before the price controls, total consumer surplus in the market:

Accepted Answer

A) would increase because consumers would be able to purchase the same quantity of cheese at a lower price. 
B) would increase because consumers would be able to purchase more cheese at a lower price. 
C) could either increase or decrease. 
D) would decrease because of the reduction in equilibrium price. 
A) would increase because consumers would be able to purchase the same quantity of cheese at a lower price. 
B) would increase because consumers would be able to purchase more cheese at a lower price. 
C) could either increase or decrease. 
D) would decrease because of the reduction in equilibrium price.

Question 9

If a consumer reallocates his or her spending away from Good B and towards Good A, then the consumer's total utility will increase if:

Accepted Answer

A) MUA/PA > MUB/PB. B) MUA/PA 0 and MUB/PB > 0. D) MUA/PA < 0 and MUB/PB < 0. A) MUA/PA > MUB/PB. B) MUA/PA 0 and MUB/PB > 0. D) MUA/PA < 0 and MUB/PB < 0.

Question 10

Refer to the accompanying figure. Suppose the dairy lobby convinces the government to impose price controls in this market. If the government requires cheese to be sold for a price of $8 per pound, total consumer surplus in the market would equal:

Accepted Answer

A) $20 per day. 
B) $60 per day. 
C) $80 per day. 
D) $120 per day. 
A) $20 per day. 
B) $60 per day. 
C) $80 per day. 
D) $120 per day.

Question 11

Growing rice requires extensive irrigation in California. Economists consider water to be a ________ for rice farmers in California.

Accepted Answer

A) want 
B) need 
C) luxury 
D) inferior good 
A) want 
B) need 
C) luxury 
D) inferior good

Question 12

In some countries, medical care is provided free-of-charge to citizens and is paid for by the government. In those countries, medical care:

Accepted Answer

A) is not a scarce resource. 
B) is available at zero opportunity cost. 
C) is rationed by some non-monetary method. 
D) does not exhibit diminishing marginal returns. 
A) is not a scarce resource. 
B) is available at zero opportunity cost. 
C) is rationed by some non-monetary method. 
D) does not exhibit diminishing marginal returns.

Question 13

Higher education is a ________ and assigned textbooks are ________.

Accepted Answer

A) need; needs 
B) want; wants 
C) need; wants 
D) want; needs 
A) need; needs 
B) want; wants 
C) need; wants 
D) want; needs

Question 14

Suppose that Fiona spends all of her income on 10 units of good X and 14 units of good Y. Fiona's marginal utility from the 10ᵗʰ unit of good X is 24 utils, and her marginal utility from the 14ᵗʰ unit of good Y is 20 utils. If the price of good X is $8 per unit and the price of good Y is $5 per unit, then to comply with the rational spending rule, Fiona should:

Accepted Answer

A) purchase more than 10 units of good X and less than 14 units of Y. 
B) purchase less than 10 units of good X and more than 14 units of good Y. 
C) purchase more than 10 units of good X and more than 14 units of good Y. 
D) continue to purchase 10 units of good X and 14 units of good Y. 
A) purchase more than 10 units of good X and less than 14 units of Y. 
B) purchase less than 10 units of good X and more than 14 units of good Y. 
C) purchase more than 10 units of good X and more than 14 units of good Y. 
D) continue to purchase 10 units of good X and 14 units of good Y.

Question 15

Suppose that at a price of 25 cents per orange, 500 consumers each demand 4 oranges, and at a price of 20 cents per orange, 750 consumers each demand 5 oranges. Therefore, the market demand for oranges is ________ at a price of 25 cents per orange and ________ at a price of 20 cents per orange.

Accepted Answer

A) 4; 5 
B) 500; 750 
C) 1,250; 1,500 
D) 2,000; 3,750 
A) 4; 5 
B) 500; 750 
C) 1,250; 1,500 
D) 2,000; 3,750

Question 16

During Thanksgiving you participated in a pumpkin-pie eating contest. You really enjoyed the first two pies, the third one was okay, but as soon as you ate the fourth one you became ill and lost the contest. You got ________ utility from eating the first pie than from eating the third pie.

Accepted Answer

A) less 
B) more 
C) the same amount of 
D) less variable 
A) less 
B) more 
C) the same amount of 
D) less variable

Question 17

Refer to the accompanying figure. Total utility increases with each additional pizza up to the ________ and then declines, but marginal utility ________ with each additional pizza consumed.

Accepted Answer

A) 7ᵗʰ pizza; increases 
B) 6ᵗʰ pizza; increases 
C) 5ᵗʰ pizza; stays the same 
D) 6ᵗʰ pizza; decreases 
A) 7ᵗʰ pizza; increases 
B) 6ᵗʰ pizza; increases 
C) 5ᵗʰ pizza; stays the same 
D) 6ᵗʰ pizza; decreases

Question 18

Taylor's marginal utility from watching movies and from eating out (in utils)is shown in the accompanying table. Taylor spends exactly $100 every month on these two forms of entertainment; the price of each movie is $10 and the price of each dinner is $20. $$\begin{array} { | c | r | c | c | } 
\hline \begin{array} { c } 
\text { Mavies } \
\text { Per Manth }
\end{array} & \begin{array} { c } 
\text { Mar ginal Utility } \
\text { Per Movie }
\end{array} & \begin{array} { c } 
\text { Dingers Out } \
\text { Per Month }
\end{array} & \begin{array} { c } 
\text { Marginal Utility } \
\text { Per Dinner }
\end{array} \
\hline 1 & 60 & 1& 150 \
\hline 2 & 50 & 2 & 140 \
\hline 3 & 20 & 3 & 120 \
\hline 4 & 5 & 4 & 100 \
\hline
\end{array}$$  
Taylor's optimal combination of movies and eating out is:

Accepted Answer

A) 3 movies and 3 dinners. 
B) 4 movies and 3 dinners. 
C) 3 movies and 4 dinners. 
D) 2 movies and 4 dinners. 
A) 3 movies and 3 dinners. 
B) 4 movies and 3 dinners. 
C) 3 movies and 4 dinners. 
D) 2 movies and 4 dinners.

Question 19

For Michael, the first cup of coffee he drinks every morning is heavenly. The second one is pretty good, but not as good as the first, and if he drinks a third cup he feels jittery and sick. For Michael, the marginal utility from drinking a cup of coffee is clearly:

Accepted Answer

A) decreasing. 
B) increasing. 
C) positive. 
D) negative. 
A) decreasing. 
B) increasing. 
C) positive. 
D) negative.

Question 20

Refer to the accompanying figure. As Jeff watches more movies, his marginal utility:

Accepted Answer

A) gets larger 
B) gets smaller 
C) does not change 
D) gets close to one 
A) gets larger 
B) gets smaller 
C) does not change 
D) gets close to one

Exam 5: Demand

If a consumer reallocates his or her spending away from Good A and towards Good B, then the consumer's total utility will increase if:

If marginal utility is positive, then as consumption increases:

Refer to the accompanying figure. When Jeff goes from watching 3 to 4 movies a day, his total utility:

Angela is currently playing five games of pool and bowling three games. At this level of consumption, her marginal utility from a game of pool is 10 and her marginal utility from bowling a game is 6. If both pool and bowling cost $1 a game, Angela should:

Refer to the accompanying figure. If Laura and Chris are the only two consumers in this market, then when the price of hamburger decreases from $2.50 to $2.00 per pound, the quantity demanded in the market will ________ by ________ pound(s)per week.

The law of demand indicates that as the cost of an activity:

If a consumer reallocates his or her spending away from Good B and towards Good A, then the consumer's total utility will increase if:

Refer to the accompanying figure. Suppose the dairy lobby convinces the government to impose price controls in this market. If the government requires cheese to be sold for a price of $8 per pound, total consumer surplus in the market would equal:

Growing rice requires extensive irrigation in California. Economists consider water to be a ________ for rice farmers in California.

In some countries, medical care is provided free-of-charge to citizens and is paid for by the government. In those countries, medical care:

Higher education is a ________ and assigned textbooks are ________.

Suppose that at a price of 25 cents per orange, 500 consumers each demand 4 oranges, and at a price of 20 cents per orange, 750 consumers each demand 5 oranges. Therefore, the market demand for oranges is ________ at a price of 25 cents per orange and ________ at a price of 20 cents per orange.

During Thanksgiving you participated in a pumpkin-pie eating contest. You really enjoyed the first two pies, the third one was okay, but as soon as you ate the fourth one you became ill and lost the contest. You got ________ utility from eating the first pie than from eating the third pie.

Refer to the accompanying figure. Total utility increases with each additional pizza up to the ________ and then declines, but marginal utility ________ with each additional pizza consumed.

For Michael, the first cup of coffee he drinks every morning is heavenly. The second one is pretty good, but not as good as the first, and if he drinks a third cup he feels jittery and sick. For Michael, the marginal utility from drinking a cup of coffee is clearly:

Refer to the accompanying figure. As Jeff watches more movies, his marginal utility:

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Elasticity

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

An Introduction to Behavioral Economics

Externalities, Property Rights, and the Environment

The Economics of Information

Labor Markets, Poverty, and Income Distribution

Public Goods and Tax Policy

International Trade and Trade Policy

Macroeconomics: The Birds Eye View of the Economy

Measuring Economic Activity: GDP and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

The Labor Market: Workers, Wages, and Unemployment

Saving and Capital Formation

Money Prices and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economic Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: The Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Exchange Rates and the Open Economy

Filters

Refer to the accompanying figure. If Laura and Chris are the only two consumers in this market, then when the price of hamburger decreases from $2.50 to $2.00 per pound, the quantity demanded in the market will by pound(s)per week.

Higher education is a and assigned textbooks are .

Suppose that at a price of 25 cents per orange, 500 consumers each demand 4 oranges, and at a price of 20 cents per orange, 750 consumers each demand 5 oranges. Therefore, the market demand for oranges is at a price of 25 cents per orange and at a price of 20 cents per orange.

Refer to the accompanying figure. Total utility increases with each additional pizza up to the and then declines, but marginal utility with each additional pizza consumed.