Question 1

Cory gets 18, 23, and 25 units worth of total utility from consuming 10, 11, and 12 raw oysters, respectively, and the price per oyster is 25 cents. Thus, one can infer that Cory:

Accepted Answer

A) is not maximizing his utility. 
B) is experiencing diminishing marginal utility. 
C) should not consume any more oysters. 
D) has consumed too many oysters. 
A) is not maximizing his utility. 
B) is experiencing diminishing marginal utility. 
C) should not consume any more oysters. 
D) has consumed too many oysters.

Question 2

Refer to the accompanying figure. What is the equilibrium quantity of bananas in this market?

Accepted Answer

A) 0 pounds/day 
B) 3 pounds/day 
C) 4 pounds/day 
D) 5 pounds/day 
A) 0 pounds/day 
B) 3 pounds/day 
C) 4 pounds/day 
D) 5 pounds/day

Question 3

The accompanying figure shows a a single consumer's demand for ice cream at the student union.   During the summer, there are 300 students on campus. Each student's weekly demand for ice cream is shown above. When the price of ice cream is $2.00 per scoop, those 300 students purchase a total of ________ scoops per week from the student union.

Accepted Answer

A) 1,200 
B) 1,500 
C) 1,800 
D) 3,000 
A) 1,200 
B) 1,500 
C) 1,800 
D) 3,000

Question 4

The tendency for consumers to purchase more of a good or service as its price falls is captured by the:

Accepted Answer

A) law of supply. 
B) law of increasing cost. 
C) Low-Hanging Fruit Principle. 
D) law of demand. 
A) law of supply. 
B) law of increasing cost. 
C) Low-Hanging Fruit Principle. 
D) law of demand.

Question 5

Suppose that at Miles's current level of consumption, his marginal utility from a pizza is 10 utils, and his marginal utility from a pint of ice cream is 16 utils. If the price of a pizza is $8, and the price of a pint of ice cream is $5, is Miles maximizing his utility?

Accepted Answer

A) No. He should shift his spending away from ice cream and towards frozen pizza. 
B) No. He should buy less frozen pizza and less ice cream. 
C) No. He should shift his spending away from frozen pizza and towards ice cream. 
D) Yes. He should not change his spending on frozen pizza and ice cream. 
A) No. He should shift his spending away from ice cream and towards frozen pizza. 
B) No. He should buy less frozen pizza and less ice cream. 
C) No. He should shift his spending away from frozen pizza and towards ice cream. 
D) Yes. He should not change his spending on frozen pizza and ice cream.

Question 6

For two goods, A and B, the rational spending rule is expressed as:

Accepted Answer

A) MUA = MUB. 
B) MUA × MUB = PA × PB. 
C) (MUA/P
B) = (MUB/P
A) . 
D) (MUA/P
A) = (MUB/P
B) . 
A) MUA = MUB. 
B) MUA × MUB = PA × PB. 
C) (MUA/P
B) = (MUB/P
A) . 
D) (MUA/P
A) = (MUB/P
B) .

Question 7

Refer to the accompanying table. If the price of Good A is $1 and the price of Good B is $3, then the rational spending rule is satisfied when the consumer purchases ________ units of Good A and ________ units of Good B.

Accepted Answer

A) 4; 3 
B) 3; 4 
C) 4; 4 
D) 3; 3 
A) 4; 3 
B) 3; 4 
C) 4; 4 
D) 3; 3

Question 8

Refer to the accompanying figure. At the equilibrium price, total consumer surplus in this market is:

Accepted Answer

A) $4,000 per day. 
B) $8,000 per day. 
C) $12,000 per day. 
D) $24,000 per day. 
A) $4,000 per day. 
B) $8,000 per day. 
C) $12,000 per day. 
D) $24,000 per day.

Question 9

Assume that Dusty has $30 in income, the price of a loaf of bread is $1.50, and the price of a jar of peanut butter is $3. Dusty can buy a maximum of ________ loaves of bread or a maximum of ________ jars of peanut butter.

Accepted Answer

A) 20; 10 
B) 15; 15 
C) 10; 20 
D) 10; 5 
A) 20; 10 
B) 15; 15 
C) 10; 20 
D) 10; 5

Question 10

It is impossible for total utility to be ________ when marginal utility is ________.

Accepted Answer

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

Question 11

Refer to the accompanying table. If the price of a t-shirt is $6 and the price of a sweater is $80, then the rational spending rule is satisfied when the consumer purchases ________ t-shirts and ________ sweaters.

Accepted Answer

A) 4; 3 
B) 3; 4 
C) 4; 4 
D) 4; 1 
A) 4; 3 
B) 3; 4 
C) 4; 4 
D) 4; 1

Question 12

Refer to the accompanying figure.  
   Suppose that James' initial budget constraint shifts from BC1 to BC2, and as a result, his best affordable bundle moves from point A to point B. According to this figure:

Accepted Answer

A) spinach is an inferior good. 
B) potatoes are an inferior good. 
C) spinach and potatoes are substitutes. 
D) spinach and potatoes are complements. 
A) spinach is an inferior good. 
B) potatoes are an inferior good. 
C) spinach and potatoes are substitutes. 
D) spinach and potatoes are complements.

Question 13

The accompanying figure shows a single consumer's demand for ice cream at the student union.   The student union sells a total of 7,200 scoops of ice cream each week at a price of $2.00 per scoop. If every student who buys ice cream has the demand curve shown above, then there must be ________ students purchasing ice cream each week.

Accepted Answer

A) 800 
B) 1,200 
C) 1,500 
D) 2,000 
A) 800 
B) 1,200 
C) 1,500 
D) 2,000

Question 14

Suppose a cup of tea costs $0.60 and a scone costs $1.20. If Edith spends all of her income on these two goods, and at her current level of consumption, she receives a marginal utility of 6 utils from the last cup of tea she buys and a marginal utility of 24 utils from the last scone she buys, then Edith should:

Accepted Answer

A) buy more tea and fewer scones. 
B) buy less tea and more scones. 
C) not change her consumption of tea and scones. 
D) buy more tea and more scones. 
A) buy more tea and fewer scones. 
B) buy less tea and more scones. 
C) not change her consumption of tea and scones. 
D) buy more tea and more scones.

Question 15

Refer to the accompanying figures. If the price of soda is $1.25 per can, then the quantity of soda demanded in the market each month is:

Accepted Answer

A) 40. 
B) 30. 
C) 10. 
D) 0. 
A) 40. 
B) 30. 
C) 10. 
D) 0.

Question 16

Jamie's marginal utility from muffins and from doughnuts (in utils)is shown in the accompanying table. Jamie spends a total of $8 on muffins and/or doughnuts every morning. The price of each muffin is $2 and the price of each doughnut is $1. $$\begin{array} { | c | r | r | r | } 
\hline \begin{array} { c } 
\text { Mufins } \
\text { Per Day }
\end{array} & \begin{array} { c } 
\text { Marginnl Utility } \
\text { Per Muftin }
\end{array} & \begin{array} { c } 
\text { Deughnuts } \
\text { Per Day }
\end{array} & \begin{array} { c } 
\text { Marginal Utility } \
\text { Per Deughnut }
\end{array} \
\hline 1 & 40 & 2 & 20 \
\hline 2 & 30 & 4 & 15 \
\hline 3 & 20 & 5 & 10 \
\hline
\end{array}$$ What is Jamie's optimal combination of muffins and doughnuts each day?

Accepted Answer

A) 1 muffin, 6 doughnuts 
B) 2 muffins, 4 doughnuts 
C) 3 muffins, 2 doughnuts 
D) 4 muffins, zero doughnuts 
A) 1 muffin, 6 doughnuts 
B) 2 muffins, 4 doughnuts 
C) 3 muffins, 2 doughnuts 
D) 4 muffins, zero doughnuts

Question 17

Refer to the accompanying figure. What is total consumer surplus at the market equilibrium?

Accepted Answer

A) $6 per day 
B) $80 per day 
C) $160 per day 
D) $240 per day 
A) $6 per day 
B) $80 per day 
C) $160 per day 
D) $240 per day

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. $$\begin{array} { | c | r | c | c | } 
\hline \begin{array} { c } 
\text { Mavies } \
\text { Per Manth }
\end{array} & \begin{array} { c } 
\text { Mar ginal Utility } \
\text { Per Movie }
\end{array} & \begin{array} { c } 
\text { Dingers Out } \
\text { Per Month }
\end{array} & \begin{array} { c } 
\text { Marginal Utility } \
\text { Per Dinner }
\end{array} \
\hline 1 & 60 & 1& 150 \
\hline 2 & 50 & 2 & 140 \
\hline 3 & 20 & 3 & 120 \
\hline 4 & 5 & 4 & 100 \
\hline
\end{array}$$  
If Taylor eats out 3 times a month, Taylor will watch ________ movies, and have marginal utility per dollar of ________ from eating out and a marginal utility per dollar of ________ from going to the movies.

Accepted Answer

A) 4; 6; 2 
B) 3; 2; 6 
C) 4; 6; 1/2 
D) 3; 4; 4 
A) 4; 6; 2 
B) 3; 2; 6 
C) 4; 6; 1/2 
D) 3; 4; 4

Question 19

Refer to the accompanying figure.  
  From the figure, we can infer that James' marginal rate of substitution is:

Accepted Answer

A) the same at point A and point B. 
B) higher at point B than point A. 
C) higher at point A than point B. 
D) constant. 
A) the same at point A and point B. 
B) higher at point B than point A. 
C) higher at point A than point B. 
D) constant.

Question 20

Refer to the accompanying table. If the price of Good A is $5 and the price of Good B is $4, then the rational spending rule is satisfied when the consumer purchases ________ units of Good A and ________ units of Good B.

Accepted Answer

A) 3; 3 
B) 1; 3 
C) 4; 2 
D) 3; 2 
A) 3; 3 
B) 1; 3 
C) 4; 2 
D) 3; 2

Exam 5: Demand

Cory gets 18, 23, and 25 units worth of total utility from consuming 10, 11, and 12 raw oysters, respectively, and the price per oyster is 25 cents. Thus, one can infer that Cory:

Refer to the accompanying figure. What is the equilibrium quantity of bananas in this market?

The tendency for consumers to purchase more of a good or service as its price falls is captured by the:

Suppose that at Miles's current level of consumption, his marginal utility from a pizza is 10 utils, and his marginal utility from a pint of ice cream is 16 utils. If the price of a pizza is $8, and the price of a pint of ice cream is $5, is Miles maximizing his utility?

For two goods, A and B, the rational spending rule is expressed as:

Refer to the accompanying table. If the price of Good A is $1 and the price of Good B is $3, then the rational spending rule is satisfied when the consumer purchases ________ units of Good A and ________ units of Good B.

Refer to the accompanying figure. At the equilibrium price, total consumer surplus in this market is:

Assume that Dusty has $30 in income, the price of a loaf of bread is $1.50, and the price of a jar of peanut butter is $3. Dusty can buy a maximum of ________ loaves of bread or a maximum of ________ jars of peanut butter.

It is impossible for total utility to be ________ when marginal utility is ________.

Refer to the accompanying table. If the price of a t-shirt is $6 and the price of a sweater is $80, then the rational spending rule is satisfied when the consumer purchases ________ t-shirts and ________ sweaters.

Refer to the accompanying figure. Suppose that James' initial budget constraint shifts from BC1 to BC2, and as a result, his best affordable bundle moves from point A to point B. According to this figure:

Refer to the accompanying figures. If the price of soda is $1.25 per can, then the quantity of soda demanded in the market each month is:

Refer to the accompanying figure. What is total consumer surplus at the market equilibrium?

Refer to the accompanying figure. From the figure, we can infer that James' marginal rate of substitution is:

Refer to the accompanying table. If the price of Good A is $5 and the price of Good B is $4, then the rational spending rule is satisfied when the consumer purchases ________ units of Good A and ________ units of Good B.

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 table. If the price of Good A is $1 and the price of Good B is $3, then the rational spending rule is satisfied when the consumer purchases units of Good A and units of Good B.

Assume that Dusty has $30 in income, the price of a loaf of bread is $1.50, and the price of a jar of peanut butter is $3. Dusty can buy a maximum of loaves of bread or a maximum of jars of peanut butter.

It is impossible for total utility to be when marginal utility is .

Refer to the accompanying table. If the price of a t-shirt is $6 and the price of a sweater is $80, then the rational spending rule is satisfied when the consumer purchases t-shirts and sweaters.

Refer to the accompanying table. If the price of Good A is $5 and the price of Good B is $4, then the rational spending rule is satisfied when the consumer purchases units of Good A and units of Good B.