Question 1

Other things being equal, when the money price of a good increases, its relative price

Accepted Answer

A)  stays the same. 
B)  increases. 
C)  decreases. 
D)  falls to zero. 
A)  stays the same. 
B)  increases. 
C)  decreases. 
D)  falls to zero.

Question 2

You consider yourself to be wise consumer. The marginal utility/price ratio of coffee is 12 utils per dollar. If the price of a donut is $0.75, you should only buy the donut if it gives you at least

Accepted Answer

A)  16 utils of satisfaction. 
B)  9 utils of satisfaction. 
C)  12 utils of satisfaction. 
D)  The answer cannot be determined with this information. 
A)  16 utils of satisfaction. 
B)  9 utils of satisfaction. 
C)  12 utils of satisfaction. 
D)  The answer cannot be determined with this information.

Question 3

Observations of violations of consumer optimum predicted by consumer choice theory could provide support forI. utility analysis II. bounded rationality
III) behavioral economics

Accepted Answer

A)  I only. 
B)  III only. 
C)  both I and II. 
D)  both II and III. 
A)  I only. 
B)  III only. 
C)  both I and II. 
D)  both II and III.

Question 4

The consumer optimum is the set of goods and services, subject to the limited income of the consumer, that

Accepted Answer

A)  the consumer can afford to buy. 
B)  is characterized by zero marginal utility on each good and service. 
C)  maximizes the level of satisfaction for each consumer. 
D)  is characterized by increasing marginal utility. 
A)  the consumer can afford to buy. 
B)  is characterized by zero marginal utility on each good and service. 
C)  maximizes the level of satisfaction for each consumer. 
D)  is characterized by increasing marginal utility.

Question 5

The state of consumer optimum is reached when the consumer's

Accepted Answer

A)  total utility/marginal utility ratio for all items is equal. 
B)  total utility/price ratio for all items is equal. 
C)  marginal utility for a product is zero. 
D)  marginal utility/price ratios for all items are equal. 
A)  total utility/marginal utility ratio for all items is equal. 
B)  total utility/price ratio for all items is equal. 
C)  marginal utility for a product is zero. 
D)  marginal utility/price ratios for all items are equal.

Question 6

The information on a demand curve is also on a(n)

Accepted Answer

A)  indifference curve. 
B)  budget constraint. 
C)  income-consumption curve. 
D)  price-consumption curve. 
A)  indifference curve. 
B)  budget constraint. 
C)  income-consumption curve. 
D)  price-consumption curve.

Question 7

At a ball game we can observe people eating hot dogs, chips, and burgers. If all are priced the same and we observe Michelle eating a hot dog and David eating a hamburger, we can conclude that

Accepted Answer

A)  Robert will be eating chips. 
B)  Michelle likes hot dogs better than David does and David likes hamburgers better than Michelle does. 
C)  Michelle derives the same amount of utility from eating a hot dog as David derives from eating a hamburger. 
D)  at this time Michelle derives more utility from eating a hot dog than from eating either a hamburger or chips, while David derives more utility from eating a hamburger than from eating either a hot dog or chips. 
A)  Robert will be eating chips. 
B)  Michelle likes hot dogs better than David does and David likes hamburgers better than Michelle does. 
C)  Michelle derives the same amount of utility from eating a hot dog as David derives from eating a hamburger. 
D)  at this time Michelle derives more utility from eating a hot dog than from eating either a hamburger or chips, while David derives more utility from eating a hamburger than from eating either a hot dog or chips.

Question 8

What is the principle of diminishing marginal utility?

Accepted Answer

The principle of marginal utility is tha

Question 9

-Given the above figure, when Joey eats a third piece of pizza his marginal utility is ________ and his total utility is ________.

Accepted Answer

A)  falling; falling 
B)  falling; rising 
C)  rising; falling 
D)  rising; rising 
A)  falling; falling 
B)  falling; rising 
C)  rising; falling 
D)  rising; rising

Question 10

Juan and Sophia have decided to stop studying economics and get a bite to eat. Juan wants to go for a pizza and Sophia wants a hamburger. They decide to go for pizza. What can we conclude from this?

Accepted Answer

A)  Juan always gets more utility from pizza than Sophia does. 
B)  Sophia gets less utility from pizza than she could from a hamburger. 
C)  Sophia will get negative utility from the pizza. 
D)  Utility analysis does not work here since Sophia did not eat a hamburger. 
A)  Juan always gets more utility from pizza than Sophia does. 
B)  Sophia gets less utility from pizza than she could from a hamburger. 
C)  Sophia will get negative utility from the pizza. 
D)  Utility analysis does not work here since Sophia did not eat a hamburger.

Question 11

The price of a hamburger is $1, the price of a movie is $5, and the consumer has $13. A consumer has purchased 3 hamburgers and two movies, receiving 10 units of utility for the last hamburger and 10 units of utility for the last movie. The set of goods

Accepted Answer

A)  is an optimum since the entire income is spent and the marginal utility is the same for the last unit of each good. 
B)  is an optimum because the consumer has maximized her utility given the limited income she had. 
C)  is not an optimum because the marginal utility per dollar spent is greater for the hamburger than for the movie. 
D)  is not an optimum because the marginal utility for the second hamburger was less than the marginal utility for the first hamburger. 
A)  is an optimum since the entire income is spent and the marginal utility is the same for the last unit of each good. 
B)  is an optimum because the consumer has maximized her utility given the limited income she had. 
C)  is not an optimum because the marginal utility per dollar spent is greater for the hamburger than for the movie. 
D)  is not an optimum because the marginal utility for the second hamburger was less than the marginal utility for the first hamburger.

Question 12

The change in the consumption of one good that just offsets a one-unit change in the consumption of another good is the

Accepted Answer

A)  marginal utility. 
B)  marginal rate of consumption. 
C)  marginal rate of substitution. 
D)  marginal rate of satisfaction. 
A)  marginal utility. 
B)  marginal rate of consumption. 
C)  marginal rate of substitution. 
D)  marginal rate of satisfaction.

Question 13

-Use the above figure. The consumer's choice changes from YB to YA. Which of the following statements about good Y is true?

Accepted Answer

A)  price has increased and the quantity demanded has risen.. 
B)  price has decreased and the quantity demanded has risen.. 
C)  price has decreased and the quantity demanded has fallen. 
D)  price has increased and the quantity demanded has fallen. 
A)  price has increased and the quantity demanded has risen.. 
B)  price has decreased and the quantity demanded has risen.. 
C)  price has decreased and the quantity demanded has fallen. 
D)  price has increased and the quantity demanded has fallen.

Question 14

Behavioral economics suggests that people face human limitations that prevent them from examining every possible choice available to them, with the implication that

Accepted Answer

A)  the consumer optimum implied by utility theory is an inappropriate approach to deriving demand curves. 
B)  the consumer optimum implied by utility theory is an appropriate approach to deriving demand curves. 
C)  marginal utility is always equal to zero. 
D)  marginal utility is always negative. 
A)  the consumer optimum implied by utility theory is an inappropriate approach to deriving demand curves. 
B)  the consumer optimum implied by utility theory is an appropriate approach to deriving demand curves. 
C)  marginal utility is always equal to zero. 
D)  marginal utility is always negative.

Question 15

As an individual consumes more of a particular commodity, the total level of utility derived from that consumption usually

Accepted Answer

A)  increases at a constant rate. 
B)  increases at an increasing rate. 
C)  increases at a decreasing rate. 
D)  decreases at an increasing rate. 
A)  increases at a constant rate. 
B)  increases at an increasing rate. 
C)  increases at a decreasing rate. 
D)  decreases at an increasing rate.

Question 16

In economics, the term "marginal" refers to

Accepted Answer

A)  total. 
B)  a change in the total. 
C)  negative. 
D)  inverse. 
A)  total. 
B)  a change in the total. 
C)  negative. 
D)  inverse.

Question 17

-Refer to the above table. The table gives the various combinations of Good A and Good B along Jane's indifference curve. The marginal rate of substitution when Jane goes from combination C to combination D is

Accepted Answer

A)  4:1. 
B)  3:1. 
C)  2:1. 
D)  0. 
A)  4:1. 
B)  3:1. 
C)  2:1. 
D)  0.

Question 18

When marginal utility is positive, but decreasing, then total utility is

Accepted Answer

A)  increasing at a decreasing rate. 
B)  negative. 
C)  decreasing. 
D)  increasing at an increasing rate. 
A)  increasing at a decreasing rate. 
B)  negative. 
C)  decreasing. 
D)  increasing at an increasing rate.

Question 19

If a person claims, "I wouldn't eat liver if you paid me," we can assume that his marginal utility of liver is

Accepted Answer

A)  positive. 
B)  positive, but decreasing. 
C)  zero. 
D)  negative. 
A)  positive. 
B)  positive, but decreasing. 
C)  zero. 
D)  negative.

Question 20

-Refer to the above table. If the price of a hamburger is $2, the price of a Broadway Show is $60, and the consumer has $190, what is the consumer optimum?

Accepted Answer

A)  4 hamburgers and 2 Broadway shows. 
B)  5 hamburgers and 3 Broadway shows. 
C)  6 hamburgers and 0 Broadway shows. 
D)  0 hamburgers and 6 Broadway shows. 
A)  4 hamburgers and 2 Broadway shows. 
B)  5 hamburgers and 3 Broadway shows. 
C)  6 hamburgers and 0 Broadway shows. 
D)  0 hamburgers and 6 Broadway shows.

Exam 20: Consumer Choice

Other things being equal, when the money price of a good increases, its relative price

You consider yourself to be wise consumer. The marginal utility/price ratio of coffee is 12 utils per dollar. If the price of a donut is $0.75, you should only buy the donut if it gives you at least

Observations of violations of consumer optimum predicted by consumer choice theory could provide support forI. utility analysis II. bounded rationality III) behavioral economics

The consumer optimum is the set of goods and services, subject to the limited income of the consumer, that

The state of consumer optimum is reached when the consumer's

The information on a demand curve is also on a(n)

At a ball game we can observe people eating hot dogs, chips, and burgers. If all are priced the same and we observe Michelle eating a hot dog and David eating a hamburger, we can conclude that

What is the principle of diminishing marginal utility?

-Given the above figure, when Joey eats a third piece of pizza his marginal utility is ________ and his total utility is ________.

Juan and Sophia have decided to stop studying economics and get a bite to eat. Juan wants to go for a pizza and Sophia wants a hamburger. They decide to go for pizza. What can we conclude from this?

The price of a hamburger is $1, the price of a movie is $5, and the consumer has $13. A consumer has purchased 3 hamburgers and two movies, receiving 10 units of utility for the last hamburger and 10 units of utility for the last movie. The set of goods

The change in the consumption of one good that just offsets a one-unit change in the consumption of another good is the

-Use the above figure. The consumer's choice changes from YB to YA. Which of the following statements about good Y is true?

Behavioral economics suggests that people face human limitations that prevent them from examining every possible choice available to them, with the implication that

As an individual consumes more of a particular commodity, the total level of utility derived from that consumption usually

In economics, the term "marginal" refers to

-Refer to the above table. The table gives the various combinations of Good A and Good B along Jane's indifference curve. The marginal rate of substitution when Jane goes from combination C to combination D is

When marginal utility is positive, but decreasing, then total utility is

If a person claims, "I wouldn't eat liver if you paid me," we can assume that his marginal utility of liver is

-Refer to the above table. If the price of a hamburger is $2, the price of a Broadway Show is $60, and the consumer has $190, what is the consumer optimum?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

-Given the above figure, when Joey eats a third piece of pizza his marginal utility is and his total utility is .

-Use the above figure. The consumer's choice changes from Y_B to Y_A. Which of the following statements about good Y is true?