Question 1

-According to the above table, John's marginal utility from watching the 9th movie is

Accepted Answer

A)  405 units of utility. 
B)  0 units of utility. 
C)  15 units of utility. 
D)  10 units of utility. 
A)  405 units of utility. 
B)  0 units of utility. 
C)  15 units of utility. 
D)  10 units of utility.

Question 2

A good synonym for "utility" is

Accepted Answer

A)  marginal. 
B)  need. 
C)  practical. 
D)  satisfaction. 
A)  marginal. 
B)  need. 
C)  practical. 
D)  satisfaction.

Question 3

Which of the following best describes the consumer optimum?

Accepted Answer

A)    /   =   /   
B)    /   =   
C)    /   =   /   = . . . =   /   
D)  change in TU/change in P = MU 
A)    /   =   /   
B)    /   =   
C)    /   =   /   = . . . =   /   
D)  change in TU/change in P = MU

Question 4

The total utility from consuming 8 units of a good is 155. The marginal utility of the 8th unit is 7 and the marginal utility of the 7th unit is 11. The total utility from consuming 6 units of the good is

Accepted Answer

A)  173. 
B)  144. 
C)  137. 
D)  130. 
A)  173. 
B)  144. 
C)  137. 
D)  130.

Question 5

-Refer to the above table. If the price of Good X is $1, the price of Good Y is $2, and the consumer has $13, the rational consumer will purchase

Accepted Answer

A)  3 units of Good X and 4 units of Good Y. 
B)  1 units of Good X and 1 units of Good Y. 
C)  6 units of Good X and 0 units of Good Y. 
D)  5 units of Good X and 4 units of Good Y. 
A)  3 units of Good X and 4 units of Good Y. 
B)  1 units of Good X and 1 units of Good Y. 
C)  6 units of Good X and 0 units of Good Y. 
D)  5 units of Good X and 4 units of Good Y.

Question 6

John is currently spending all of his income. For the last unit of Good A consumed John gets 20 utils and for the last unit of Good B consumed he gets 10 utils. The price of Good A is $1. The price of Good B is $10. If John wants to maximize his utility he should

Accepted Answer

A)  continue to purchase the same amount of Good A and Good B. 
B)  increase the consumption of Good A and decrease the consumption of Good B. 
C)  decrease the consumption of Good A and increase the consumption of Good B. 
D)  decrease the consumption of Good A and decrease the consumption of Good B. 
A)  continue to purchase the same amount of Good A and Good B. 
B)  increase the consumption of Good A and decrease the consumption of Good B. 
C)  decrease the consumption of Good A and increase the consumption of Good B. 
D)  decrease the consumption of Good A and decrease the consumption of Good B.

Question 7

When the total utility from consuming one good is maximized, marginal utility is

Accepted Answer

A)  maximized. 
B)  minimized. 
C)  zero. 
D)  positive. 
A)  maximized. 
B)  minimized. 
C)  zero. 
D)  positive.

Question 8

-Use the above figure. When the budget line rotates from "b" to "c"

Accepted Answer

A)  fewer units of J and fewer units of K will be purchased. 
B)  more units of J and more units of K will be purchased. 
C)  fewer units of J and more units of K will be purchased. 
D)  more units of J and fewer units of K will be purchased. 
A)  fewer units of J and fewer units of K will be purchased. 
B)  more units of J and more units of K will be purchased. 
C)  fewer units of J and more units of K will be purchased. 
D)  more units of J and fewer units of K will be purchased.

Question 9

The real-income effect refers to

Accepted Answer

A)  the law of diminishing marginal utility. 
B)  the want-satisfying power of a good or service. 
C)  substitution of less expensive commodities for more expensive commodities. 
D)  the change in purchasing power when the price of a good changes. 
A)  the law of diminishing marginal utility. 
B)  the want-satisfying power of a good or service. 
C)  substitution of less expensive commodities for more expensive commodities. 
D)  the change in purchasing power when the price of a good changes.

Question 10

Along a given indifference curve, a consumer reduces the quantity of one good in favor of more units of the other. In this situation

Accepted Answer

A)  the marginal rate of substitution falls. 
B)  the marginal utility of the first rises and the marginal utility of the second good falls. 
C)  Total utility rises. 
D)  Both A and B are correct. 
A)  the marginal rate of substitution falls. 
B)  the marginal utility of the first rises and the marginal utility of the second good falls. 
C)  Total utility rises. 
D)  Both A and B are correct.

Question 11

In cardinal utility analysis

Accepted Answer

A)  numbers can be assigned to utility. 
B)  it is recognized that numbers can not be assigned to utility. 
C)  the concept of marginal utility exists while in ordinal utility analysis marginal utility does not exist. 
D)  marginal utility always increases as more of a good is consumed. 
A)  numbers can be assigned to utility. 
B)  it is recognized that numbers can not be assigned to utility. 
C)  the concept of marginal utility exists while in ordinal utility analysis marginal utility does not exist. 
D)  marginal utility always increases as more of a good is consumed.

Question 12

The utility analysis theory assumes that consumers try to

Accepted Answer

A)  maximize their average utility. 
B)  maximize their marginal utility. 
C)  maximize the difference between total and marginal utility. 
D)  maximize their total utility. 
A)  maximize their average utility. 
B)  maximize their marginal utility. 
C)  maximize the difference between total and marginal utility. 
D)  maximize their total utility.

Question 13

-Assume that Catherine has the preferences shown in the above table. Also assume that the price of a can of Pepsi is $3.00 and that the price of a slice of pizza is $2.00. If she has $16 available to spend, what combination of Pepsi and pizza will be her consumer optimum?

Accepted Answer

A)  1 can of Pepsi, 4 slices of pizza 
B)  2 cans of Pepsi, 5 slices of pizza 
C)  4 cans of Pepsi, 2 slices of pizza 
D)  6 cans of Pepsi, 0 slices of pizza 
A)  1 can of Pepsi, 4 slices of pizza 
B)  2 cans of Pepsi, 5 slices of pizza 
C)  4 cans of Pepsi, 2 slices of pizza 
D)  6 cans of Pepsi, 0 slices of pizza

Question 14

Suppose a consumer is currently buying 5 goods so that utility is maximized. The price of one of the goods falls while the prices of the other 4 goods do not change. The consumer should

Accepted Answer

A)  buy less of all goods being consumed to get to the optimal position. 
B)  buy more of all of the goods but the one that experiences the decline in price, to get to the optimal position. 
C)  buy more of all goods being consumed to get to the optimal position. 
D)  buy more of the good that has experienced the fall in price to get to the optimal position. 
A)  buy less of all goods being consumed to get to the optimal position. 
B)  buy more of all of the goods but the one that experiences the decline in price, to get to the optimal position. 
C)  buy more of all goods being consumed to get to the optimal position. 
D)  buy more of the good that has experienced the fall in price to get to the optimal position.

Question 15

If the price of a product increases, then

Accepted Answer

A)  the budget line rotates and the optimal quantity demanded, which corresponds to the higher price, decreases. 
B)  the budget line rotates and the optimal quantity demanded, which corresponds to the higher price, increases. 
C)  the budget line shifts outward and the optimal quantity demanded, which corresponds to the higher price, decreases. 
D)  the budget line shifts inward and the optimal quantity demanded, which corresponds to the higher price, increases. 
A)  the budget line rotates and the optimal quantity demanded, which corresponds to the higher price, decreases. 
B)  the budget line rotates and the optimal quantity demanded, which corresponds to the higher price, increases. 
C)  the budget line shifts outward and the optimal quantity demanded, which corresponds to the higher price, decreases. 
D)  the budget line shifts inward and the optimal quantity demanded, which corresponds to the higher price, increases.

Question 16

-Assume that Jack has the preferences shown in the above table. Also assume that the price of a can of Pepsi is $3.00 and that the price of a slice of pizza is $1.00. If he has $16 available to spend, what combination of Pepsi and pizza will be his consumer optimum?

Accepted Answer

A)  4 cans of Pepsi, 1 slice of pizza 
B)  3 cans of Pepsi, 2 slices of pizza 
C)  2 cans of Pepsi, 4 slices of pizza 
D)  4 cans of Pepsi, 4 slices of pizza 
A)  4 cans of Pepsi, 1 slice of pizza 
B)  3 cans of Pepsi, 2 slices of pizza 
C)  2 cans of Pepsi, 4 slices of pizza 
D)  4 cans of Pepsi, 4 slices of pizza

Question 17

-Using the above table, what is the total utility of consuming 2 bottles of soda?

Accepted Answer

A)  115 
B)  120 
C)  140 
D)  240 
A)  115 
B)  120 
C)  140 
D)  240

Question 18

Diminishing marginal utility means that as more of a good is consumed,

Accepted Answer

A)  the rate at which total utility increases starts to diminish. 
B)  the rate at which total utility increases stays the same. 
C)  the rate at which total utility increases starts to increase. 
D)  there is no impact on the rate of change of total utility. 
A)  the rate at which total utility increases starts to diminish. 
B)  the rate at which total utility increases stays the same. 
C)  the rate at which total utility increases starts to increase. 
D)  there is no impact on the rate of change of total utility.

Question 19

Suppose that indifference curve I1 lies to the right of indifference curve I2. We can conclude that

Accepted Answer

A)  some, but not all, points on indifference curve I1 will correspond to higher utility than points along indifference curve I2. 
B)  some, but not all, points on indifference curve I1 will correspond to lower utility than points along indifference curve I2. 
C)  all points along indifference curve I1 will correspond to higher utility than points along indifference curve I2. 
D)  all points along indifference curve I1 will correspond to lower utility than points along indifference curve I2. 
A)  some, but not all, points on indifference curve I1 will correspond to higher utility than points along indifference curve I2. 
B)  some, but not all, points on indifference curve I1 will correspond to lower utility than points along indifference curve I2. 
C)  all points along indifference curve I1 will correspond to higher utility than points along indifference curve I2. 
D)  all points along indifference curve I1 will correspond to lower utility than points along indifference curve I2.

Question 20

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

Accepted Answer

A)  This change in the consumer's choice results from a rise in the price of good Y. 
B)  This change in the consumer's choice results from a fall in the price of good X. 
C)  This change in the consumer's choice results from a rise in the price of good X. 
D)  This change in the consumer's choice results from an increase in the consumer's income. 
A)  This change in the consumer's choice results from a rise in the price of good Y. 
B)  This change in the consumer's choice results from a fall in the price of good X. 
C)  This change in the consumer's choice results from a rise in the price of good X. 
D)  This change in the consumer's choice results from an increase in the consumer's income.

Exam 20: Consumer Choice

-According to the above table, John's marginal utility from watching the 9th movie is

A good synonym for "utility" is

Which of the following best describes the consumer optimum?

The total utility from consuming 8 units of a good is 155. The marginal utility of the 8th unit is 7 and the marginal utility of the 7th unit is 11. The total utility from consuming 6 units of the good is

-Refer to the above table. If the price of Good X is $1, the price of Good Y is $2, and the consumer has $13, the rational consumer will purchase

John is currently spending all of his income. For the last unit of Good A consumed John gets 20 utils and for the last unit of Good B consumed he gets 10 utils. The price of Good A is $1. The price of Good B is $10. If John wants to maximize his utility he should

When the total utility from consuming one good is maximized, marginal utility is

-Use the above figure. When the budget line rotates from "b" to "c"

The real-income effect refers to

Along a given indifference curve, a consumer reduces the quantity of one good in favor of more units of the other. In this situation

In cardinal utility analysis

The utility analysis theory assumes that consumers try to

-Assume that Catherine has the preferences shown in the above table. Also assume that the price of a can of Pepsi is $3.00 and that the price of a slice of pizza is $2.00. If she has $16 available to spend, what combination of Pepsi and pizza will be her consumer optimum?

Suppose a consumer is currently buying 5 goods so that utility is maximized. The price of one of the goods falls while the prices of the other 4 goods do not change. The consumer should

If the price of a product increases, then

-Assume that Jack has the preferences shown in the above table. Also assume that the price of a can of Pepsi is $3.00 and that the price of a slice of pizza is $1.00. If he has $16 available to spend, what combination of Pepsi and pizza will be his consumer optimum?

-Using the above table, what is the total utility of consuming 2 bottles of soda?

Diminishing marginal utility means that as more of a good is consumed,

Suppose that indifference curve I1 lies to the right of indifference curve I2. We can conclude that

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

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

Suppose that indifference curve I₁lies to the right of indifference curve I₂. We can conclude that

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