Question 1

Figure 6.4  
-Refer to Figure 6.4.The consumer can afford consumption bundles

Accepted Answer

A) r, s, t and u. 
B) r, s, v and u. 
C) s, v and u only. 
D) s, v, t and u. 
A) r, s, t and u. 
B) r, s, v and u. 
C) s, v and u only. 
D) s, v, t and u.

Question 2

Which of the following is used to explain why a consumer's willingness to buy a mobile increases as the number of other people who own and use mobiles increases?

Accepted Answer

A) Network externalities 
B) Market failure 
C) Diminishing marginal utility 
D) The income effect of a price change 
A) Network externalities 
B) Market failure 
C) Diminishing marginal utility 
D) The income effect of a price change

Question 3

Consider a good whose consumption takes place publicly.Your decision to buy that good depends

Accepted Answer

A) both on the characteristics of the product and on how many other people are buying the good. 
B) only on the characteristics of the good. 
C) only on how many other people buy the good. 
D) only on the price of the good. 
A) both on the characteristics of the product and on how many other people are buying the good. 
B) only on the characteristics of the good. 
C) only on how many other people buy the good. 
D) only on the price of the good.

Question 4

Vinny consumes tacos and chicken wings.To keep his utility constant, he must consume more tacos if he consumes fewer chicken wings.This means that

Accepted Answer

A) Vinny's indifference curve for tacos and chicken wings must have a negative slope. 
B) the prices Vinny pays for tacos and chicken wings are always the same. 
C) Vinny's marginal utility from each good must be constant along his convex indifference curves for tacos and chicken wings. 
D) Vinny's marginal rate of substitution must be constant along his indifference curves for tacos and chicken wings. 
A) Vinny's indifference curve for tacos and chicken wings must have a negative slope. 
B) the prices Vinny pays for tacos and chicken wings are always the same. 
C) Vinny's marginal utility from each good must be constant along his convex indifference curves for tacos and chicken wings. 
D) Vinny's marginal rate of substitution must be constant along his indifference curves for tacos and chicken wings.

Question 5

Figure 6.4  
-Refer to Figure 6.4.Suppose the price of pizza increases while the price of hamburger remains constant.Then, the consumer's

Accepted Answer

A) indifference curve becomes more concave away from the origin. 
B) indifference curve becomes straighter. 
C) budget constraint moves inward toward the origin on the pizza axis while the hamburger intercept remains the same. 
D) budget constraint moves outward away from the origin on the pizza axis while the hamburger intercept remains the same. 
A) indifference curve becomes more concave away from the origin. 
B) indifference curve becomes straighter. 
C) budget constraint moves inward toward the origin on the pizza axis while the hamburger intercept remains the same. 
D) budget constraint moves outward away from the origin on the pizza axis while the hamburger intercept remains the same.

Question 6

Table 6.2   Table 6.2 above shows Keira's utility from soup and sandwiches.The price of soup is $2 per cup and the price of a sandwich is $3.Keira has $18 to spend on these two goods.
-Refer to Table 6.2.Keira's marginal utility per dollar spent on the third cup of soup is

Accepted Answer

A) 72 units of utility 
B) 36 units of utility 
C) 12 units of utility 
D) 6 units of utility 
A) 72 units of utility 
B) 36 units of utility 
C) 12 units of utility 
D) 6 units of utility

Question 7

Economists Gary Becker and Kevin Murphy are associated with which of the following?

Accepted Answer

A) The discovery of the first example of a Giffen good 
B) They have argued that social factors are not important in explaining the choices consumers make. 
C) Consumers appear to receive utility from consuming goods they believe are popular. 
D) They discovered that price changes have both income and substitution effects. 
A) The discovery of the first example of a Giffen good 
B) They have argued that social factors are not important in explaining the choices consumers make. 
C) Consumers appear to receive utility from consuming goods they believe are popular. 
D) They discovered that price changes have both income and substitution effects.

Question 8

Consider a downward-sloping demand curve.When the price of an inferior good decreases, the income and substitution effects

Accepted Answer

A) work in the same direction to increase quantity demanded. 
B) work in the same direction to decrease quantity demanded. 
C) work in opposite directions and quantity demanded increases. 
D) work in opposite directions and quantity demanded decreases. 
A) work in the same direction to increase quantity demanded. 
B) work in the same direction to decrease quantity demanded. 
C) work in opposite directions and quantity demanded increases. 
D) work in opposite directions and quantity demanded decreases.

Question 9

What is a sunk cost?

Accepted Answer

A) Another term that means opportunity cost. 
B) A term used to describe the cost of capital that the owners of a firm sink into their business. 
C) The highest valued alternative that must be given up to engage in an activity. 
D) A cost that has already been paid and cannot be recovered. 
A) Another term that means opportunity cost. 
B) A term used to describe the cost of capital that the owners of a firm sink into their business. 
C) The highest valued alternative that must be given up to engage in an activity. 
D) A cost that has already been paid and cannot be recovered.

Question 10

Economists have noted that businesses of a certain type tend to congregate geographically, attracting workers with skills in those fields.This, in turn, lures more firms seeking employees with those skills.Some examples include commercial banking, software development, and the automobile industry.What mechanism is at work here? Briefly explain how the mechanism works to the advantage of employers and employees.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The mechanism at work is a network exter

Question 11

A curve that shows combinations of consumption bundles that give a consumer the same utility is called

Accepted Answer

A) a utility curve. 
B) an indifference curve. 
C) a preference curve. 
D) a demand curve. 
A) a utility curve. 
B) an indifference curve. 
C) a preference curve. 
D) a demand curve.

Question 12

Table 6.6   Table 6.6 lists Jay's marginal utilities for burgers and Pepsi.Jay has $7 to spend on these two goods.The price of a burger is $2 and the price of a can of Pepsi is $1.
-Refer to Table 6.6.If Jay can eat all the burgers he wants for free, he will consume

Accepted Answer

A) 7 burgers 
B) 6 burgers 
C) 5 burgers 
D) 3 burgers 
A) 7 burgers 
B) 6 burgers 
C) 5 burgers 
D) 3 burgers

Question 13

Economists have shown that when the ultimatum game experiment is carried out, both allocators and recipients act as if fairness is important.

Accepted Answer

A) True 
 B)False

Question 14

The income effect of a price increase for a Giffen good outweighs the substitution effect.

Accepted Answer

A) True 
 B)False

Figure 6.4 -Refer to Figure 6.4.The consumer can afford consumption bundles

Which of the following is used to explain why a consumer's willingness to buy a mobile increases as the number of other people who own and use mobiles increases?

Consider a good whose consumption takes place publicly.Your decision to buy that good depends

Vinny consumes tacos and chicken wings.To keep his utility constant, he must consume more tacos if he consumes fewer chicken wings.This means that

Figure 6.4 -Refer to Figure 6.4.Suppose the price of pizza increases while the price of hamburger remains constant.Then, the consumer's

Table 6.2 Table 6.2 above shows Keira's utility from soup and sandwiches.The price of soup is $2 per cup and the price of a sandwich is $3.Keira has $18 to spend on these two goods. -Refer to Table 6.2.Keira's marginal utility per dollar spent on the third cup of soup is

Economists Gary Becker and Kevin Murphy are associated with which of the following?

Consider a downward-sloping demand curve.When the price of an inferior good decreases, the income and substitution effects

What is a sunk cost?

A curve that shows combinations of consumption bundles that give a consumer the same utility is called

Table 6.6 Table 6.6 lists Jay's marginal utilities for burgers and Pepsi.Jay has $7 to spend on these two goods.The price of a burger is $2 and the price of a can of Pepsi is $1. -Refer to Table 6.6.If Jay can eat all the burgers he wants for free, he will consume

Economists have shown that when the ultimatum game experiment is carried out, both allocators and recipients act as if fairness is important.

The income effect of a price increase for a Giffen good outweighs the substitution effect.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 6: Consumer Choice and Behavioural Economics

Figure 6.4 -Refer to Figure 6.4.The consumer can afford consumption bundles

Which of the following is used to explain why a consumer's willingness to buy a mobile increases as the number of other people who own and use mobiles increases?

Consider a good whose consumption takes place publicly.Your decision to buy that good depends

Vinny consumes tacos and chicken wings.To keep his utility constant, he must consume more tacos if he consumes fewer chicken wings.This means that

Figure 6.4 -Refer to Figure 6.4.Suppose the price of pizza increases while the price of hamburger remains constant.Then, the consumer's

Table 6.2 Table 6.2 above shows Keira's utility from soup and sandwiches.The price of soup is $2 per cup and the price of a sandwich is $3.Keira has $18 to spend on these two goods. -Refer to Table 6.2.Keira's marginal utility per dollar spent on the third cup of soup is

Economists Gary Becker and Kevin Murphy are associated with which of the following?

Consider a downward-sloping demand curve.When the price of an inferior good decreases, the income and substitution effects

What is a sunk cost?

A curve that shows combinations of consumption bundles that give a consumer the same utility is called

Table 6.6 Table 6.6 lists Jay's marginal utilities for burgers and Pepsi.Jay has $7 to spend on these two goods.The price of a burger is $2 and the price of a can of Pepsi is $1. -Refer to Table 6.6.If Jay can eat all the burgers he wants for free, he will consume

Economists have shown that when the ultimatum game experiment is carried out, both allocators and recipients act as if fairness is important.

The income effect of a price increase for a Giffen good outweighs the substitution effect.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters