Question 1

Which of the following occurs when a consumer equilibrium has been achieved?

Accepted Answer

A)  The marginal utility of the last unit purchased is identical for all goods. 
B)  The price of the last unit purchased is identical for all goods. 
C)  An equal amount of income is spent on all goods purchased. 
D)  The ratio of the marginal utility of each good divided by its price is equal across all goods consumed. 
A)  The marginal utility of the last unit purchased is identical for all goods. 
B)  The price of the last unit purchased is identical for all goods. 
C)  An equal amount of income is spent on all goods purchased. 
D)  The ratio of the marginal utility of each good divided by its price is equal across all goods consumed. D

Question 2

Ben consumes soda and cheeseburgers.If his marginal utility from sodas is currently 20,and his marginal utility from cheeseburgers is 10,and the price of cheeseburgers is twice the price of sodas,

Accepted Answer

A)  Ben is in equilibrium. 
B)  Ben should increase his soda consumption and decrease his cheeseburger consumption. 
C)  Ben should decrease his soda consumption and increase his cheeseburger consumption. 
D)  we cannot conclude that any of the above are correct. 
A)  Ben is in equilibrium. 
B)  Ben should increase his soda consumption and decrease his cheeseburger consumption. 
C)  Ben should decrease his soda consumption and increase his cheeseburger consumption. 
D)  we cannot conclude that any of the above are correct. B

Question 3

A one-day ticket to Sea World costs $37,but a two-day pass costs $42.What is the average cost per day for a one-day pass? For a two-day pass? What is the marginal cost of a second day at Sea World? Why might Sea World charge such a price for a second day's entrance to the park?

Accepted Answer

The one-day pass average cost is $37.The average cost per day of the two-day pass is $21.The marginal cost of the second day is $5.Sea World knows that due to diminishing marginal utility,the value of the first day's visit is high,but the second day is much lower.So in order to entice people to visit for a second day and increase Sea World revenues,the price reflects the decrease in value to individuals.

Question 4

When a consumer maximizes utility subject to a limited income,she allocates income across goods to the point that:

Accepted Answer

A)  the marginal price is the same for all goods. 
B)  marginal utility is zero. 
C)  marginal utility is negative. 
D)  the marginal utility per dollar spent is the same for all goods. 
A)  the marginal price is the same for all goods. 
B)  marginal utility is zero. 
C)  marginal utility is negative. 
D)  the marginal utility per dollar spent is the same for all goods.

Question 5

When a person's income doubles,her consumption of each good will double in order for her to stay in consumer equilibrium.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 10-5   Refer to Exhibit 10-5.In the exhibit,the line that connects points A and B is called:

Accepted Answer

A)  the price-consumption curve. 
B)  the income-consumption curve. 
C)  the Engels curve. 
D)  the relative-price effect. 
A)  the price-consumption curve. 
B)  the income-consumption curve. 
C)  the Engels curve. 
D)  the relative-price effect.

Question 7

At consumer equilibrium,the level of marginal utility per dollar spent is the same for all consumers.

Accepted Answer

A) True 
 B)False

Question 8

A consumer equilibrium is depicted using indifference curve analysis as:

Accepted Answer

A)  the point where two indifference curves cross. 
B)  the combination of two goods that minimizes total utility for a given level of income. 
C)  the combination of two goods located where the highest attainable indifference curve is just tangent to the budget line. 
D)  any combination of two goods where an indifference curve crosses the budget line. 
A)  the point where two indifference curves cross. 
B)  the combination of two goods that minimizes total utility for a given level of income. 
C)  the combination of two goods located where the highest attainable indifference curve is just tangent to the budget line. 
D)  any combination of two goods where an indifference curve crosses the budget line.

Question 9

Grace maximizes her utility by consuming both gourmet cookies and ice cream.If the price of a dozen cookies is three times that of a pint of ice cream,we would expect that:

Accepted Answer

A)  the total utility of a dozen cookies is three times that of a pint of ice cream. 
B)  the total utility of a dozen cookies is one-third that of a pint of ice cream. 
C)  the marginal utility of the last dozen cookies is three times that of the last pint of ice cream. 
D)  the marginal utility of the last dozen cookies is one-third times that of the last pint of ice cream. 
A)  the total utility of a dozen cookies is three times that of a pint of ice cream. 
B)  the total utility of a dozen cookies is one-third that of a pint of ice cream. 
C)  the marginal utility of the last dozen cookies is three times that of the last pint of ice cream. 
D)  the marginal utility of the last dozen cookies is one-third times that of the last pint of ice cream.

Question 10

Exhibit 10-3   Refer to Exhibit 10-3.Which budget line depicts an increase in the price of X?

Accepted Answer

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

Question 11

Exhibit 10-6   Refer to Exhibit 10-6.Based on the graph,how would the budget constraint change if the price of chicken fingers doubled?

Accepted Answer

A)  The intercept on the vertical axis would move upward and the intercept on the horizontal axis would not change. 
B)  The intercept on the vertical axis would move downward and the intercept on the horizontal axis would not change. 
C)  The intercept on the horizontal axis would move outward and the intercept on the vertical axis would not change. 
D)  The intercept on the horizontal axis would move inward and the intercept on the vertical axis would not change. 
A)  The intercept on the vertical axis would move upward and the intercept on the horizontal axis would not change. 
B)  The intercept on the vertical axis would move downward and the intercept on the horizontal axis would not change. 
C)  The intercept on the horizontal axis would move outward and the intercept on the vertical axis would not change. 
D)  The intercept on the horizontal axis would move inward and the intercept on the vertical axis would not change.

Question 12

The price of a bagel with cream cheese equals $2 and the price of a donut equals 50 cents.The marginal utility to Joaquin of the last bagel consumed equals 16 utils.If Joaquin maximizes his satisfaction by consuming both bagels and donuts,we would expect the marginal utility of the last donut consumed to equal:

Accepted Answer

A)  20 utils. 
B)  12 utils. 
C)  8 utils. 
D)  4 utils. 
A)  20 utils. 
B)  12 utils. 
C)  8 utils. 
D)  4 utils.

Question 13

Cheese is priced at $5 per pound and wine at $10 per bottle.A consumer who enjoys both cheese and wine will not be in consumer equilibrium until the marginal utility of a pound of cheese is:

Accepted Answer

A)  four times that of wine. 
B)  one-fourth that of wine. 
C)  two times that of wine. 
D)  one-half that of wine. 
A)  four times that of wine. 
B)  one-fourth that of wine. 
C)  two times that of wine. 
D)  one-half that of wine.

Question 14

Exhibit 10-4   Refer to Exhibit 10-4.If a consumer were at Point B on the budget line:

Accepted Answer

A)  with the given level of income, she could make herself better off by consuming less clothing and more food. 
B)  with the given level of income, she could make herself better off by consuming more clothing and less food. 
C)  is at the consumer optimal position. 
D)  All of the above statements are correct. 
A)  with the given level of income, she could make herself better off by consuming less clothing and more food. 
B)  with the given level of income, she could make herself better off by consuming more clothing and less food. 
C)  is at the consumer optimal position. 
D)  All of the above statements are correct.

Question 15

Which of the following is an example a lack of self-control that contradicts the conclusions of standard economic analysis?

Accepted Answer

A)  Eating more food at an all-you-can-eat buffet 
B)  Playing video games all night even with an exam the following morning that will determine your semester grade 
C)  Decreasing the purchase of steak if the price increases 25% 
D)  all of the above 
A)  Eating more food at an all-you-can-eat buffet 
B)  Playing video games all night even with an exam the following morning that will determine your semester grade 
C)  Decreasing the purchase of steak if the price increases 25% 
D)  all of the above

Question 16

Exhibit 10-6   Refer to Exhibit 10-6.Based on the graph with the budget constraint as indicated,the highest level of utility possible would be:

Accepted Answer

A)  on I1. 
B)  on I2. 
C)  on I3. 
D)  on any of the curves because they represent equal levels of utility. 
A)  on I1. 
B)  on I2. 
C)  on I3. 
D)  on any of the curves because they represent equal levels of utility.

Question 17

Indifference curves typically

Accepted Answer

A)  cross each other. 
B)  have a positive slope. 
C)  are convex from the origin. 
D)  are concave from the origin. 
A)  cross each other. 
B)  have a positive slope. 
C)  are convex from the origin. 
D)  are concave from the origin.

Question 18

Suppose a consumer buys only food and clothing.If the quantity of food bought decreases while that of clothing remains the same,their marginal utility from food will:

Accepted Answer

A)  fall relative to the marginal utility of clothing. 
B)  rise relative to the marginal utility of clothing. 
C)  rise, but not as fast as their marginal utility of clothing rises. 
D)  fall, but not as fast as their marginal utility of clothing falls. 
A)  fall relative to the marginal utility of clothing. 
B)  rise relative to the marginal utility of clothing. 
C)  rise, but not as fast as their marginal utility of clothing rises. 
D)  fall, but not as fast as their marginal utility of clothing falls.

Question 19

Exhibit 10-2   Refer to Exhibit 10-2.Which indifference curve depicts a perfect complement?

Accepted Answer

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

Question 20

The marginal rate of substitution is:

Accepted Answer

A)  the total amount a consumer is willing to trade to get another good. 
B)  the rate at which the consumer is willing to trade one good to gain one more unit of another good. 
C)  is reflected by the slope of the indifference curve. 
D)  characterized by both b. and c. 
A)  the total amount a consumer is willing to trade to get another good. 
B)  the rate at which the consumer is willing to trade one good to gain one more unit of another good. 
C)  is reflected by the slope of the indifference curve. 
D)  characterized by both b. and c.

Exam 10: Consumer Choice Theory

Which of the following occurs when a consumer equilibrium has been achieved?

Ben consumes soda and cheeseburgers.If his marginal utility from sodas is currently 20,and his marginal utility from cheeseburgers is 10,and the price of cheeseburgers is twice the price of sodas,

A one-day ticket to Sea World costs $37,but a two-day pass costs $42.What is the average cost per day for a one-day pass? For a two-day pass? What is the marginal cost of a second day at Sea World? Why might Sea World charge such a price for a second day's entrance to the park?

When a consumer maximizes utility subject to a limited income,she allocates income across goods to the point that:

When a person's income doubles,her consumption of each good will double in order for her to stay in consumer equilibrium.

Exhibit 10-5 Refer to Exhibit 10-5.In the exhibit,the line that connects points A and B is called:

At consumer equilibrium,the level of marginal utility per dollar spent is the same for all consumers.

A consumer equilibrium is depicted using indifference curve analysis as:

Grace maximizes her utility by consuming both gourmet cookies and ice cream.If the price of a dozen cookies is three times that of a pint of ice cream,we would expect that:

Exhibit 10-3 Refer to Exhibit 10-3.Which budget line depicts an increase in the price of X?

Exhibit 10-6 Refer to Exhibit 10-6.Based on the graph,how would the budget constraint change if the price of chicken fingers doubled?

Cheese is priced at $5 per pound and wine at $10 per bottle.A consumer who enjoys both cheese and wine will not be in consumer equilibrium until the marginal utility of a pound of cheese is:

Exhibit 10-4 Refer to Exhibit 10-4.If a consumer were at Point B on the budget line:

Which of the following is an example a lack of self-control that contradicts the conclusions of standard economic analysis?

Exhibit 10-6 Refer to Exhibit 10-6.Based on the graph with the budget constraint as indicated,the highest level of utility possible would be:

Indifference curves typically

Suppose a consumer buys only food and clothing.If the quantity of food bought decreases while that of clothing remains the same,their marginal utility from food will:

Exhibit 10-2 Refer to Exhibit 10-2.Which indifference curve depicts a perfect complement?

The marginal rate of substitution is:

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

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