Question 1

Which of the following is false?

Accepted Answer

A)  We can be sure that people with more income get less marginal utility from their consumption of a good than those with less income. 
B)  We can be sure that people with less income get less marginal utility from their consumption of a good than those with more income. 
C)  We can be sure that those who receive greater marginal utility from consumption of a particular unit of an item receive greater total utility from consumption of that item. 
D)  All of the above are false. 
A)  We can be sure that people with more income get less marginal utility from their consumption of a good than those with less income. 
B)  We can be sure that people with less income get less marginal utility from their consumption of a good than those with more income. 
C)  We can be sure that those who receive greater marginal utility from consumption of a particular unit of an item receive greater total utility from consumption of that item. 
D)  All of the above are false.

Question 2

Exhibit 10-4   Refer to Exhibit 10-4.Which points are attainable?

Accepted Answer

A)  Point A 
B)  Point B 
C)  Point C 
D)  either point A or B 
A)  Point A 
B)  Point B 
C)  Point C 
D)  either point A or B

Question 3

The slope of a budget line:

Accepted Answer

A)  is the negative of the price ratio, -PX/PY 
B)  depends on income. 
C)  depends on preferences. 
D)  is positive. 
A)  is the negative of the price ratio, -PX/PY 
B)  depends on income. 
C)  depends on preferences. 
D)  is positive.

Question 4

Exhibit 10-1 A consumer is faced with choosing between hamburgers and milkshakes that are priced at $2 and $1,respectively.The marginal utility derived from each of the two goods is as follows:
  Refer to Exhibit 10-1.How many hamburgers and milkshakes will be consumed if the consumer maximizes his utility subject to $14 of income each week?

Accepted Answer

A)  4 hamburgers and 5 milkshakes 
B)  5 hamburgers and 4 milkshakes 
C)  4 hamburgers and 3 milkshakes 
D)  3 hamburgers and 4 milkshakes 
A)  4 hamburgers and 5 milkshakes 
B)  5 hamburgers and 4 milkshakes 
C)  4 hamburgers and 3 milkshakes 
D)  3 hamburgers and 4 milkshakes

Question 5

The line joining the old and new optimum points following a pivotal rotation of the budget line is:

Accepted Answer

A)  the price-consumption curve. 
B)  the income-consumption curve. 
C)  the Engels curve. 
D)  the hypothetical budget line 
A)  the price-consumption curve. 
B)  the income-consumption curve. 
C)  the Engels curve. 
D)  the hypothetical budget line

Question 6

The price of shrimp is $10.00 per pound and the price of lobster is $15.00 per pound.The marginal utility to Mike of pound of shrimp consumed is 60 utils.If Mike maximizes his satisfaction by consuming both shrimp and lobster,we would expect the marginal utility of the last pound of lobster consumed to equal:

Accepted Answer

A)  40 utils 
B)  60 utils 
C)  90 utils 
D)  150 utils 
A)  40 utils 
B)  60 utils 
C)  90 utils 
D)  150 utils

Question 7

The total utility from consuming five donuts is 9,19,30,38,and 45 utils,respectively.Marginal utility begins to diminish after consuming the ____ donut.

Accepted Answer

A)  first 
B)  second 
C)  third 
D)  fourth 
A)  first 
B)  second 
C)  third 
D)  fourth

Question 8

Suppose Carrie's utility function for clams is as follows: If she consumes 1 clam,she gets 10 units of total utility; for 2 clams,she gets 18 units of total utility; for 3 clams,she gets 24 units of total utility; for 4 clams,she gets 28 units of total utility; for 5 clams,she gets 30 units of total utility; and for 6 clams,she gets 26 units of total utility.

Accepted Answer

A)  Carrie gets 6 units of marginal utility for the 5th clam. 
B)  Carrie gets 6 units of marginal utility for the 3rd clam. 
C)  Carrie would never choose to consume the 6th clam. 
D)  Both b. and c. are true. 
A)  Carrie gets 6 units of marginal utility for the 5th clam. 
B)  Carrie gets 6 units of marginal utility for the 3rd clam. 
C)  Carrie would never choose to consume the 6th clam. 
D)  Both b. and c. are true.

Question 9

In consumer equilibrium:

Accepted Answer

A)  the average utility from each dollar spent is the same. 
B)  total utility cannot be increased by reallocating spending among the goods consumed. 
C)  total utility obtained from the consumption of each product is at a maximum. 
D)  the marginal utility from the last unit of each good consumed is the same. 
A)  the average utility from each dollar spent is the same. 
B)  total utility cannot be increased by reallocating spending among the goods consumed. 
C)  total utility obtained from the consumption of each product is at a maximum. 
D)  the marginal utility from the last unit of each good consumed is the same.

Question 10

Betty spends all her income on wine and brie.Currently she gets 30 utils from the last bottle of wine and 15 utils from the last package of brie.The price of wine is $6 per bottle and the price of brie is $4 per package.

Accepted Answer

A)  Betty cannot increase her total utility by changing the combination of wine and brie she consumes. 
B)  Betty can increase her total utility by buying more wine and less brie. 
C)  Betty can increase her total utility by buying more brie and less wine. 
D)  Betty could increase her total utility by buying less of both brie and wine. 
A)  Betty cannot increase her total utility by changing the combination of wine and brie she consumes. 
B)  Betty can increase her total utility by buying more wine and less brie. 
C)  Betty can increase her total utility by buying more brie and less wine. 
D)  Betty could increase her total utility by buying less of both brie and wine.

Question 11

The term used to describe a more realistic conception of human problem-solving that assumes less than perfect analysis is:

Accepted Answer

A)  framing. 
B)  compartmentalizing. 
C)  countercyclical policy. 
D)  bounded rationality. 
A)  framing. 
B)  compartmentalizing. 
C)  countercyclical policy. 
D)  bounded rationality.

Question 12

Diminishing marginal utility is best illustrated by which of the following statements?

Accepted Answer

A)  A decrease in the price of hot dogs will cause consumers to buy more hot dogs, because the lowered price has increased their effective real income. 
B)  A person will receive less satisfaction from consuming four hot dogs than from consuming three hot dogs. 
C)  A person will receive less added satisfaction from consuming a fourth hot dog in a week than from consuming the third hot dog in a week. 
D)  If the price of hot dogs declines, people's tastes for hot dogs will increase. 
A)  A decrease in the price of hot dogs will cause consumers to buy more hot dogs, because the lowered price has increased their effective real income. 
B)  A person will receive less satisfaction from consuming four hot dogs than from consuming three hot dogs. 
C)  A person will receive less added satisfaction from consuming a fourth hot dog in a week than from consuming the third hot dog in a week. 
D)  If the price of hot dogs declines, people's tastes for hot dogs will increase.

Question 13

If Tom purchases and consumes an entire Pizza,which of the following is likely to be true?

Accepted Answer

A)  The total utility of the first two pieces will be positive and the marginal utility of the second piece will be negative. 
B)  The marginal utility of the second piece will be positive and the total utility of the first two pieces will be negative. 
C)  The total utility of the first two pieces will be positive and the marginal utility of the second piece will be less than the marginal utility of the first piece. 
D)  The marginal utility of the second piece will be positive and the total utility of the first two pieces will be less than the marginal utility of the first piece. 
A)  The total utility of the first two pieces will be positive and the marginal utility of the second piece will be negative. 
B)  The marginal utility of the second piece will be positive and the total utility of the first two pieces will be negative. 
C)  The total utility of the first two pieces will be positive and the marginal utility of the second piece will be less than the marginal utility of the first piece. 
D)  The marginal utility of the second piece will be positive and the total utility of the first two pieces will be less than the marginal utility of the first piece.

Question 14

Jason buys only music downloads and food with his weekly income.In response to a decrease in the price of downloads,he buys more downloads and less food.As a result,we would expect:

Accepted Answer

A)  the marginal utility of downloads to increase and the marginal utility of food to decrease. 
B)  the marginal utility of both downloads and food to remain unchanged. 
C)  the marginal utility of downloads to decrease and the marginal utility of food to increase. 
D)  the marginal utility of food to become negative. 
A)  the marginal utility of downloads to increase and the marginal utility of food to decrease. 
B)  the marginal utility of both downloads and food to remain unchanged. 
C)  the marginal utility of downloads to decrease and the marginal utility of food to increase. 
D)  the marginal utility of food to become negative.

Question 15

A consumer's budget line will shift to the right in a parallel manner if:

Accepted Answer

A)  the price of the good on the X-axis decreases. 
B)  the price of the good on the Y-axis increases. 
C)  the consumer's income increases. 
D)  the consumer's income decreases. 
A)  the price of the good on the X-axis decreases. 
B)  the price of the good on the Y-axis increases. 
C)  the consumer's income increases. 
D)  the consumer's income decreases.

Question 16

The law of diminishing marginal utility helps explain:

Accepted Answer

A)  why most individual demand curves are straight lines. 
B)  why most supply curves slope upward. 
C)  why most individual demand curves slope downward. 
D)  why marginal utility falls when total utility falls. 
A)  why most individual demand curves are straight lines. 
B)  why most supply curves slope upward. 
C)  why most individual demand curves slope downward. 
D)  why marginal utility falls when total utility falls.

Question 17

Exhibit 10-1 A consumer is faced with choosing between hamburgers and milkshakes that are priced at $2 and $1,respectively.The marginal utility derived from each of the two goods is as follows:
  Refer to Exhibit 10-1.How many hamburgers and milkshakes will be consumed each if the consumer maximizes his utility subject to $11 of income each week?

Accepted Answer

A)  5 hamburgers and 1 milkshake 
B)  1 hamburger and 5 milkshakes 
C)  4 hamburgers and 3 milkshakes 
D)  3 hamburgers and 4 milkshakes 
A)  5 hamburgers and 1 milkshake 
B)  1 hamburger and 5 milkshakes 
C)  4 hamburgers and 3 milkshakes 
D)  3 hamburgers and 4 milkshakes

Question 18

The budget line is downward sloping,reflecting the fact that you must give up some of one good to get more of the other.

Accepted Answer

A) True 
 B)False

Question 19

Exhibit 10-4   Refer to Exhibit 10-4.Which point represents consumer equilibrium?

Accepted Answer

A)  Point A 
B)  Point B 
C)  Point C 
D)  all of the above points 
A)  Point A 
B)  Point B 
C)  Point C 
D)  all of the above points

Question 20

In consumer equilibrium,the marginal utility of good A,B and C are 100,300,and 400 respectively.If the price of good A was $35,then the prices of goods B and C,respectively,are:

Accepted Answer

A)  $105 and $140. 
B)  $140 and $105. 
C)  $105 and $175. 
D)  $140 and $175. 
A)  $105 and $140. 
B)  $140 and $105. 
C)  $105 and $175. 
D)  $140 and $175.

Exam 10: Consumer Choice Theory

Which of the following is false?

Exhibit 10-4 Refer to Exhibit 10-4.Which points are attainable?

The slope of a budget line:

The line joining the old and new optimum points following a pivotal rotation of the budget line is:

The total utility from consuming five donuts is 9,19,30,38,and 45 utils,respectively.Marginal utility begins to diminish after consuming the ____ donut.

In consumer equilibrium:

Betty spends all her income on wine and brie.Currently she gets 30 utils from the last bottle of wine and 15 utils from the last package of brie.The price of wine is $6 per bottle and the price of brie is $4 per package.

The term used to describe a more realistic conception of human problem-solving that assumes less than perfect analysis is:

Diminishing marginal utility is best illustrated by which of the following statements?

If Tom purchases and consumes an entire Pizza,which of the following is likely to be true?

Jason buys only music downloads and food with his weekly income.In response to a decrease in the price of downloads,he buys more downloads and less food.As a result,we would expect:

A consumer's budget line will shift to the right in a parallel manner if:

The law of diminishing marginal utility helps explain:

The budget line is downward sloping,reflecting the fact that you must give up some of one good to get more of the other.

Exhibit 10-4 Refer to Exhibit 10-4.Which point represents consumer equilibrium?

In consumer equilibrium,the marginal utility of good A,B and C are 100,300,and 400 respectively.If the price of good A was $35,then the prices of goods B and C,respectively,are:

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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