Question 1

Phyllis spends her income on beer and pretzels,and a six pack of beer costs the same as a bag of pretzels.If she is in consumer equilibrium,we know:

Accepted Answer

A)  she buys the same quantities of six packs of beer and bags of pretzels. 
B)  she gets the same marginal utility from the last six pack of beer as from the last bag of pretzels. 
C)  she gets the same total utility from beer as she does from pretzels. 
D)  that all of the above are true. 
A)  she buys the same quantities of six packs of beer and bags of pretzels. 
B)  she gets the same marginal utility from the last six pack of beer as from the last bag of pretzels. 
C)  she gets the same total utility from beer as she does from pretzels. 
D)  that all of the above are true.

Question 2

When the incremental satisfaction derived from an additional unit of a good or service decreases as more is consumed,it is known as:

Accepted Answer

A)  consumer equilibrium. 
B)  marginal benefit. 
C)  diminishing marginal utility. 
D)  decreasing opportunity cost. 
A)  consumer equilibrium. 
B)  marginal benefit. 
C)  diminishing marginal utility. 
D)  decreasing opportunity cost.

Question 3

If total utility is increasing as more of a good is consumed:

Accepted Answer

A)  marginal utility must be decreasing. 
B)  marginal utility must be increasing at an increasing rate. 
C)  marginal utility is positive. 
D)  both (b) and (c) are true. 
A)  marginal utility must be decreasing. 
B)  marginal utility must be increasing at an increasing rate. 
C)  marginal utility is positive. 
D)  both (b) and (c) are true.

Question 4

If the marginal utility per dollar spent on Good X exceeds that of Good Y,the utility-maximizing consumer should:

Accepted Answer

A)  buy less of Good X and more of Good Y. 
B)  buy less of Good Y and more of Good X. 
C)  buy more of both Good X and Good Y. 
D)  buy less of both Good X and Good Y. 
A)  buy less of Good X and more of Good Y. 
B)  buy less of Good Y and more of Good X. 
C)  buy more of both Good X and Good Y. 
D)  buy less of both Good X and Good Y.

Question 5

Exhibit 10-3   Refer to Exhibit 10-3.Which budget line depicts an increase in income?

Accepted Answer

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

Question 6

Which of the following is an example of a concept from behavioral economics?

Accepted Answer

A)  compartmentalizing 
B)  the endowment effect 
C)  behavior based on perceived fairness 
D)  all of the above 
A)  compartmentalizing 
B)  the endowment effect 
C)  behavior based on perceived fairness 
D)  all of the above

Question 7

Exhibit 10-5   Refer to Exhibit 10-5.The graph on the right implies that:

Accepted Answer

A)  clothing is a normal good and low quality meat is a normal good. 
B)  clothing is a normal good and low quality meat is an inferior good. 
C)  clothing is an inferior good and low quality meat is a normal good. 
D)  clothing is an inferior good and low quality meat is an inferior good. 
A)  clothing is a normal good and low quality meat is a normal good. 
B)  clothing is a normal good and low quality meat is an inferior good. 
C)  clothing is an inferior good and low quality meat is a normal good. 
D)  clothing is an inferior good and low quality meat is an inferior good.

Question 8

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

Accepted Answer

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

Question 9

The law of diminishing marginal utility is consistent with the consumer behavior that produces a negatively sloped demand curve.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 10-2   Refer to Exhibit 10-2.Which indifference curve best reflect the principle of diminishing marginal rate of substitution?

Accepted Answer

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

Question 11

The price of a pound of sirloin steak is five times the price of a pound of ground beef.You are not in consumer equilibrium unless:

Accepted Answer

A)  you consume five times as much ground beef as you do sirloin steak. 
B)  you consume five times as much sirloin steak as you do ground beef. 
C)  the total utility you derive from consuming sirloin steak is five times the total utility you derive from consuming ground beef. 
D)  your marginal utility from the last pound of sirloin steak consumed is five times that of the last pound of ground beef consumed. 
A)  you consume five times as much ground beef as you do sirloin steak. 
B)  you consume five times as much sirloin steak as you do ground beef. 
C)  the total utility you derive from consuming sirloin steak is five times the total utility you derive from consuming ground beef. 
D)  your marginal utility from the last pound of sirloin steak consumed is five times that of the last pound of ground beef consumed.

Question 12

What do economists mean by "consumer equilibrium?"

Accepted Answer

In order to reach consumer equilibrium,c

Question 13

Daniel enjoys both soda and pizza,allocating his purchases across these two goods so that his utility is maximized.If Daniel receives one-third as much utility from the last can of soda as from the last slice of pizza,we can say that:

Accepted Answer

A)  the price of pizza is one-third that of soda. 
B)  the price of pizza is equal to that of soda. 
C)  the price of pizza is twice that of soda. 
D)  the price of pizza is three times that of soda. 
A)  the price of pizza is one-third that of soda. 
B)  the price of pizza is equal to that of soda. 
C)  the price of pizza is twice that of soda. 
D)  the price of pizza is three times that of soda.

Question 14

As an individual increases his consumption of onion rings,it is likely that:

Accepted Answer

A)  his marginal utility and total utility both increase. 
B)  his marginal utility and total utility both decrease. 
C)  his marginal utility increases and his total utility decreases. 
D)  his marginal utility decreases and his total utility increases. 
A)  his marginal utility and total utility both increase. 
B)  his marginal utility and total utility both decrease. 
C)  his marginal utility increases and his total utility decreases. 
D)  his marginal utility decreases and his total utility increases.

Question 15

Exhibit 10-2   Refer to Exhibit 10-2.Which indifference curve best reflects a person's indifference between a right shoe and a left shoe?

Accepted Answer

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

Question 16

Exhibit 10-3   Refer to Exhibit 10-3.Which of the following statements is(are)true?

Accepted Answer

A)  The point of tangency between the budget line and the indifference curve indicates the optimal quantities of each good that will maximize total satisfaction. 
B)  At the point of tangency, the slope of the indifference curve will equal the slope of the budget line. 
C)  Consumer optimization occurs at the point where the marginal rate of substitution is equal to the relative price of the two goods. 
D)  All of the above are true. 
A)  The point of tangency between the budget line and the indifference curve indicates the optimal quantities of each good that will maximize total satisfaction. 
B)  At the point of tangency, the slope of the indifference curve will equal the slope of the budget line. 
C)  Consumer optimization occurs at the point where the marginal rate of substitution is equal to the relative price of the two goods. 
D)  All of the above are true.

Question 17

Use the law of diminishing marginal utility to explain why a pizza parlor might price pizzas in the following way: "Buy one pizza for $12,get the second pizza for $6." Why not simply charge $9 per pizza instead?

Accepted Answer

The second pizza gives less marginal uti

Question 18

Burritos and margaritas are priced at $3 and $5 each,respectively.If the marginal utility of the last burrito is 15 utils,then,in consumer equilibrium,the marginal utility of the last margarita is:

Accepted Answer

A)  15 utils. 
B)  20 utils. 
C)  25 utils. 
D)  30 utils. 
A)  15 utils. 
B)  20 utils. 
C)  25 utils. 
D)  30 utils.

Question 19

Jeremy maximizes utility by consuming both iced tea and coffee.Iced tea is priced at $1.50 per bottle and coffee at $2.00 per 16-ounce cup.Which of the following marginal utility pairs is inconsistent with Jeremy's consumer equilibrium at these prices?

Accepted Answer

A)  MU of iced tea = 3; MU of coffee = 4 
B)  MU of iced tea = 4; MU of coffee = 3 
C)  MU of iced tea = 6; MU of coffee = 8 
D)  MU of iced tea = 3/4; MU of coffee = 1 
A)  MU of iced tea = 3; MU of coffee = 4 
B)  MU of iced tea = 4; MU of coffee = 3 
C)  MU of iced tea = 6; MU of coffee = 8 
D)  MU of iced tea = 3/4; MU of coffee = 1

Question 20

Peanuts are $3 per pound and cashew nuts are $5 per pound.If the marginal utility from consuming the last pound of cashew nuts equals 15 utils,then the marginal utility from consuming the last pound of peanuts in consumer equilibrium should equal:

Accepted Answer

A)  18 utils. 
B)  15 utils. 
C)  9 utils. 
D)  5 utils. 
A)  18 utils. 
B)  15 utils. 
C)  9 utils. 
D)  5 utils.

Exam 10: Consumer Choice Theory

Phyllis spends her income on beer and pretzels,and a six pack of beer costs the same as a bag of pretzels.If she is in consumer equilibrium,we know:

When the incremental satisfaction derived from an additional unit of a good or service decreases as more is consumed,it is known as:

If total utility is increasing as more of a good is consumed:

If the marginal utility per dollar spent on Good X exceeds that of Good Y,the utility-maximizing consumer should:

Exhibit 10-3 Refer to Exhibit 10-3.Which budget line depicts an increase in income?

Which of the following is an example of a concept from behavioral economics?

Exhibit 10-5 Refer to Exhibit 10-5.The graph on the right implies that:

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

The law of diminishing marginal utility is consistent with the consumer behavior that produces a negatively sloped demand curve.

Exhibit 10-2 Refer to Exhibit 10-2.Which indifference curve best reflect the principle of diminishing marginal rate of substitution?

The price of a pound of sirloin steak is five times the price of a pound of ground beef.You are not in consumer equilibrium unless:

What do economists mean by "consumer equilibrium?"

Daniel enjoys both soda and pizza,allocating his purchases across these two goods so that his utility is maximized.If Daniel receives one-third as much utility from the last can of soda as from the last slice of pizza,we can say that:

As an individual increases his consumption of onion rings,it is likely that:

Exhibit 10-2 Refer to Exhibit 10-2.Which indifference curve best reflects a person's indifference between a right shoe and a left shoe?

Exhibit 10-3 Refer to Exhibit 10-3.Which of the following statements is(are)true?

Use the law of diminishing marginal utility to explain why a pizza parlor might price pizzas in the following way: "Buy one pizza for $12,get the second pizza for $6." Why not simply charge $9 per pizza instead?

Burritos and margaritas are priced at $3 and $5 each,respectively.If the marginal utility of the last burrito is 15 utils,then,in consumer equilibrium,the marginal utility of the last margarita is:

Jeremy maximizes utility by consuming both iced tea and coffee.Iced tea is priced at $1.50 per bottle and coffee at $2.00 per 16-ounce cup.Which of the following marginal utility pairs is inconsistent with Jeremy's consumer equilibrium at these prices?

Peanuts are $3 per pound and cashew nuts are $5 per pound.If the marginal utility from consuming the last pound of cashew nuts equals 15 utils,then the marginal utility from consuming the last pound of peanuts in consumer equilibrium should equal:

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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