Question 1

Exhibit 10-4   Refer to Exhibit 10-4.In the exhibit,Point C is:

Accepted Answer

A)  attainable. 
B)  not attainable but is desirable because it is on a higher indifference curve. 
C)  is on a lower indifference curve and is undesirable. 
D)  None of the above. 
A)  attainable. 
B)  not attainable but is desirable because it is on a higher indifference curve. 
C)  is on a lower indifference curve and is undesirable. 
D)  None of the above.

Question 2

If the total utility for eating up to five $2.00 hamburgers is 40,60,70,75,70,respectively,which of the following is true?

Accepted Answer

A)  A rational consumer would choose to eat five hamburgers at the price of $2.00 
B)  A rational consumer would choose to eat five hamburgers only if the price was reduced to $1.00. 
C)  A rational consumer would choose to eat five hamburgers only if the 5th hamburger as free. 
D)  A rational consumer would have to be compensated to eat the 5th hamburger. 
A)  A rational consumer would choose to eat five hamburgers at the price of $2.00 
B)  A rational consumer would choose to eat five hamburgers only if the price was reduced to $1.00. 
C)  A rational consumer would choose to eat five hamburgers only if the 5th hamburger as free. 
D)  A rational consumer would have to be compensated to eat the 5th hamburger.

Question 3

When marginal utility begins to diminish,total utility always diminishes.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  clothing is a normal good and food is a normal good. 
B)  clothing is a normal good and food is an inferior good. 
C)  clothing is an inferior good and food is a normal good. 
D)  clothing is an inferior good and food is an inferior good. 
A)  clothing is a normal good and food is a normal good. 
B)  clothing is a normal good and food is an inferior good. 
C)  clothing is an inferior good and food is a normal good. 
D)  clothing is an inferior good and food is an inferior good.

Question 5

Collin consumes both corned beef sandwiches and steak sandwiches.Corned beef is priced at $5.00 per sandwich and steak sandwiches are priced at $8.00.Which of the following marginal utility pairs is consistent with Collin's consumer equilibrium at these prices?

Accepted Answer

A)  MU of corned beef sandwich = 1; MU of steak sandwich = 1 
B)  MU of corned beef sandwich = 1; MU of steak sandwich = 1.6 
C)  MU of corned beef sandwich = 1.6; MU of steak sandwich = 1 
D)  MU of corned beef sandwich = 1; MU of steak sandwich = 5 
A)  MU of corned beef sandwich = 1; MU of steak sandwich = 1 
B)  MU of corned beef sandwich = 1; MU of steak sandwich = 1.6 
C)  MU of corned beef sandwich = 1.6; MU of steak sandwich = 1 
D)  MU of corned beef sandwich = 1; MU of steak sandwich = 5

Question 6

Any combination of goods beyond the budget line is not feasible.

Accepted Answer

A) True 
 B)False

Question 7

Indifference curves have which of the following properties?

Accepted Answer

A)  Higher indifference curves represent greater total satisfaction. 
B)  Indifference curves are negatively sloped. 
C)  Indifference curves are convex from the origin. 
D)  All of the above. 
A)  Higher indifference curves represent greater total satisfaction. 
B)  Indifference curves are negatively sloped. 
C)  Indifference curves are convex from the origin. 
D)  All of the above.

Question 8

Assume that Michaela's marginal utility from pizza consumption is 10 utils and the price is $2.00 per slice.Further,assume that her marginal utility from scone consumption is 20 utils and the price is $3.00 per scone.Which of the following is true?

Accepted Answer

A)  With her existing budget she should increase her consumption of pizza. 
B)  With her existing budget she should increase her consumption of scones. 
C)  She is currently maximizing her utility and should not change the amount of consumption for either good with her current budget. 
D)  If her budget increases, she should increase her consumption of pizza but not scones. 
E)  If her budget increases, she should increase her consumption of scones but not pizza. 
A)  With her existing budget she should increase her consumption of pizza. 
B)  With her existing budget she should increase her consumption of scones. 
C)  She is currently maximizing her utility and should not change the amount of consumption for either good with her current budget. 
D)  If her budget increases, she should increase her consumption of pizza but not scones. 
E)  If her budget increases, she should increase her consumption of scones but not pizza.

Question 9

An individual's level of utility is based on fulfillment of needs as opposed to wants.

Accepted Answer

A) True 
 B)False

Question 10

In consumer equilibrium,one dollar's worth of additional gasoline will yield the same marginal utility as one dollar's worth of additional cheese.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 10-2   Refer to Exhibit 10-2.Which indifference curve reflects a constant marginal rate of substitution?

Accepted Answer

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

Question 12

Which of the following is true?

Accepted Answer

A)  A good for which the marginal utility of the last unit of a good consumed is greater will provide more total utility from consumption of the good. 
B)  If marginal utility is positive but diminishing, total utility increases with consumption of a good. 
C)  If marginal utility is diminishing, total utility must be diminishing. 
D)  Total utility is equal to the change in marginal utility from consuming an added unit of a product. 
A)  A good for which the marginal utility of the last unit of a good consumed is greater will provide more total utility from consumption of the good. 
B)  If marginal utility is positive but diminishing, total utility increases with consumption of a good. 
C)  If marginal utility is diminishing, total utility must be diminishing. 
D)  Total utility is equal to the change in marginal utility from consuming an added unit of a product.

Question 13

In the diagram,a consumer equilibrium is depicted by:

Accepted Answer

A)  Point A. 
B)  Point B. 
C)  Point C. 
D)  Point D. 
A)  Point A. 
B)  Point B. 
C)  Point C. 
D)  Point D.

Question 14

Use the concept of diminishing marginal utility to explain why we would be more likely to see an all you can eat pizza buffet rather than an all you can carry sunglass "buffet."

Accepted Answer

As more food is consumed at one buffet s

Question 15

When a consumer allocates her limited budgetary resources to maximize her well-being,____ is achieved.

Accepted Answer

A)  the elimination of scarcity 
B)  market equilibrium 
C)  consumer equilibrium 
D)  the maximization of marginal utility 
A)  the elimination of scarcity 
B)  market equilibrium 
C)  consumer equilibrium 
D)  the maximization of marginal utility

Question 16

Total utility:

Accepted Answer

A)  generally diminishes as consumption of a good increases. 
B)  always increases as consumption increases. 
C)  increases only as long as marginal utility increases. 
D)  increases as long as marginal utility is positive. 
A)  generally diminishes as consumption of a good increases. 
B)  always increases as consumption increases. 
C)  increases only as long as marginal utility increases. 
D)  increases as long as marginal utility is positive.

Question 17

The amount of additional satisfaction derived from an additional unit of a good or service is called:

Accepted Answer

A)  total utility. 
B)  marginal cost. 
C)  total cost. 
D)  marginal utility. 
A)  total utility. 
B)  marginal cost. 
C)  total cost. 
D)  marginal utility.

Question 18

Diminishing marginal utility means that:

Accepted Answer

A)  marginal utility is maximized when consumers get the same amount of total utility from every good they consume. 
B)  beyond some point, added units of a product provide lower and lower amounts of marginal utility. 
C)  a consumer would get more utility from the last unit of a good consumed when that good costs $3 than when it costs $1. 
D)  both (b) and (c) are true. 
A)  marginal utility is maximized when consumers get the same amount of total utility from every good they consume. 
B)  beyond some point, added units of a product provide lower and lower amounts of marginal utility. 
C)  a consumer would get more utility from the last unit of a good consumed when that good costs $3 than when it costs $1. 
D)  both (b) and (c) are true.

Question 19

In consumer equilibrium,which of the following is true?

Accepted Answer

A)  The marginal utility from the consumption of each good is the same. 
B)  The marginal utility from the consumption of each good is zero. 
C)  The marginal utility from the consumption of the last dollar's worth of each good is the same. 
D)  The total utility from the consumption of each good is the same. 
A)  The marginal utility from the consumption of each good is the same. 
B)  The marginal utility from the consumption of each good is zero. 
C)  The marginal utility from the consumption of the last dollar's worth of each good is the same. 
D)  The total utility from the consumption of each good is the same.

Question 20

If a university cafeteria changes from selling each food item separately to offering all-you-can-eat meals for one low price,one would expect that the marginal utility of the last food item consumed in the cafeteria by the typical student would decrease since more food is now likely to be consumed by students who eat a meal in the cafeteria.

Accepted Answer

A) True 
 B)False

Exam 10: Consumer Choice Theory

Exhibit 10-4 Refer to Exhibit 10-4.In the exhibit,Point C is:

If the total utility for eating up to five $2.00 hamburgers is 40,60,70,75,70,respectively,which of the following is true?

When marginal utility begins to diminish,total utility always diminishes.

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

Collin consumes both corned beef sandwiches and steak sandwiches.Corned beef is priced at $5.00 per sandwich and steak sandwiches are priced at $8.00.Which of the following marginal utility pairs is consistent with Collin's consumer equilibrium at these prices?

Any combination of goods beyond the budget line is not feasible.

Indifference curves have which of the following properties?

Assume that Michaela's marginal utility from pizza consumption is 10 utils and the price is $2.00 per slice.Further,assume that her marginal utility from scone consumption is 20 utils and the price is $3.00 per scone.Which of the following is true?

An individual's level of utility is based on fulfillment of needs as opposed to wants.

In consumer equilibrium,one dollar's worth of additional gasoline will yield the same marginal utility as one dollar's worth of additional cheese.

Exhibit 10-2 Refer to Exhibit 10-2.Which indifference curve reflects a constant marginal rate of substitution?

Which of the following is true?

In the diagram,a consumer equilibrium is depicted by:

Use the concept of diminishing marginal utility to explain why we would be more likely to see an all you can eat pizza buffet rather than an all you can carry sunglass "buffet."

When a consumer allocates her limited budgetary resources to maximize her well-being,____ is achieved.

Total utility:

The amount of additional satisfaction derived from an additional unit of a good or service is called:

Diminishing marginal utility means that:

In consumer equilibrium,which of the following is true?

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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