Question 1

Explain the concept of utility.

Accepted Answer

Utility is a measure of the relative lev

Question 2

If a coin toss comes up heads five times in a row,on the sixth flip the odds are better that this coin will come up tails.

Accepted Answer

A) True 
 B)False

Question 3

How does the law of demand reflect the law of diminishing marginal utility?

Accepted Answer

The law of demand states that when the p

Question 4

A consumer's indifference curve shows:

Accepted Answer

A)  all the commodity bundles a consumer can afford. 
B)  only commodity bundles that maximize utility. 
C)  the equilibrium commodity bundles. 
D)  various combinations of goods that yield the same level of total utility to this consumer. 
A)  all the commodity bundles a consumer can afford. 
B)  only commodity bundles that maximize utility. 
C)  the equilibrium commodity bundles. 
D)  various combinations of goods that yield the same level of total utility to this consumer.

Question 5

A consumer's switch to another similar good when the price of the preferred good increases is termed the:

Accepted Answer

A)  income effect. 
B)  substitution effect. 
C)  utility effect. 
D)  marginal effect. 
A)  income effect. 
B)  substitution effect. 
C)  utility effect. 
D)  marginal effect.

Question 6

Which of the following is not true about utility?

Accepted Answer

A)  Utility varies from individual to individual. 
B)  Marginal utility tends to decline, the more of a good or service is consumed. 
C)  When marginal utility is at its maximum, total utility is zero. 
D)  All of the above are true about utility. 
A)  Utility varies from individual to individual. 
B)  Marginal utility tends to decline, the more of a good or service is consumed. 
C)  When marginal utility is at its maximum, total utility is zero. 
D)  All of the above are true about utility.

Question 7

"I'm tired of eating muffins for breakfast.Today I am trying a bagel." This statement most clearly reflects the:

Accepted Answer

A)  ceteris paribus condition. 
B)  the law of supply. 
C)  law of diminishing marginal utility. 
D)  law of comparative advantage. 
A)  ceteris paribus condition. 
B)  the law of supply. 
C)  law of diminishing marginal utility. 
D)  law of comparative advantage.

Question 8

The income effect occurs when an individual switches to another similar good when the price of the preferred good increases.

Accepted Answer

A) True 
 B)False

Question 9

Marginal utility must be positive.

Accepted Answer

A) True 
 B)False

Question 10

For Brent,if the marginal utility of sleeping an extra hour,from 8 a.m.to 9 a.m.,is negative:

Accepted Answer

A)  Brent is better off getting up at 8 a.m. or earlier. 
B)  Brent is better off getting up at 9 a.m. 
C)  Brent's total utility from sleeping must be negative. 
D)  Brent's average utility from every hour he sleeps must be negative. 
A)  Brent is better off getting up at 8 a.m. or earlier. 
B)  Brent is better off getting up at 9 a.m. 
C)  Brent's total utility from sleeping must be negative. 
D)  Brent's average utility from every hour he sleeps must be negative.

Question 11

As an individual consumes more of a given good or service,the marginal utility of that good to the consumer likely:

Accepted Answer

A)  increases. 
B)  remains constant. 
C)  falls. 
D)  falls and then rises. 
A)  increases. 
B)  remains constant. 
C)  falls. 
D)  falls and then rises.

Question 12

Consumer equilibrium is reached when:

Accepted Answer

A)  an individual spends her entire income. 
B)  there is no way a consumer, given the available income, could increase her satisfaction. 
C)  marginal utility begins to diminish. 
D)  marginal utility is maximized, subject to the available income. 
A)  an individual spends her entire income. 
B)  there is no way a consumer, given the available income, could increase her satisfaction. 
C)  marginal utility begins to diminish. 
D)  marginal utility is maximized, subject to the available income.

Question 13

Ben consumes soda and cheeseburgers.If his total utility from sodas is currently 40,and his total utility from cheeseburgers is 30,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.

Question 14

Reduction in quantity demanded of a good when its price increases because of a consumer's decreased purchasing power is termed as:

Accepted Answer

A)  income effect. 
B)  substitution effect. 
C)  utility effect. 
D)  marginal effect. 
A)  income effect. 
B)  substitution effect. 
C)  utility effect. 
D)  marginal effect.

Question 15

To maximize satisfaction,the consumer must reach the lowest indifference curve that can be reached with a given level of income.

Accepted Answer

A) True 
 B)False

Question 16

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 9 units of marginal utility for the 2nd clam. 
B)  Carrie gets 8 units of marginal utility for the 3rd clam. 
C)  Carrie gets 7 units of marginal utility for the 4th clam. 
D)  None of the above are true. 
A)  Carrie gets 9 units of marginal utility for the 2nd clam. 
B)  Carrie gets 8 units of marginal utility for the 3rd clam. 
C)  Carrie gets 7 units of marginal utility for the 4th clam. 
D)  None of the above are true.

Question 17

A consumer's budget line will rotate outward along the vertical axis if:

Accepted Answer

A)  the price of the good on the horizontal axis decreases. 
B)  the price of the good on the vertical axis increases. 
C)  the price of the good on the horizontal axis increases. 
D)  the price of the good on the vertical axis decreases. 
A)  the price of the good on the horizontal axis decreases. 
B)  the price of the good on the vertical axis increases. 
C)  the price of the good on the horizontal axis increases. 
D)  the price of the good on the vertical axis decreases.

Question 18

If the price of good A falls,it will:

Accepted Answer

A)  increase a consumer's total utility from the consumption of that good. 
B)  increase a consumer's marginal utility from consuming the last unit of that good. 
C)  decrease a consumer's marginal utility from consuming the last unit of that good. 
D)  do both (a) and (c). 
A)  increase a consumer's total utility from the consumption of that good. 
B)  increase a consumer's marginal utility from consuming the last unit of that good. 
C)  decrease a consumer's marginal utility from consuming the last unit of that good. 
D)  do both (a) and (c).

Question 19

For most goods and most people,marginal utility probably:

Accepted Answer

A)  continues to increase as larger quantities are purchased. 
B)  declines as consumption increases. 
C)  plummets after the first few units but soon begins to rise. 
D)  is negative after the first unit of a good is purchased. 
A)  continues to increase as larger quantities are purchased. 
B)  declines as consumption increases. 
C)  plummets after the first few units but soon begins to rise. 
D)  is negative after the first unit of a good is purchased.

Question 20

Moving down along an indifference curve:

Accepted Answer

A)  total utility remains constant. 
B)  total utility decreases. 
C)  total utility increases. 
D)  total utility first decreases and then increases. 
A)  total utility remains constant. 
B)  total utility decreases. 
C)  total utility increases. 
D)  total utility first decreases and then increases.

Exam 10: Consumer Choice Theory

Explain the concept of utility.

If a coin toss comes up heads five times in a row,on the sixth flip the odds are better that this coin will come up tails.

How does the law of demand reflect the law of diminishing marginal utility?

A consumer's indifference curve shows:

A consumer's switch to another similar good when the price of the preferred good increases is termed the:

Which of the following is not true about utility?

"I'm tired of eating muffins for breakfast.Today I am trying a bagel." This statement most clearly reflects the:

The income effect occurs when an individual switches to another similar good when the price of the preferred good increases.

Marginal utility must be positive.

For Brent,if the marginal utility of sleeping an extra hour,from 8 a.m.to 9 a.m.,is negative:

As an individual consumes more of a given good or service,the marginal utility of that good to the consumer likely:

Consumer equilibrium is reached when:

Ben consumes soda and cheeseburgers.If his total utility from sodas is currently 40,and his total utility from cheeseburgers is 30,and the price of cheeseburgers is twice the price of sodas,

Reduction in quantity demanded of a good when its price increases because of a consumer's decreased purchasing power is termed as:

To maximize satisfaction,the consumer must reach the lowest indifference curve that can be reached with a given level of income.

A consumer's budget line will rotate outward along the vertical axis if:

If the price of good A falls,it will:

For most goods and most people,marginal utility probably:

Moving down along an indifference curve:

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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