Question 1

The restriction that a consumer's total expenditure on goods and services purchased cannot exceed the income available is referred to as

Accepted Answer

A)  maximising behaviour. 
B)  economising behaviour. 
C)  the price constraint. 
D)  the budget constraint. 
A)  maximising behaviour. 
B)  economising behaviour. 
C)  the price constraint. 
D)  the budget constraint.

Question 2

The law of diminishing marginal utility states that

Accepted Answer

A)  eventually total utility falls as more of a good is consumed, other things constant. 
B)  the extra satisfaction from consuming a good decreases as more of a good is consumed, other things constant. 
C)  the extra satisfaction from consuming a good increases slowly as more of a good is consumed, other things constant. 
D)  when the extra satisfaction from consuming a good becomes negative, total utility starts falling, other things constant. 
A)  eventually total utility falls as more of a good is consumed, other things constant. 
B)  the extra satisfaction from consuming a good decreases as more of a good is consumed, other things constant. 
C)  the extra satisfaction from consuming a good increases slowly as more of a good is consumed, other things constant. 
D)  when the extra satisfaction from consuming a good becomes negative, total utility starts falling, other things constant.

Question 3

If your total satisfaction increases when you consume another unit, your marginal utility must be

Accepted Answer

A)  increasing. 
B)  decreasing. 
C)  negative. 
D)  positive. 
A)  increasing. 
B)  decreasing. 
C)  negative. 
D)  positive.

Question 4

Health clubs typically experience an increase in one-year memberships in January, but many new customers cancel their memberships before the end of the year. Which of the following is the best explanation for this behaviour?

Accepted Answer

A)  Some health club members suffer minor injuries that prevent them from working out. 
B)  Some people are overly optimistic about their future behaviour. 
C)  Some people fail to treat their membership fees as sunk costs. 
D)  Some members receive utility from activities they believe are popular. 
A)  Some health club members suffer minor injuries that prevent them from working out. 
B)  Some people are overly optimistic about their future behaviour. 
C)  Some people fail to treat their membership fees as sunk costs. 
D)  Some members receive utility from activities they believe are popular.

Question 5

Economists have shown that when the ultimatum game experiment is carried out, both allocators and recipients act as if fairness is important.

Accepted Answer

A) True 
 B)False

Question 6

All but one of the following have been suggested by some economists as possible consequences of path dependency and switching costs. Which of the following is not a possible consequence of path dependency and switching costs?

Accepted Answer

A)  Consumers may get locked into using products with inferior technology. 
B)  market failure 
C)  diseconomies of scale 
D)  Government intervention may be necessary in affected markets in order to improve economic efficiency. 
A)  Consumers may get locked into using products with inferior technology. 
B)  market failure 
C)  diseconomies of scale 
D)  Government intervention may be necessary in affected markets in order to improve economic efficiency.

Question 7

What is marginal utility and what is the law of diminishing marginal utility?

Accepted Answer

Marginal utility is the change in total

Question 8

A consumer's budget constraint is

Accepted Answer

A)  the limited income that a consumer has to spend on goods and services. 
B)  the rate at which the consumer must give up one good to purchase an additional unit of the other goods in the market. 
C)  the price ratio a consumer faces in the marketplace. 
D)  the extent to which one's preferences are limited by one's income. 
A)  the limited income that a consumer has to spend on goods and services. 
B)  the rate at which the consumer must give up one good to purchase an additional unit of the other goods in the market. 
C)  the price ratio a consumer faces in the marketplace. 
D)  the extent to which one's preferences are limited by one's income.

Question 9

The satisfaction a person receives from consuming goods and services is called

Accepted Answer

A)  contentment. 
B)  psychic income. 
C)  wealth. 
D)  utility. 
A)  contentment. 
B)  psychic income. 
C)  wealth. 
D)  utility.

Question 10

You wish to buy only one CD. Use the rule of equal marginal utility per dollar to determine which one to purchase: (a) Usher's latest CD for $15 which gives you 75 units of utility, or (b) Tom Petty and the Heartbreakers' Greatest Hits for $10 that gives you 100 units of utility?

Accepted Answer

You should buy the Tom Petty C

Question 11

Gowri has $6 per day to purchase lunch. She spends all of her lunch money on pizza and iced tea. The price of pizza is $2.00 per slice and iced tea costs $1 per bottle.
a. Draw Gowri's budget constraint and label it BC0. Put pizza on the horizontal axis and iced tea on the vertical axis. Be sure to identify the intercept values.
b. If the price of iced tea rises to $1.20 per bottle, show what will happen to her budget constraint in your diagram. Be sure to indicate any new intercept values.

Accepted Answer

a. @#IMG-DLM& b. BC₁ in the fi

Question 12

-Refer to Figure 6-4. Which of the following statements is true?

Accepted Answer

A)  The consumer gets more utility from bundle r than from bundle v. 
B)  The consumer gets less utility from bundle w than from bundle v. 
C)  Bundles r, s, t and u all cost the same. 
D)  Bundles r and w are not affordable. 
A)  The consumer gets more utility from bundle r than from bundle v. 
B)  The consumer gets less utility from bundle w than from bundle v. 
C)  Bundles r, s, t and u all cost the same. 
D)  Bundles r and w are not affordable.

Question 13

A consumer maximises her total utility from a bundle of goods when her marginal utility from each good is equal.

Accepted Answer

A) True 
 B)False

Question 14

The word 'util' has been used by economists in the past as an objective measure of utility. Today economists believe that

Accepted Answer

A)  utility cannot be measured objectively. 
B)  utility can be measured objectively because people can use prices of different goods to measure utility. 
C)  all of the important conclusions of the economic model of consumer behaviour depend on utility being measured objectively. 
D)  the util truly is an objective, rather than a subjective, measure of utility. 
A)  utility cannot be measured objectively. 
B)  utility can be measured objectively because people can use prices of different goods to measure utility. 
C)  all of the important conclusions of the economic model of consumer behaviour depend on utility being measured objectively. 
D)  the util truly is an objective, rather than a subjective, measure of utility.

Question 15

The demand for a Giffen good slopes upward.

Accepted Answer

A) True 
 B)False

Question 16

-Refer to Figure 6-4. The consumer can afford consumption bundles

Accepted Answer

A)  r, s, t and u. 
B)  r, s, v and u. 
C)  s, v and u only. 
D)  s, v, t and u. 
A)  r, s, t and u. 
B)  r, s, v and u. 
C)  s, v and u only. 
D)  s, v, t and u.

Question 17

Marginal utility is the

Accepted Answer

A)  total satisfaction received from consuming a given number of units of a product. 
B)  average satisfaction received from consuming a product. 
C)  extra satisfaction received from consuming one more unit of a product. 
D)  satisfaction achieved when a consumer has had enough of a product. 
A)  total satisfaction received from consuming a given number of units of a product. 
B)  average satisfaction received from consuming a product. 
C)  extra satisfaction received from consuming one more unit of a product. 
D)  satisfaction achieved when a consumer has had enough of a product.

Question 18

A budget constraint

Accepted Answer

A)  represents the bundles of consumption that make a consumer equally happy. 
B)  refers to the limited amount of income available to consumers to spend on goods and services. 
C)  reflects the desire by consumers to increase their income. 
D)  shows the prices that a consumer chooses to pay for products he consumes. 
A)  represents the bundles of consumption that make a consumer equally happy. 
B)  refers to the limited amount of income available to consumers to spend on goods and services. 
C)  reflects the desire by consumers to increase their income. 
D)  shows the prices that a consumer chooses to pay for products he consumes.

Question 19

Consider a downward-sloping demand curve. When the price of a normal good decreases, the income and substitution effects

Accepted Answer

A)  work in the same direction to increase quantity demanded. 
B)  work in the same direction to decrease quantity demanded. 
C)  work in opposite directions and quantity demanded increases. 
D)  work in opposite directions and quantity demanded decreases. 
A)  work in the same direction to increase quantity demanded. 
B)  work in the same direction to decrease quantity demanded. 
C)  work in opposite directions and quantity demanded increases. 
D)  work in opposite directions and quantity demanded decreases.

Question 20

Which of the following statements is false?

Accepted Answer

A)  There is an indifference curve associated with any combination of goods selected by a consumer. 
B)  A consumer is indifferent among all consumption bundles along a given budget line. 
C)  All consumption bundles along a given indifference curve are equally desirable. 
D)  Consumption bundles that lie on higher indifference curves yield higher utility. 
A)  There is an indifference curve associated with any combination of goods selected by a consumer. 
B)  A consumer is indifferent among all consumption bundles along a given budget line. 
C)  All consumption bundles along a given indifference curve are equally desirable. 
D)  Consumption bundles that lie on higher indifference curves yield higher utility.

The restriction that a consumer's total expenditure on goods and services purchased cannot exceed the income available is referred to as

The law of diminishing marginal utility states that

If your total satisfaction increases when you consume another unit, your marginal utility must be

Health clubs typically experience an increase in one-year memberships in January, but many new customers cancel their memberships before the end of the year. Which of the following is the best explanation for this behaviour?

Economists have shown that when the ultimatum game experiment is carried out, both allocators and recipients act as if fairness is important.

All but one of the following have been suggested by some economists as possible consequences of path dependency and switching costs. Which of the following is not a possible consequence of path dependency and switching costs?

What is marginal utility and what is the law of diminishing marginal utility?

A consumer's budget constraint is

The satisfaction a person receives from consuming goods and services is called

You wish to buy only one CD. Use the rule of equal marginal utility per dollar to determine which one to purchase: (a) Usher's latest CD for $15 which gives you 75 units of utility, or (b) Tom Petty and the Heartbreakers' Greatest Hits for $10 that gives you 100 units of utility?

-Refer to Figure 6-4. Which of the following statements is true?

A consumer maximises her total utility from a bundle of goods when her marginal utility from each good is equal.

The word 'util' has been used by economists in the past as an objective measure of utility. Today economists believe that

The demand for a Giffen good slopes upward.

-Refer to Figure 6-4. The consumer can afford consumption bundles

Marginal utility is the

A budget constraint

Consider a downward-sloping demand curve. When the price of a normal good decreases, the income and substitution effects

Which of the following statements is false?

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 6: Concumer Choice and Behavioural Economics

The restriction that a consumer's total expenditure on goods and services purchased cannot exceed the income available is referred to as

The law of diminishing marginal utility states that

If your total satisfaction increases when you consume another unit, your marginal utility must be

Health clubs typically experience an increase in one-year memberships in January, but many new customers cancel their memberships before the end of the year. Which of the following is the best explanation for this behaviour?

Economists have shown that when the ultimatum game experiment is carried out, both allocators and recipients act as if fairness is important.

All but one of the following have been suggested by some economists as possible consequences of path dependency and switching costs. Which of the following is not a possible consequence of path dependency and switching costs?

What is marginal utility and what is the law of diminishing marginal utility?

A consumer's budget constraint is

The satisfaction a person receives from consuming goods and services is called

You wish to buy only one CD. Use the rule of equal marginal utility per dollar to determine which one to purchase: (a) Usher's latest CD for $15 which gives you 75 units of utility, or (b) Tom Petty and the Heartbreakers' Greatest Hits for $10 that gives you 100 units of utility?

-Refer to Figure 6-4. Which of the following statements is true?

A consumer maximises her total utility from a bundle of goods when her marginal utility from each good is equal.

The word 'util' has been used by economists in the past as an objective measure of utility. Today economists believe that

The demand for a Giffen good slopes upward.

-Refer to Figure 6-4. The consumer can afford consumption bundles

Marginal utility is the

A budget constraint

Consider a downward-sloping demand curve. When the price of a normal good decreases, the income and substitution effects

Which of the following statements is false?

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters