Question 1

The income effect of a decrease in the price of macaroni and cheese (assume this is an inferior good) results in

Accepted Answer

A)  a decrease in the demand for macaroni and cheese. 
B)  an increase in the quantity demanded of macaroni and cheese. 
C)  a decrease in the quantity demanded of macaroni and cheese. 
D)  an increase in the demand for macaroni and cheese. 
A)  a decrease in the demand for macaroni and cheese. 
B)  an increase in the quantity demanded of macaroni and cheese. 
C)  a decrease in the quantity demanded of macaroni and cheese. 
D)  an increase in the demand for macaroni and cheese.

Question 2

Adhira buys chocolates and almonds. She has 3 bars of chocolates and 4 bags of almonds. The marginal utility of the third chocolate bar is 18 units of utility and the marginal utility from the fourth bag of almonds is also 18. Is Adhira maximising her utility?

Accepted Answer

A)  Yes, the marginal utility from the last unit of each good is equal. 
B)  No, she must buy 1 more chocolate bar to equate her quantities of the two goods. 
C)  No, she must buy cut back to 3 bags of almonds to equate her quantities of the two goods. 
D)  Without information on her income and the prices of the two goods, we cannot answer the question. 
A)  Yes, the marginal utility from the last unit of each good is equal. 
B)  No, she must buy 1 more chocolate bar to equate her quantities of the two goods. 
C)  No, she must buy cut back to 3 bags of almonds to equate her quantities of the two goods. 
D)  Without information on her income and the prices of the two goods, we cannot answer the question.

Question 3

-Refer to Table 6-6. If Jay can eat all the burgers he wants for free, how many burgers will he consume?

Accepted Answer

A)  7 burgers 
B)  6 burgers 
C)  5 burgers 
D)  3 burgers 
A)  7 burgers 
B)  6 burgers 
C)  5 burgers 
D)  3 burgers

Question 4

In explaining consumer behaviour, economists explain how consumer tastes and preferences are formed.

Accepted Answer

A) True 
 B)False

Question 5

What is the endowment effect?

Accepted Answer

A)  the phenomenon that economic agents are endowed with different qualities and abilities so that trade among individuals increase efficiency 
B)  the tendency for economic agents with abundant resources to consume a proportionately greater quantity of goods and services 
C)  the tendency of people to be unwilling to sell something they already own even if they are offered a price that is greater than the price they would be willing to pay to buy the good if they didn't already own it. 
D)  the tendency of firms to use celebrities endowed with good looks to promote their products 
A)  the phenomenon that economic agents are endowed with different qualities and abilities so that trade among individuals increase efficiency 
B)  the tendency for economic agents with abundant resources to consume a proportionately greater quantity of goods and services 
C)  the tendency of people to be unwilling to sell something they already own even if they are offered a price that is greater than the price they would be willing to pay to buy the good if they didn't already own it. 
D)  the tendency of firms to use celebrities endowed with good looks to promote their products

Question 6

Which of the following describes the substitution effect of a price change?

Accepted Answer

A)  The change in demand that results from a change in price, making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power. 
B)  The change in quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding everything else constant. 
C)  The change in quantity demanded of a good that results from the change in the price of a substitute for the good. 
D)  The change in quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power. 
A)  The change in demand that results from a change in price, making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power. 
B)  The change in quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding everything else constant. 
C)  The change in quantity demanded of a good that results from the change in the price of a substitute for the good. 
D)  The change in quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power.

Question 7

-Refer to Table 6-2. What is Keira's marginal utility per dollar spent on the third cup of soup?

Accepted Answer

A)  72 units of utility 
B)  36 units of utility 
C)  12 units of utility 
D)  6 units of utility 
A)  72 units of utility 
B)  36 units of utility 
C)  12 units of utility 
D)  6 units of utility

Question 8

Marge buys 5 CDs and 7 DVDs. The marginal utility of the 5th CD and the marginal utility of the 7th DVD are both equal to 30 utils. Can we say that this is the optimal combination of CDs and DVDs for Marge?

Accepted Answer

A)  No. We need to know her preferences for CDs and DVDs. 
B)  Yes. 
C)  No. We need to know the prices of the CDs and DVDs. 
D)  No. If this was the optimal combination, the marginal utility per dollar of the 5th CD and the 7th DVD would be equal. 
A)  No. We need to know her preferences for CDs and DVDs. 
B)  Yes. 
C)  No. We need to know the prices of the CDs and DVDs. 
D)  No. If this was the optimal combination, the marginal utility per dollar of the 5th CD and the 7th DVD would be equal.

Question 9

If a consumer receives 22 units of marginal utility from consuming the first can of lemonade, 20 units from consuming the second, and 15 from the third, the total utility of consuming the three units is

Accepted Answer

A)  57 utility units. 
B)  35 utility units. 
C)  15 utility units. 
D)  unknown as more information is needed to determine the answer. 
A)  57 utility units. 
B)  35 utility units. 
C)  15 utility units. 
D)  unknown as more information is needed to determine the answer.

Question 10

One reason university students do not study enough to get high grades is that they are unrealistic about their future behaviour.

Accepted Answer

A) True 
 B)False

Question 11

What must be true in terms of the income effect, the substitution effect, and the type of good for the good's demand curve to be upward sloping?

Accepted Answer

The income effect would have t

Question 12

Which of the following is not a characteristic of indifference curves?

Accepted Answer

A)  Indifference curves cannot intersect. 
B)  Indifference curves are usually bowed in, or convex. 
C)  The slope of an indifference curve is negative. 
D)  The closer to the origin, the greater the utility level. 
A)  Indifference curves cannot intersect. 
B)  Indifference curves are usually bowed in, or convex. 
C)  The slope of an indifference curve is negative. 
D)  The closer to the origin, the greater the utility level.

Question 13

What is the marginal rate of substitution?

Accepted Answer

A)  the price ratio 
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 rate at which the consumer is willing to trade one good for another so that she increases her utility 
D)  the rate at which the consumer is willing to trade one good for another without any loss in utility 
A)  the price ratio 
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 rate at which the consumer is willing to trade one good for another so that she increases her utility 
D)  the rate at which the consumer is willing to trade one good for another without any loss in utility

Question 14

Most film processing companies have a policy of printing every picture on a roll of film and allowing customers to request a refund for pictures that were not clearly developed. The companies do this knowing that most customers do not ask for refunds. This is an example of consumers

Accepted Answer

A)  failing to ignore sunk costs. 
B)  being overly optimistic about their future behaviour. 
C)  not taking nonmonetary opportunity costs into account. 
D)  not making themselves aware of the policy regarding refunds. 
A)  failing to ignore sunk costs. 
B)  being overly optimistic about their future behaviour. 
C)  not taking nonmonetary opportunity costs into account. 
D)  not making themselves aware of the policy regarding refunds.

The income effect of a decrease in the price of macaroni and cheese (assume this is an inferior good) results in

Adhira buys chocolates and almonds. She has 3 bars of chocolates and 4 bags of almonds. The marginal utility of the third chocolate bar is 18 units of utility and the marginal utility from the fourth bag of almonds is also 18. Is Adhira maximising her utility?

-Refer to Table 6-6. If Jay can eat all the burgers he wants for free, how many burgers will he consume?

In explaining consumer behaviour, economists explain how consumer tastes and preferences are formed.

What is the endowment effect?

Which of the following describes the substitution effect of a price change?

-Refer to Table 6-2. What is Keira's marginal utility per dollar spent on the third cup of soup?

Marge buys 5 CDs and 7 DVDs. The marginal utility of the 5th CD and the marginal utility of the 7th DVD are both equal to 30 utils. Can we say that this is the optimal combination of CDs and DVDs for Marge?

If a consumer receives 22 units of marginal utility from consuming the first can of lemonade, 20 units from consuming the second, and 15 from the third, the total utility of consuming the three units is

One reason university students do not study enough to get high grades is that they are unrealistic about their future behaviour.

What must be true in terms of the income effect, the substitution effect, and the type of good for the good's demand curve to be upward sloping?

Which of the following is not a characteristic of indifference curves?

What is the marginal rate of substitution?

Most film processing companies have a policy of printing every picture on a roll of film and allowing customers to request a refund for pictures that were not clearly developed. The companies do this knowing that most customers do not ask for refunds. This is an example of consumers

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 income effect of a decrease in the price of macaroni and cheese (assume this is an inferior good) results in

Adhira buys chocolates and almonds. She has 3 bars of chocolates and 4 bags of almonds. The marginal utility of the third chocolate bar is 18 units of utility and the marginal utility from the fourth bag of almonds is also 18. Is Adhira maximising her utility?

-Refer to Table 6-6. If Jay can eat all the burgers he wants for free, how many burgers will he consume?

In explaining consumer behaviour, economists explain how consumer tastes and preferences are formed.

What is the endowment effect?

Which of the following describes the substitution effect of a price change?

-Refer to Table 6-2. What is Keira's marginal utility per dollar spent on the third cup of soup?

Marge buys 5 CDs and 7 DVDs. The marginal utility of the 5th CD and the marginal utility of the 7th DVD are both equal to 30 utils. Can we say that this is the optimal combination of CDs and DVDs for Marge?

If a consumer receives 22 units of marginal utility from consuming the first can of lemonade, 20 units from consuming the second, and 15 from the third, the total utility of consuming the three units is

One reason university students do not study enough to get high grades is that they are unrealistic about their future behaviour.

What must be true in terms of the income effect, the substitution effect, and the type of good for the good's demand curve to be upward sloping?

Which of the following is not a characteristic of indifference curves?

What is the marginal rate of substitution?

Most film processing companies have a policy of printing every picture on a roll of film and allowing customers to request a refund for pictures that were not clearly developed. The companies do this knowing that most customers do not ask for refunds. This is an example of consumers

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