Question 1

-Refer to the above table If the price of a movie download is $2 and the price of an apple pie is $5 and the consumer has $40, the rational consumer will purchase

Accepted Answer

A)  2 movies and 2 apple pies. 
B)  2 movies and 3 apple pies. 
C)  5 movies and 6 apple pies. 
D)  6 movies and 6 apple pies. 
A)  2 movies and 2 apple pies. 
B)  2 movies and 3 apple pies. 
C)  5 movies and 6 apple pies. 
D)  6 movies and 6 apple pies.

Question 2

Why does total utility rise at a decreasing rate as an individual's consumption of an item increases?

Accepted Answer

This is due to the principle of diminish

Question 3

A representative unit that measures the want-satisfying power of a good is

Accepted Answer

A)  a margin. 
B)  purchasing power. 
C)  income. 
D)  a util. 
A)  a margin. 
B)  purchasing power. 
C)  income. 
D)  a util.

Question 4

If the price of a slice of pizza falls from $2 to $1.5, a pizza-loving consumer will

Accepted Answer

A)  see her purchasing power fall. 
B)  see her purchasing power rise. 
C)  substitute more Chinese food for pizza. 
D)  spend more on soft drinks and less on pizza. 
A)  see her purchasing power fall. 
B)  see her purchasing power rise. 
C)  substitute more Chinese food for pizza. 
D)  spend more on soft drinks and less on pizza.

Question 5

Holding all other prices and money income constant, if the price of food rises, then the consumer will adjust her expenditures and

Accepted Answer

A)  reach an optimum on a higher indifference curve. 
B)  reach an optimum on a lower indifference curve. 
C)  reach an optimum on the same indifference curve. 
D)  her level of satisfaction may go up or down. 
A)  reach an optimum on a higher indifference curve. 
B)  reach an optimum on a lower indifference curve. 
C)  reach an optimum on the same indifference curve. 
D)  her level of satisfaction may go up or down.

Question 6

The consumption possibilities curve is the

Accepted Answer

A)  supply curve. 
B)  demand curve. 
C)  budget constraint. 
D)  indifference curve. 
A)  supply curve. 
B)  demand curve. 
C)  budget constraint. 
D)  indifference curve.

Question 7

The budget line

Accepted Answer

A)  shifts to the left as income increases. 
B)  has a positive slope. 
C)  is a vertical line. 
D)  shows the combination of goods that can be purchased at fixed prices and with a given income. 
A)  shifts to the left as income increases. 
B)  has a positive slope. 
C)  is a vertical line. 
D)  shows the combination of goods that can be purchased at fixed prices and with a given income.

Question 8

-In the above figure, if the budget line is the line DF, the consumer will maximize utility at point

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  G. 
A)  A. 
B)  B. 
C)  C. 
D)  G.

Question 9

-Refer to the above table. Kate's utility schedule is characterized by

Accepted Answer

A)  diminishing marginal utility. 
B)  increasing marginal utility. 
C)  constant marginal utility. 
D)  decreasing marginal utility. 
A)  diminishing marginal utility. 
B)  increasing marginal utility. 
C)  constant marginal utility. 
D)  decreasing marginal utility.

Question 10

Suppose that Dillon derives 40 utils of total utility from eating 5 hotdogs and 42 utils of total utility from eating 6 hotdogs. What is Dillon's marginal utility from eating the 6th hotdog?

Accepted Answer

A)  2 
B)  6 
C)  7 
D)  6.67 
A)  2 
B)  6 
C)  7 
D)  6.67

Question 11

-Refer to the above table. The marginal utility of the 2nd movie for Rosie is

Accepted Answer

A)  95 units of utility. 
B)  90 units of utility. 
C)  80 units of utility. 
D)  190 units of utility. 
A)  95 units of utility. 
B)  90 units of utility. 
C)  80 units of utility. 
D)  190 units of utility.

Question 12

The possible combinations of goods that can be purchased with a specific income are called the

Accepted Answer

A)  budget constraint. 
B)  indifference map. 
C)  marginal rate of substitution. 
D)  income-consumption curve. 
A)  budget constraint. 
B)  indifference map. 
C)  marginal rate of substitution. 
D)  income-consumption curve.

Question 13

Utility analysis is the analysis of

Accepted Answer

A)  how consumers decide how to earn more money. 
B)  the formation of tastes and preferences. 
C)  the psychology of decision making. 
D)  consumer decision making based on utility maximization. 
A)  how consumers decide how to earn more money. 
B)  the formation of tastes and preferences. 
C)  the psychology of decision making. 
D)  consumer decision making based on utility maximization.

Question 14

-Refer to the above table. The marginal utility of the 5th movie for Michael is

Accepted Answer

A)  40 units of utility. 
B)  50 units of utility. 
C)  60 units of utility. 
D)  390 units of utility. 
A)  40 units of utility. 
B)  50 units of utility. 
C)  60 units of utility. 
D)  390 units of utility.

Question 15

In economic utility analysis, consumer tastes and preferences are assumed

Accepted Answer

A)  to be determined by income. 
B)  to be influenced by the prices of goods. 
C)  given and stable for an individual. 
D)  given but rapidly changeable. 
A)  to be determined by income. 
B)  to be influenced by the prices of goods. 
C)  given and stable for an individual. 
D)  given but rapidly changeable.

Question 16

The price of a can of soft drink is $1.25 and the marginal utility of the second can consumed is 10 utils. The marginal utility of the third hotdog is 4 utils. You should only consume the third hotdog if the price of the hotdog is less than or equal to

Accepted Answer

A)  $0.41. 
B)  $0.625. 
C)  $0.25. 
D)  $0.50. 
A)  $0.41. 
B)  $0.625. 
C)  $0.25. 
D)  $0.50.

Question 17

The change in the consumption of one good that just offsets a one-unit change in the consumption of another good is the

Accepted Answer

A)  marginal utility. 
B)  marginal rate of consumption. 
C)  marginal rate of substitution. 
D)  marginal rate of satisfaction. 
A)  marginal utility. 
B)  marginal rate of consumption. 
C)  marginal rate of substitution. 
D)  marginal rate of satisfaction.

Question 18

-Use the above figure. What would make all possible points attainable for the individual to consume?

Accepted Answer

A)  a decrease in the price of good y 
B)  an increase in the price of good y 
C)  an increase in the price of good x 
D)  a decrease in income 
A)  a decrease in the price of good y 
B)  an increase in the price of good y 
C)  an increase in the price of good x 
D)  a decrease in income

Question 19

If a person claims, "I wouldn't eat anchovies if you paid me," we can assume that his marginal utility of anchovies is

Accepted Answer

A)  positive. 
B)  positive, but decreasing. 
C)  zero. 
D)  negative. 
A)  positive. 
B)  positive, but decreasing. 
C)  zero. 
D)  negative.

Question 20

Given the utility-optimizing rule and the presence of diminishing marginal utility for a good

Accepted Answer

A)  the demand curve for the good will be vertical. 
B)  there will not be a well-defined demand curve. 
C)  there will not be a substitution effect. 
D)  the demand curve for the good will be negatively sloped. 
A)  the demand curve for the good will be vertical. 
B)  there will not be a well-defined demand curve. 
C)  there will not be a substitution effect. 
D)  the demand curve for the good will be negatively sloped.

Exam 20: Consumer Choice

-Refer to the above table If the price of a movie download is $2 and the price of an apple pie is $5 and the consumer has $40, the rational consumer will purchase

Why does total utility rise at a decreasing rate as an individual's consumption of an item increases?

A representative unit that measures the want-satisfying power of a good is

If the price of a slice of pizza falls from $2 to $1.5, a pizza-loving consumer will

Holding all other prices and money income constant, if the price of food rises, then the consumer will adjust her expenditures and

The consumption possibilities curve is the

The budget line

-In the above figure, if the budget line is the line DF, the consumer will maximize utility at point

-Refer to the above table. Kate's utility schedule is characterized by

Suppose that Dillon derives 40 utils of total utility from eating 5 hotdogs and 42 utils of total utility from eating 6 hotdogs. What is Dillon's marginal utility from eating the 6th hotdog?

-Refer to the above table. The marginal utility of the 2nd movie for Rosie is

The possible combinations of goods that can be purchased with a specific income are called the

Utility analysis is the analysis of

-Refer to the above table. The marginal utility of the 5th movie for Michael is

In economic utility analysis, consumer tastes and preferences are assumed

The price of a can of soft drink is $1.25 and the marginal utility of the second can consumed is 10 utils. The marginal utility of the third hotdog is 4 utils. You should only consume the third hotdog if the price of the hotdog is less than or equal to

The change in the consumption of one good that just offsets a one-unit change in the consumption of another good is the

-Use the above figure. What would make all possible points attainable for the individual to consume?

If a person claims, "I wouldn't eat anchovies if you paid me," we can assume that his marginal utility of anchovies is

Given the utility-optimizing rule and the presence of diminishing marginal utility for a good

The Nature of Economics

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