Question 1

In order to have a meaningful measure of marginal utility, we must define the time period during which consumption is occurring.

Accepted Answer

A) True 
 B)False

Question 2

The study of decision making that assumes people are rational in a broad sense, even if they do not have complete and perfect information is called _____.

Accepted Answer

A) rational economics 
B) reasonable economics 
C) understandable economics 
D) behavioral economics 
E) optimal economics 
A) rational economics 
B) reasonable economics 
C) understandable economics 
D) behavioral economics 
E) optimal economics

Question 3

The term _____ refers to the idea that the value people place on money depends on where that money comes from.

Accepted Answer

A) decision making 
B) psychological pricing 
C) mental accounting 
D) marketing mix 
E) anchoring 
A) decision making 
B) psychological pricing 
C) mental accounting 
D) marketing mix 
E) anchoring

Question 4

_____ is the change in total utility that occurs because one more unit of the good is consumed or acquired.

Accepted Answer

A) Total utility 
B) Marginal utility 
C) Disutility 
D) Diminishing marginal utility 
E) Expected utility 
A) Total utility 
B) Marginal utility 
C) Disutility 
D) Diminishing marginal utility 
E) Expected utility

Question 5

As the price of a good declines, a utility-maximizing consumer will respond by purchasing more of that good.

Accepted Answer

A) True 
 B)False

Question 6

"Throwing good money after bad" is also known as the _____ effect.

Accepted Answer

A) anchoring 
B) sunk cost 
C) status quo 
D) familiarity 
E) overconfidence 
A) anchoring 
B) sunk cost 
C) status quo 
D) familiarity 
E) overconfidence

Question 7

An indifference map shows _____.

Accepted Answer

A) all combinations of two goods that a consumer can afford to purchase 
B) all combinations of two goods that provide the same level of utility 
C) a set of indifference curves for a representative consumer 
D) all combinations of price and quantity that provide the same level of utility 
E) the combination of goods that a consumer can afford to buy 
A) all combinations of two goods that a consumer can afford to purchase 
B) all combinations of two goods that provide the same level of utility 
C) a set of indifference curves for a representative consumer 
D) all combinations of price and quantity that provide the same level of utility 
E) the combination of goods that a consumer can afford to buy

Question 8

An increase in income _____.

Accepted Answer

A) makes the budget line flatter 
B) makes the budget line steeper 
C) makes the consumer worse off 
D) makes the consumer achieve a higher level of utility 
E) makes the consumer more selfish 
A) makes the budget line flatter 
B) makes the budget line steeper 
C) makes the consumer worse off 
D) makes the consumer achieve a higher level of utility 
E) makes the consumer more selfish

Question 9

Mr.Rational has $27 that he plans to spend purchasing 5 units of good X (priced at $3 per unit)and 6 units of good Y (priced at $2 per unit).The marginal utility of the fifth unit of X is 30, and the marginal utility of the sixth unit of Y is 30.If Mr.Rational is a utility maximizer, he should:

Accepted Answer

A) not buy anything. 
B) buy more of X and less of Y. 
C) buy less of X and more of Y. 
D) buy X and Y in the quantities indicated. 
E) but less of X and even lesser than that of Y. 
A) not buy anything. 
B) buy more of X and less of Y. 
C) buy less of X and more of Y. 
D) buy X and Y in the quantities indicated. 
E) but less of X and even lesser than that of Y.

Question 10

A consumer is in equilibrium when the slope of his or her indifference curve is equal to his or her budget constraint.

Accepted Answer

A) True 
 B)False

Question 11

The demand curve slopes downward because of:

Accepted Answer

A) diminishing marginal utility and consumer equilibrium. 
B) the fact that consumers cannot decide how much they want to pay for goods and services. 
C) the fact that suppliers cannot decide how much to charge for the goods and services they supply. 
D) the fact that consumer tastes and preferences change rapidly. 
E) the fact that consumers are fickle, which makes pricing a good or service very difficult. 
A) diminishing marginal utility and consumer equilibrium. 
B) the fact that consumers cannot decide how much they want to pay for goods and services. 
C) the fact that suppliers cannot decide how much to charge for the goods and services they supply. 
D) the fact that consumer tastes and preferences change rapidly. 
E) the fact that consumers are fickle, which makes pricing a good or service very difficult.

Question 12

If a consumer purchases more of a product, then most likely the marginal utility of _____.

Accepted Answer

A) that product decreases 
B) that product remains the same 
C) other products decreases 
D) other products increases 
E) that product increases 
A) that product decreases 
B) that product remains the same 
C) other products decreases 
D) other products increases 
E) that product increases

Question 13

To economists, feelings such as peace, serenity, religious devotion, and self-esteem are captured in the concept known as _____.

Accepted Answer

A) rational self-interest 
B) utility 
C) profit 
D) total revenue 
E) surplus 
A) rational self-interest 
B) utility 
C) profit 
D) total revenue 
E) surplus

Question 14

According to neuroeconomists, our logical brain knows we should spend as much as possible when we have money.

Accepted Answer

A) True 
 B)False

Question 15

Buyers who are persuaded to take a product home to try it out, _____.

Accepted Answer

A) are likely to return the product later 
B) are lucky the seller is not concerned about the buyers' credit ratings 
C) like to try the product out 
D) have no money to pay at the time 
E) will be reluctant to return the product when payment is due 
A) are likely to return the product later 
B) are lucky the seller is not concerned about the buyers' credit ratings 
C) like to try the product out 
D) have no money to pay at the time 
E) will be reluctant to return the product when payment is due

Question 16

If a consumer is buying only goods A and B, then he or she will be in equilibrium only when MUa = MUb.

Accepted Answer

A) True 
 B)False

Question 17

If one were to plot the data from Table 6.1 (with utility on the vertical axis and quantity of the good on the horizontal axis):

Accepted Answer

A) the total utility curve would begin to decline after the second unit of the good. 
B) the marginal utility curve would begin to decline after the third unit of the good. 
C) the marginal utility curve would intersect the horizontal axis at the third unit of the good. 
D) the marginal utility curve would intersect the horizontal axis at the second unit of the good. 
E) the total utility curve would rise from the first unit to the fifth unit. 
A) the total utility curve would begin to decline after the second unit of the good. 
B) the marginal utility curve would begin to decline after the third unit of the good. 
C) the marginal utility curve would intersect the horizontal axis at the third unit of the good. 
D) the marginal utility curve would intersect the horizontal axis at the second unit of the good. 
E) the total utility curve would rise from the first unit to the fifth unit.

Question 18

As the price of a good increases, the marginal utility per dollar spent on that good will also increase.

Accepted Answer

A) True 
 B)False

Question 19

As one moves downward on an indifference curve, the:

Accepted Answer

A) total utility from the consumption of a good decreases. 
B) total utility from the consumption of a good increases. 
C) the total satisfaction from consumption remains the same. 
D) the marginal utility from the consumption a good increases. 
E) the total satisfaction from consumption decreases. 
A) total utility from the consumption of a good decreases. 
B) total utility from the consumption of a good increases. 
C) the total satisfaction from consumption remains the same. 
D) the marginal utility from the consumption a good increases. 
E) the total satisfaction from consumption decreases.

Question 20

If a consumer is buying three goods A, B and C, then she will be in equilibrium when total utility from each good is equal.

Accepted Answer

A) True 
 B)False

Exam 36: Consumer Choice

In order to have a meaningful measure of marginal utility, we must define the time period during which consumption is occurring.

The study of decision making that assumes people are rational in a broad sense, even if they do not have complete and perfect information is called _____.

The term _____ refers to the idea that the value people place on money depends on where that money comes from.

_____ is the change in total utility that occurs because one more unit of the good is consumed or acquired.

As the price of a good declines, a utility-maximizing consumer will respond by purchasing more of that good.

"Throwing good money after bad" is also known as the _____ effect.

An indifference map shows _____.

An increase in income _____.

Mr.Rational has $27 that he plans to spend purchasing 5 units of good X (priced at $3 per unit)and 6 units of good Y (priced at $2 per unit).The marginal utility of the fifth unit of X is 30, and the marginal utility of the sixth unit of Y is 30.If Mr.Rational is a utility maximizer, he should:

A consumer is in equilibrium when the slope of his or her indifference curve is equal to his or her budget constraint.

The demand curve slopes downward because of:

If a consumer purchases more of a product, then most likely the marginal utility of _____.

To economists, feelings such as peace, serenity, religious devotion, and self-esteem are captured in the concept known as _____.

According to neuroeconomists, our logical brain knows we should spend as much as possible when we have money.

Buyers who are persuaded to take a product home to try it out, _____.

If a consumer is buying only goods A and B, then he or she will be in equilibrium only when MUa = MUb.

If one were to plot the data from Table 6.1 (with utility on the vertical axis and quantity of the good on the horizontal axis):

As the price of a good increases, the marginal utility per dollar spent on that good will also increase.

As one moves downward on an indifference curve, the:

If a consumer is buying three goods A, B and C, then she will be in equilibrium when total utility from each good is equal.

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

If a consumer is buying only goods A and B, then he or she will be in equilibrium only when MU_a = MU_b.