Question 1

If MUX / PX Y / PY then this consumer:

Accepted Answer

A) will buy less of X and more of Y. 
B) will buy more of X and more of Y. 
C) is in equilibrium. 
D) will buy more of X and less of Y. 
E) will buy less of X and less of Y. 
A) will buy less of X and more of Y. 
B) will buy more of X and more of Y. 
C) is in equilibrium. 
D) will buy more of X and less of Y. 
E) will buy less of X and less of Y.

Question 2

The demand curve for a product slopes downward and to the right because:

Accepted Answer

A) total utility decreases as more of the product is consumed. 
B) total utility derived from both, the product and its substitutes is the same. 
C) marginal utility of the product diminishes as more of the product is consumed. 
D) there are no substitutes for the product. 
E) when the price falls, the income effect causes consumers to buy less of the product. 
A) total utility decreases as more of the product is consumed. 
B) total utility derived from both, the product and its substitutes is the same. 
C) marginal utility of the product diminishes as more of the product is consumed. 
D) there are no substitutes for the product. 
E) when the price falls, the income effect causes consumers to buy less of the product.

Question 3

In order to maximize utility, consumers _____.

Accepted Answer

A) continue to make purchases until the marginal utility of each good is zero 
B) compare the marginal utilities of the last dollar spent on each good 
C) equate the total utilities of each good consumed 
D) continue to purchase a good until total utility is equal to zero 
E) will continue purchasing till diminishing marginal utility is not achieved 
A) continue to make purchases until the marginal utility of each good is zero 
B) compare the marginal utilities of the last dollar spent on each good 
C) equate the total utilities of each good consumed 
D) continue to purchase a good until total utility is equal to zero 
E) will continue purchasing till diminishing marginal utility is not achieved

Question 4

Assume that a consumer purchases a combination of products X and Y and the MUx / Px = 75 utils per dollar and MUy / Py = 50 utils per dollar.To maximize utility without spending more dollars, the consumer should buy:

Accepted Answer

A) more of both X and Y. 
B) less of Y only if the price of Y increases. 
C) more of Y and less of X. 
D) more of X and less of Y. 
E) less of both X and Y. 
A) more of both X and Y. 
B) less of Y only if the price of Y increases. 
C) more of Y and less of X. 
D) more of X and less of Y. 
E) less of both X and Y.

Question 5

Total utility is maximized when _____.

Accepted Answer

A) marginal utility is maximized 
B) marginal utility is the same for all goods consumed 
C) marginal utility per dollar expenditure is maximized 
D) marginal utility per dollar expenditure is the same for all goods consumed 
E) any change in purchasing from good A to good B reduces marginal satisfaction 
A) marginal utility is maximized 
B) marginal utility is the same for all goods consumed 
C) marginal utility per dollar expenditure is maximized 
D) marginal utility per dollar expenditure is the same for all goods consumed 
E) any change in purchasing from good A to good B reduces marginal satisfaction

Question 6

Following a decrease in the price of a good or service, an individual will purchase more of the now less expensive good and less of other more expensive goods.This is known as the _____ effect.

Accepted Answer

A) income 
B) endowment 
C) substitution 
D) price 
E) scale 
A) income 
B) endowment 
C) substitution 
D) price 
E) scale

Question 7

When the price of a good changes, the substitution effect occurs because:

Accepted Answer

A) the consumers' real income measured in terms of that good changes. 
B) the relative price of that good changes compared to other goods in the consumption bundle. 
C) the total utility of that good changes. 
D) the marginal utility of that good changes. 
E) consumers have an incentive to substitute irrational behavior for rational behavior. 
A) the consumers' real income measured in terms of that good changes. 
B) the relative price of that good changes compared to other goods in the consumption bundle. 
C) the total utility of that good changes. 
D) the marginal utility of that good changes. 
E) consumers have an incentive to substitute irrational behavior for rational behavior.

Question 8

Marginal utility is total utility divided by the number of units consumed.

Accepted Answer

A) True 
 B)False

Question 9

Refer to Table 6.2.The law of diminishing marginal utility holds _____.

Accepted Answer

A) for any number of avocados 
B) up to five avocados 
C) only for one or two avocados 
D) only after five avocados are consumed 
E) for the first three avocados 
A) for any number of avocados 
B) up to five avocados 
C) only for one or two avocados 
D) only after five avocados are consumed 
E) for the first three avocados

Question 10

When marginal utility is positive and increasing, then

Accepted Answer

A) total utility must be negative. 
B) total utility must be increasing at an increasing rate. 
C) total utility must be increasing at a decreasing rate. 
D) total utility is decreasing. 
E) total utility is at its maximum point. 
A) total utility must be negative. 
B) total utility must be increasing at an increasing rate. 
C) total utility must be increasing at a decreasing rate. 
D) total utility is decreasing. 
E) total utility is at its maximum point.

Question 11

A ten-year-old boy spent his allowance on a soccer ball and a baseball glove.He said he could not be happier buying anything else.The price of the ball was $5, while the price of the glove was $10.If the marginal utility he received from the ball was 15 utils, then:

Accepted Answer

A) the marginal utility he received from expenditure on the glove was 3 utils. 
B) the marginal utility he received from expenditure on the glove was 30 utils. 
C) the total utility per dollar he received from expenditure on the glove was 3 utils. 
D) the total utility per dollar he received from expenditure on the glove was 10 utils. 
E) the marginal utility he received from the expenditure of the glove was 10 utils 
A) the marginal utility he received from expenditure on the glove was 3 utils. 
B) the marginal utility he received from expenditure on the glove was 30 utils. 
C) the total utility per dollar he received from expenditure on the glove was 3 utils. 
D) the total utility per dollar he received from expenditure on the glove was 10 utils. 
E) the marginal utility he received from the expenditure of the glove was 10 utils

Question 12

Suppose a friend gives you two pieces of gum, and you decide to have one piece now and save the other for tomorrow.You do this because:

Accepted Answer

A) the total utility you get from the two pieces of gum will be higher tomorrow. 
B) the marginal utility you get from the second piece will be higher tomorrow. 
C) the marginal utility you get from the second piece will be higher today. 
D) the marginal utility you get from the first piece will be less today. 
E) the total utility you get from the two pieces will be less tomorrow. 
A) the total utility you get from the two pieces of gum will be higher tomorrow. 
B) the marginal utility you get from the second piece will be higher tomorrow. 
C) the marginal utility you get from the second piece will be higher today. 
D) the marginal utility you get from the first piece will be less today. 
E) the total utility you get from the two pieces will be less tomorrow.

Question 13

Marginal utility is _____.

Accepted Answer

A) always greater than total utility 
B) utility that is not as good as normal utility 
C) the extra utility derived from consuming one additional unit of a good or service 
D) always positive 
E) not related to total utility 
A) always greater than total utility 
B) utility that is not as good as normal utility 
C) the extra utility derived from consuming one additional unit of a good or service 
D) always positive 
E) not related to total utility

Question 14

Which of the following sentences based on the findings of neuroeconomics is true?

Accepted Answer

A) Logical decision-making takes place in the limbic system. 
B) Emotional decision-making takes place in the pre-frontal cortex. 
C) The pre-frontal cortex confuses the logical side of the brain by bringing in emotions, and in some cases it takes over and demands immediate gratification. 
D) Adults have greater activity in their frontal lobes and lower activity in their amygdala than do teenagers. 
E) The amygdala takes a long-term perspective on the decision-making, looking at logical cost-benefit comparisons. 
A) Logical decision-making takes place in the limbic system. 
B) Emotional decision-making takes place in the pre-frontal cortex. 
C) The pre-frontal cortex confuses the logical side of the brain by bringing in emotions, and in some cases it takes over and demands immediate gratification. 
D) Adults have greater activity in their frontal lobes and lower activity in their amygdala than do teenagers. 
E) The amygdala takes a long-term perspective on the decision-making, looking at logical cost-benefit comparisons.

Question 15

Utility is easy to measure in the real world with recent advances in psychometric technology.

Accepted Answer

A) True 
 B)False

Question 16

A price change triggers the income effect but not the substitution effect.

Accepted Answer

A) True 
 B)False

Question 17

If a dinner guest was serious when she said that she could never get enough of your cooking, you would conclude that the marginal utility of your cooking for her was _____.

Accepted Answer

A) negative 
B) decreasing 
C) increasing at an increasing rate 
D) positive 
E) less than total utility 
A) negative 
B) decreasing 
C) increasing at an increasing rate 
D) positive 
E) less than total utility

Question 18

In an indifference map, one would most likely see indifference curves that:

Accepted Answer

A) are positively sloped. 
B) intersect at the origin. 
C) cross at the equilibrium point. 
D) are bowed inward toward the origin. 
E) represent greater utility as they approach the origin. 
A) are positively sloped. 
B) intersect at the origin. 
C) cross at the equilibrium point. 
D) are bowed inward toward the origin. 
E) represent greater utility as they approach the origin.

Question 19

If MUx / Px = MUY / PY then _____.

Accepted Answer

A) the consumer should purchase same quantity of X and Y. 
B) the consumer should purchase less X 
C) the consumer is maximizing utility 
D) the consumer should purchase more Y 
E) the consumer is minimizing utility 
A) the consumer should purchase same quantity of X and Y. 
B) the consumer should purchase less X 
C) the consumer is maximizing utility 
D) the consumer should purchase more Y 
E) the consumer is minimizing utility

Question 20

The income and substitution effects of a price change occur because:

Accepted Answer

A) consumer incomes are not constant. 
B) consumer substitution rates are not constant. 
C) income and substitution effects never occur simultaneously. 
D) of diminishing marginal utility and the equimarginal principle. 
E) of increasing marginal utility and the equimarginal principle. 
A) consumer incomes are not constant. 
B) consumer substitution rates are not constant. 
C) income and substitution effects never occur simultaneously. 
D) of diminishing marginal utility and the equimarginal principle. 
E) of increasing marginal utility and the equimarginal principle.

Exam 36: Consumer Choice

If MUX / PX < MUY / PY then this consumer:

The demand curve for a product slopes downward and to the right because:

In order to maximize utility, consumers _____.

Assume that a consumer purchases a combination of products X and Y and the MUx / Px = 75 utils per dollar and MUy / Py = 50 utils per dollar.To maximize utility without spending more dollars, the consumer should buy:

Total utility is maximized when _____.

Following a decrease in the price of a good or service, an individual will purchase more of the now less expensive good and less of other more expensive goods.This is known as the _____ effect.

When the price of a good changes, the substitution effect occurs because:

Marginal utility is total utility divided by the number of units consumed.

Refer to Table 6.2.The law of diminishing marginal utility holds _____.

When marginal utility is positive and increasing, then

A ten-year-old boy spent his allowance on a soccer ball and a baseball glove.He said he could not be happier buying anything else.The price of the ball was $5, while the price of the glove was $10.If the marginal utility he received from the ball was 15 utils, then:

Suppose a friend gives you two pieces of gum, and you decide to have one piece now and save the other for tomorrow.You do this because:

Marginal utility is _____.

Which of the following sentences based on the findings of neuroeconomics is true?

Utility is easy to measure in the real world with recent advances in psychometric technology.

A price change triggers the income effect but not the substitution effect.

If a dinner guest was serious when she said that she could never get enough of your cooking, you would conclude that the marginal utility of your cooking for her was _____.

In an indifference map, one would most likely see indifference curves that:

If MUx / Px = MUY / PY then _____.

The income and substitution effects of a price change occur because:

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 MU_X/ P_X < MU_Y/ P_Y then this consumer:

Assume that a consumer purchases a combination of products X and Y and the MU_x / P_x = 75 utils per dollar and MU_y / P_y = 50 utils per dollar.To maximize utility without spending more dollars, the consumer should buy:

If MU_x/ P_x = MU_Y/ P_Y then _____.