Question 1

If the slope of the budget line changes,there must have been

Accepted Answer

A)  a change in the consumer's preferences. 
B)  an increase in the consumer's income. 
C)  a change in the price of at least one good. 
D)  a change in the price of both goods. 
E)  None of these could cause a change in the slope of the budget line. 
A)  a change in the consumer's preferences. 
B)  an increase in the consumer's income. 
C)  a change in the price of at least one good. 
D)  a change in the price of both goods. 
E)  None of these could cause a change in the slope of the budget line. C

Question 2

-The figure above shows Sarah's budget line.Sarah earns $500 per week selling baskets made out of tree vines.With this money she buys sushi and rose bushes.Each piece of sushi costs $1 and each rose bush costs $10.Sarah will be at what point on her budget line if she spends $500 per week on rose bushes?

Accepted Answer

A)  Point a 
B)  Point b 
C)  Point c 
D)  Point f 
E)  Point e 
A)  Point a 
B)  Point b 
C)  Point c 
D)  Point f 
E)  Point e A

Question 3

-The figure above contains several budget lines for Sarah,who uses her income to purchase two goods,cheese and crackers.
a.A movement between which two budget lines represents an increase in Sarah's budget for cheese and crackers?
b.A movement between which two budget lines represents an increase in the price of a pound of cheese?
c.A movement between which two budget lines represents an increase in the price of a box of crackers?

Accepted Answer

a.A movement from BL? to BL? shows an increase in Sarah's budget.
b.A change from BL? to BL?shows an increase in the price of a pound of cheese.
c.A change from BL? to BL? shows an increase in the price of a box of crackers.

Question 4

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.As Buffy uses more stakes,the marginal utility of a stake ________ and as she uses more cloves of garlic,the marginal utility of a clove of garlic ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
E)  does not change; does not change 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
E)  does not change; does not change

Question 5

To resolve the paradox of value,you must

Accepted Answer

A)  compare price elasticities of demand across goods. 
B)  distinguish between marginal and total utility. 
C)  sacrifice efficiency. 
D)  minimize consumer surplus. 
E)  distinguish between marginal utility and price. 
A)  compare price elasticities of demand across goods. 
B)  distinguish between marginal and total utility. 
C)  sacrifice efficiency. 
D)  minimize consumer surplus. 
E)  distinguish between marginal utility and price.

Question 6

Why does gold,which is a relatively nonessential item,have a higher price than water,which is essential to life?

Accepted Answer

Gold has a high price and a high margina

Question 7

Any point above a given indifference curve ________ affordable and is ________ to any point on the indifference curve.

Accepted Answer

A)  is not; inferior 
B)  might or might not be; preferred 
C)  is not; preferred 
D)  might or might not be; inferior 
E)  is; preferred 
A)  is not; inferior 
B)  might or might not be; preferred 
C)  is not; preferred 
D)  might or might not be; inferior 
E)  is; preferred

Question 8

If Raul's marginal utility per dollar from bread is 25 and the marginal utility per dollar from butter is 30,

Accepted Answer

A)  Raul should purchase more butter and less bread to increase his total utility. 
B)  Raul's marginal utility from butter will fall if he buys more butter. 
C)  Raul's marginal utility from bread will rise if he buys less bread. 
D)  Only answers B and C are correct. 
E)  Answers A, B, and C are correct. 
A)  Raul should purchase more butter and less bread to increase his total utility. 
B)  Raul's marginal utility from butter will fall if he buys more butter. 
C)  Raul's marginal utility from bread will rise if he buys less bread. 
D)  Only answers B and C are correct. 
E)  Answers A, B, and C are correct.

Question 9

"If Ivan says he is indifferent between the consumption of a new pair of jeans or a set of earrings,he means that he does not want either product." Is the previous analysis correct? Explain your answer.

Accepted Answer

The analysis is incorrect.The

Question 10

The figure above shows one of a consumer's indifference curves.
-The marginal rate of substitution (MRS)at point G equals
A) 4.
B) 8.
C) 2.
D) 1/2.
E) More information is needed to calculate the MRS.

Accepted Answer

The answer of   
The figure above shows one...

Question 11

Reb buys fishing lures and steaks.If his budget does not change and the price of a fishing lure decreases,the maximum number of fishing lures he can purchase ________ and the maximum number of steaks he can purchase ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  increases; does not change 
D)  decreases; increases 
E)  does not change; does not change 
A)  increases; increases 
B)  increases; decreases 
C)  increases; does not change 
D)  decreases; increases 
E)  does not change; does not change

Question 12

-The figure above shows a consumer's budget line for sodas and DVD rentals.Point a represents an

Accepted Answer

A)  affordable combination of sodas and DVDs that spends the entire budget. 
B)  affordable combination of sodas and DVDs that does not spend the entire budget. 
C)  unaffordable combination of sodas and DVDs. 
D)  affordable combination of sodas and DVDs but whether it spends the entire budget cannot be determined from the figure. 
E)  None of the above answers is correct. 
A)  affordable combination of sodas and DVDs that spends the entire budget. 
B)  affordable combination of sodas and DVDs that does not spend the entire budget. 
C)  unaffordable combination of sodas and DVDs. 
D)  affordable combination of sodas and DVDs but whether it spends the entire budget cannot be determined from the figure. 
E)  None of the above answers is correct.

Question 13

What is the difference between a budget line and an indifference curve?

Accepted Answer

A)  One is measured in dollars while the other in units of goods. 
B)  One shows what is possible while the other shows what is preferred. 
C)  One shows a positive relationship, and the other shows a negative relationship. 
D)  The budget line is bowed in toward the origin, and the indifference curves are linear. 
E)  There is no difference. 
A)  One is measured in dollars while the other in units of goods. 
B)  One shows what is possible while the other shows what is preferred. 
C)  One shows a positive relationship, and the other shows a negative relationship. 
D)  The budget line is bowed in toward the origin, and the indifference curves are linear. 
E)  There is no difference.

Question 14

________ in consumer surplus occurs when the price of a good ________.

Accepted Answer

A)  An increase; decreases and consumers can buy more of the good at the lower price 
B)  A decrease; decreases and consumers buy less of the good at the cheaper price 
C)  An increase; decreases and consumer efficiency declines 
D)  A decrease; increases and the paradox of value is no longer valid 
E)  An increase; increases but the relative price does not change 
A)  An increase; decreases and consumers can buy more of the good at the lower price 
B)  A decrease; decreases and consumers buy less of the good at the cheaper price 
C)  An increase; decreases and consumer efficiency declines 
D)  A decrease; increases and the paradox of value is no longer valid 
E)  An increase; increases but the relative price does not change

Question 15

In the indifference curve/budget line framework,at the consumer equilibrium,the consumer

Accepted Answer

A)  is on the budget line. 
B)  is on the highest attainable indifference curve. 
C)  has a marginal rate of substitution equal to the relative price of the goods. 
D)  Only answers A and B are correct. 
E)  Answers A, B, and C are correct. 
A)  is on the budget line. 
B)  is on the highest attainable indifference curve. 
C)  has a marginal rate of substitution equal to the relative price of the goods. 
D)  Only answers A and B are correct. 
E)  Answers A, B, and C are correct.

Question 16

Diminishing marginal utility means that as more of a good is consumed,

Accepted Answer

A)  the price of the good rises. 
B)  the price of the good falls. 
C)  more income is spent. 
D)  the utility of an additional unit decreases. 
E)  the consumption of some other good must diminish. 
A)  the price of the good rises. 
B)  the price of the good falls. 
C)  more income is spent. 
D)  the utility of an additional unit decreases. 
E)  the consumption of some other good must diminish.

Question 17

If Joan consumes 1 dinner roll,she has total utility of 15; if she consumes 2,she has total utility of 27; if she consumes 3,she has total utility of 37; and if she consumes 4,she has total utility of 45.What is the marginal utility of the fourth dinner roll consumed?

Accepted Answer

A)  124 units of utility 
B)  45 units of utility 
C)  11.25 units of utility 
D)  8 units of utility 
E)  37 units of utility 
A)  124 units of utility 
B)  45 units of utility 
C)  11.25 units of utility 
D)  8 units of utility 
E)  37 units of utility

Question 18

Suppose Abe is allocating his entire income and he receives 100 units of utility per dollar from the tenth slice of pizza and 200 units of utility per dollar from his second soda.Is Abe maximizing his utility? Should Abe change his consumption of pizza and soda?

Accepted Answer

Abe is not maximizing his utility becaus

Question 19

A consumer is in equilibrium when the

Accepted Answer

A)  consumer is buying any combination of goods and services on his or her budget line. 
B)  consumer is buying the combination of goods and services on the budget line and on the highest attainable indifference curve. 
C)  marginal rate of substitution is as small as possible. 
D)  marginal rate of substitution is as large as possible. 
E)  marginal rate of substitution exceeds the relative price of the two goods by as much as possible. 
A)  consumer is buying any combination of goods and services on his or her budget line. 
B)  consumer is buying the combination of goods and services on the budget line and on the highest attainable indifference curve. 
C)  marginal rate of substitution is as small as possible. 
D)  marginal rate of substitution is as large as possible. 
E)  marginal rate of substitution exceeds the relative price of the two goods by as much as possible.

Question 20

Moving downward along a demand curve,so that the price falls and the quantity demanded increases,the marginal utility of each additional unit of the good consumed

Accepted Answer

A)  always increases. 
B)  always decreases. 
C)  stays the same. 
D)  could increase, decrease, or stay the same. 
E)  at first increases and then decreases. 
A)  always increases. 
B)  always decreases. 
C)  stays the same. 
D)  could increase, decrease, or stay the same. 
E)  at first increases and then decreases.

If the slope of the budget line changes,there must have been

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.As Buffy uses more stakes,the marginal utility of a stake and as she uses more cloves of garlic,the marginal utility of a clove of garlic .

To resolve the paradox of value,you must

Why does gold,which is a relatively nonessential item,have a higher price than water,which is essential to life?

Any point above a given indifference curve affordable and is to any point on the indifference curve.

If Raul's marginal utility per dollar from bread is 25 and the marginal utility per dollar from butter is 30,

"If Ivan says he is indifferent between the consumption of a new pair of jeans or a set of earrings,he means that he does not want either product." Is the previous analysis correct? Explain your answer.

The figure above shows one of a consumer's indifference curves. -The marginal rate of substitution (MRS)at point G equals A) 4. B) 8. C) 2. D) 1/2. E) More information is needed to calculate the MRS.

Reb buys fishing lures and steaks.If his budget does not change and the price of a fishing lure decreases,the maximum number of fishing lures he can purchase and the maximum number of steaks he can purchase .

-The figure above shows a consumer's budget line for sodas and DVD rentals.Point a represents an

What is the difference between a budget line and an indifference curve?

in consumer surplus occurs when the price of a good .

In the indifference curve/budget line framework,at the consumer equilibrium,the consumer

Diminishing marginal utility means that as more of a good is consumed,

If Joan consumes 1 dinner roll,she has total utility of 15; if she consumes 2,she has total utility of 27; if she consumes 3,she has total utility of 37; and if she consumes 4,she has total utility of 45.What is the marginal utility of the fourth dinner roll consumed?

Suppose Abe is allocating his entire income and he receives 100 units of utility per dollar from the tenth slice of pizza and 200 units of utility per dollar from his second soda.Is Abe maximizing his utility? Should Abe change his consumption of pizza and soda?

A consumer is in equilibrium when the

Moving downward along a demand curve,so that the price falls and the quantity demanded increases,the marginal utility of each additional unit of the good consumed

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 13: Consumer Choice and Demand

If the slope of the budget line changes,there must have been

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.As Buffy uses more stakes,the marginal utility of a stake ________ and as she uses more cloves of garlic,the marginal utility of a clove of garlic ________.

To resolve the paradox of value,you must

Why does gold,which is a relatively nonessential item,have a higher price than water,which is essential to life?

Any point above a given indifference curve ________ affordable and is ________ to any point on the indifference curve.

If Raul's marginal utility per dollar from bread is 25 and the marginal utility per dollar from butter is 30,

"If Ivan says he is indifferent between the consumption of a new pair of jeans or a set of earrings,he means that he does not want either product." Is the previous analysis correct? Explain your answer.

The figure above shows one of a consumer's indifference curves. -The marginal rate of substitution (MRS)at point G equals A) 4. B) 8. C) 2. D) 1/2. E) More information is needed to calculate the MRS.

Reb buys fishing lures and steaks.If his budget does not change and the price of a fishing lure decreases,the maximum number of fishing lures he can purchase ________ and the maximum number of steaks he can purchase ________.

-The figure above shows a consumer's budget line for sodas and DVD rentals.Point a represents an

What is the difference between a budget line and an indifference curve?

________ in consumer surplus occurs when the price of a good ________.

In the indifference curve/budget line framework,at the consumer equilibrium,the consumer

Diminishing marginal utility means that as more of a good is consumed,

If Joan consumes 1 dinner roll,she has total utility of 15; if she consumes 2,she has total utility of 27; if she consumes 3,she has total utility of 37; and if she consumes 4,she has total utility of 45.What is the marginal utility of the fourth dinner roll consumed?

Suppose Abe is allocating his entire income and he receives 100 units of utility per dollar from the tenth slice of pizza and 200 units of utility per dollar from his second soda.Is Abe maximizing his utility? Should Abe change his consumption of pizza and soda?

A consumer is in equilibrium when the

Moving downward along a demand curve,so that the price falls and the quantity demanded increases,the marginal utility of each additional unit of the good consumed

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.As Buffy uses more stakes,the marginal utility of a stake and as she uses more cloves of garlic,the marginal utility of a clove of garlic .

Any point above a given indifference curve affordable and is to any point on the indifference curve.

Reb buys fishing lures and steaks.If his budget does not change and the price of a fishing lure decreases,the maximum number of fishing lures he can purchase and the maximum number of steaks he can purchase .

in consumer surplus occurs when the price of a good .