Question 1

At the point where the budget line is just touching an indifference curve at one point,

Accepted Answer

A)  the slope of the budget line is equal to the slope of the indifference curve. 
B)  the marginal rate of substitution equals the relative price. 
C)  the consumer can change his or her consumption and can move to a higher indifference curve. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct. 
A)  the slope of the budget line is equal to the slope of the indifference curve. 
B)  the marginal rate of substitution equals the relative price. 
C)  the consumer can change his or her consumption and can move to a higher indifference curve. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct.

Question 2

Mary likes to consume either pizza or spaghetti.She has $48 to spend on these meals.
a.One week the price of pizza is $8 and the price of spaghetti is $6.Mary uses the indifference curve analysis she learned in microeconomics to decide how much of each type of meal to buy.She puts pizza on the vertical axis and spaghetti on the horizontal axis.What is the marginal rate of substitution at the combination of pizza and spaghetti that Mary chooses?
b.The next week,the price of pizza is $6 and the price of spaghetti is $8 so Mary adjusts her consumption combination to maximize her total utility.What is her marginal rate of substitution now?

Accepted Answer

a.The marginal rate of substitution is e

Question 3

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.The total utility Buffy gets from 5 wooden stakes is

Accepted Answer

A)  7. 
B)  65. 
C)  222. 
D)  122. 
E)  None of the above answers is correct. 
A)  7. 
B)  65. 
C)  222. 
D)  122. 
E)  None of the above answers is correct.

Question 4

Sushi costs $3 per piece.Cynthia's total utility after eating one piece is 30 and her total utility after eating 2 pieces is 51,so her marginal utility from the second piece is

Accepted Answer

A)  17. 
B)  10. 
C)  51. 
D)  7. 
E)  21. 
A)  17. 
B)  10. 
C)  51. 
D)  7. 
E)  21.

Question 5

Sheryl is maximizing her utility.She notices that her marginal utility from the last package of bubble gum consumed is greater than her marginal utility from the last package of mints consumed.This result means that the

Accepted Answer

A)  price of a package of gum is greater than the price of a package of mints. 
B)  price of a package of mints is greater than the price of a package of gum. 
C)  total utility of gum must be falling as more gum is consumed. 
D)  total utility of mints must be falling as more mints are consumed. 
E)  More information is needed to determine which, if any, of the above answers is correct. 
A)  price of a package of gum is greater than the price of a package of mints. 
B)  price of a package of mints is greater than the price of a package of gum. 
C)  total utility of gum must be falling as more gum is consumed. 
D)  total utility of mints must be falling as more mints are consumed. 
E)  More information is needed to determine which, if any, of the above answers is correct.

Question 6

Suppose a consumer has $100 to spend on two goods,shoes and shirts.If the price of a pair of shoes is $20 per pair and the price of a shirt is $15 each,which of the following combinations is unaffordable to the consumer?

Accepted Answer

A)  5 pairs of shoes and 0 shirts 
B)  2 pairs of shoes and 4 shirts 
C)  0 pairs of shoes and 7 shirts 
D)  2 pairs of shoes and 3 shirts 
E)  0 pairs of shoes and 0 shirts 
A)  5 pairs of shoes and 0 shirts 
B)  2 pairs of shoes and 4 shirts 
C)  0 pairs of shoes and 7 shirts 
D)  2 pairs of shoes and 3 shirts 
E)  0 pairs of shoes and 0 shirts

Question 7

Along an indifference curve,if the marginal rate of substitution is 3,then the consumer is willing to

Accepted Answer

A)  give up 1 unit of the good measured along the y-axis for 3 units of the good measured along the x-axis. 
B)  give up 3 units of the good measured along the y-axis for 1 unit of the good measured along the x-axis. 
C)  pay $3 for one unit of the good measured along the y-axis. 
D)  pay $3 for one unit of the good measured along the x-axis. 
E)  give up 3 units of the good measured along the y-axis for 1 unit of income, that is, $1 of income. 
A)  give up 1 unit of the good measured along the y-axis for 3 units of the good measured along the x-axis. 
B)  give up 3 units of the good measured along the y-axis for 1 unit of the good measured along the x-axis. 
C)  pay $3 for one unit of the good measured along the y-axis. 
D)  pay $3 for one unit of the good measured along the x-axis. 
E)  give up 3 units of the good measured along the y-axis for 1 unit of income, that is, $1 of income.

Question 8

For Jack,the total utility from three shirts is 50 units and the marginal utility of one more shirt is 5.The total utility of four shirts is

Accepted Answer

A)  45. 
B)  55. 
C)  55/4. 
D)  55/5. 
E)  None of the above answers is correct. 
A)  45. 
B)  55. 
C)  55/4. 
D)  55/5. 
E)  None of the above answers is correct.

Question 9

If a consumer's total utility increases when another unit of a good is consumed,which of the following is true? Marginal utility must be

Accepted Answer

A)  negative. 
B)  equal to one. 
C)  positive. 
D)  increasing. 
E)  some amount, but more information is needed to determine if marginal utility is positive, negative, or equal to zero. 
A)  negative. 
B)  equal to one. 
C)  positive. 
D)  increasing. 
E)  some amount, but more information is needed to determine if marginal utility is positive, negative, or equal to zero.

Question 10

The demand curve for macadamia nuts is downward sloping.This slope is because consumers maximize their utility and an increase in the price of macadamia nuts leads to

Accepted Answer

A)  no change in quantity demanded. 
B)  an increase in the marginal utility per dollar from macadamia nuts. 
C)  a decrease in the marginal utility per dollar from macadamia nuts. 
D)  consumers' budget lines rotating outward with their slopes changing. 
E)  consumers' budget lines shifting outward with no change in their slope. 
A)  no change in quantity demanded. 
B)  an increase in the marginal utility per dollar from macadamia nuts. 
C)  a decrease in the marginal utility per dollar from macadamia nuts. 
D)  consumers' budget lines rotating outward with their slopes changing. 
E)  consumers' budget lines shifting outward with no change in their slope.

Question 11

Suppose that Jen receives 400 units of utility from her last soda and 200 units of utility from her last slice of pizza.What can we conclude about Jen's choices if the price of a soda is $1 and the price of a slice of pizza is $2?

Accepted Answer

A)  Jen is maximizing utility because she buys more of the good providing the most utility. 
B)  Jen should buy more soda to maximize her utility. 
C)  Jen should buy more pizza to maximize her utility. 
D)  Jen needs to buy less soda and less pizza to maximize her utility. 
E)  None of the above answers is correct. 
A)  Jen is maximizing utility because she buys more of the good providing the most utility. 
B)  Jen should buy more soda to maximize her utility. 
C)  Jen should buy more pizza to maximize her utility. 
D)  Jen needs to buy less soda and less pizza to maximize her utility. 
E)  None of the above answers is correct.

Question 12

Which of the following describes what happens to a consumer's budget line if that consumer's budget increases?

Accepted Answer

A)  The budget line becomes steeper. 
B)  The budget line becomes more horizontal. 
C)  The budget line shifts farther away from the origin of the graph. 
D)  The budget line shifts closer to the origin of the graph. 
E)  The budget line does not change. 
A)  The budget line becomes steeper. 
B)  The budget line becomes more horizontal. 
C)  The budget line shifts farther away from the origin of the graph. 
D)  The budget line shifts closer to the origin of the graph. 
E)  The budget line does not change.

Question 13

If the price of a good rises and the consumer's budget remains the same,what happens to the consumer's consumption possibilities?

Accepted Answer

The consumer's consumption possibilities

Question 14

If a consumer has $30 to spend on apples and bananas,where on the apple axis would the consumer's budget line intersect if the price of apples is $3 a pound?

Accepted Answer

A)  30 pounds 
B)  10 pounds 
C)  3 pounds 
D)  0 pounds 
E)  It is impossible to determine with the given information. 
A)  30 pounds 
B)  10 pounds 
C)  3 pounds 
D)  0 pounds 
E)  It is impossible to determine with the given information.

Question 15

What is the "principle of diminishing marginal utility"?

Accepted Answer

As the consumption of a good or service

Question 16

A preference map is a set of

Accepted Answer

A)  indifference curves. 
B)  budget lines. 
C)  demand curves. 
D)  substitution curves. 
E)  marginal rate of substitution curves. 
A)  indifference curves. 
B)  budget lines. 
C)  demand curves. 
D)  substitution curves. 
E)  marginal rate of substitution curves.

Question 17

Suppose Alice spends her budget on books and downloaded movies.If her budget does not change,and the price of a book stays the same but the price of a downloaded movie falls,her budget line

Accepted Answer

A)  shifts outward and its slope does not change. 
B)  shifts inward and its slope does not change. 
C)  rotates inward and its slope changes. 
D)  rotates outward and its slope changes. 
E)  does not change because her budget has not changed. 
A)  shifts outward and its slope does not change. 
B)  shifts inward and its slope does not change. 
C)  rotates inward and its slope changes. 
D)  rotates outward and its slope changes. 
E)  does not change because her budget has not changed.

Question 18

An indifference curve shows

Accepted Answer

A)  different combinations of two goods among which the consumer is indifferent. 
B)  consumption possibilities that a consumer faces at different prices and income. 
C)  affordable combinations of goods. 
D)  the opportunity cost of one good relative to another. 
E)  the relative price of one good relative to another. 
A)  different combinations of two goods among which the consumer is indifferent. 
B)  consumption possibilities that a consumer faces at different prices and income. 
C)  affordable combinations of goods. 
D)  the opportunity cost of one good relative to another. 
E)  the relative price of one good relative to another.

Question 19

-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 $300 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

Question 20

Bottles of Soda	Slices of Pizza
  
-The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.The price of pizza is $2 per slice and the price of soda is $1 per bottle.His marginal utility from the 4th bottle of soda is

Accepted Answer

A)  21. 
B)  3. 
C)  3 units for soda ÷ 7 units for pizza. 
D)  34. 
E)  5.25. 
A)  21. 
B)  3. 
C)  3 units for soda ÷ 7 units for pizza. 
D)  34. 
E)  5.25.

At the point where the budget line is just touching an indifference curve at one point,

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.The total utility Buffy gets from 5 wooden stakes is

Sushi costs $3 per piece.Cynthia's total utility after eating one piece is 30 and her total utility after eating 2 pieces is 51,so her marginal utility from the second piece is

Sheryl is maximizing her utility.She notices that her marginal utility from the last package of bubble gum consumed is greater than her marginal utility from the last package of mints consumed.This result means that the

Suppose a consumer has $100 to spend on two goods,shoes and shirts.If the price of a pair of shoes is $20 per pair and the price of a shirt is $15 each,which of the following combinations is unaffordable to the consumer?

Along an indifference curve,if the marginal rate of substitution is 3,then the consumer is willing to

For Jack,the total utility from three shirts is 50 units and the marginal utility of one more shirt is 5.The total utility of four shirts is

If a consumer's total utility increases when another unit of a good is consumed,which of the following is true? Marginal utility must be

The demand curve for macadamia nuts is downward sloping.This slope is because consumers maximize their utility and an increase in the price of macadamia nuts leads to

Suppose that Jen receives 400 units of utility from her last soda and 200 units of utility from her last slice of pizza.What can we conclude about Jen's choices if the price of a soda is $1 and the price of a slice of pizza is $2?

Which of the following describes what happens to a consumer's budget line if that consumer's budget increases?

If the price of a good rises and the consumer's budget remains the same,what happens to the consumer's consumption possibilities?

If a consumer has $30 to spend on apples and bananas,where on the apple axis would the consumer's budget line intersect if the price of apples is $3 a pound?

What is the "principle of diminishing marginal utility"?

A preference map is a set of

Suppose Alice spends her budget on books and downloaded movies.If her budget does not change,and the price of a book stays the same but the price of a downloaded movie falls,her budget line

An indifference curve shows

Bottles of Soda Slices of Pizza -The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.The price of pizza is $2 per slice and the price of soda is $1 per bottle.His marginal utility from the 4th bottle of soda is

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

At the point where the budget line is just touching an indifference curve at one point,

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.The total utility Buffy gets from 5 wooden stakes is

Sushi costs $3 per piece.Cynthia's total utility after eating one piece is 30 and her total utility after eating 2 pieces is 51,so her marginal utility from the second piece is

Sheryl is maximizing her utility.She notices that her marginal utility from the last package of bubble gum consumed is greater than her marginal utility from the last package of mints consumed.This result means that the

Suppose a consumer has $100 to spend on two goods,shoes and shirts.If the price of a pair of shoes is $20 per pair and the price of a shirt is $15 each,which of the following combinations is unaffordable to the consumer?

Along an indifference curve,if the marginal rate of substitution is 3,then the consumer is willing to

For Jack,the total utility from three shirts is 50 units and the marginal utility of one more shirt is 5.The total utility of four shirts is

If a consumer's total utility increases when another unit of a good is consumed,which of the following is true? Marginal utility must be

The demand curve for macadamia nuts is downward sloping.This slope is because consumers maximize their utility and an increase in the price of macadamia nuts leads to

Suppose that Jen receives 400 units of utility from her last soda and 200 units of utility from her last slice of pizza.What can we conclude about Jen's choices if the price of a soda is $1 and the price of a slice of pizza is $2?

Which of the following describes what happens to a consumer's budget line if that consumer's budget increases?

If the price of a good rises and the consumer's budget remains the same,what happens to the consumer's consumption possibilities?

If a consumer has $30 to spend on apples and bananas,where on the apple axis would the consumer's budget line intersect if the price of apples is $3 a pound?

What is the "principle of diminishing marginal utility"?

A preference map is a set of

Suppose Alice spends her budget on books and downloaded movies.If her budget does not change,and the price of a book stays the same but the price of a downloaded movie falls,her budget line

An indifference curve shows

Bottles of Soda Slices of Pizza -The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.The price of pizza is $2 per slice and the price of soda is $1 per bottle.His marginal utility from the 4th bottle of soda is

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