Question 1

Over the past 10 years,the price of a downloaded song has ________ which has lead to ________.

Accepted Answer

A)  increased; a decrease in consumer surplus 
B)  increased; an increase in consumer efficiency 
C)  decreased; an increase in consumer surplus 
D)  decreased; a decrease in consumer efficiency 
E)  not changed; no change in consumer surplus 
A)  increased; a decrease in consumer surplus 
B)  increased; an increase in consumer efficiency 
C)  decreased; an increase in consumer surplus 
D)  decreased; a decrease in consumer efficiency 
E)  not changed; no change in consumer surplus

Question 2

A consumer's demand for tuna can be found from an indifference curve diagram by doing which of the following?

Accepted Answer

A)  observing what happens to the consumption of tuna for different income levels 
B)  finding where the budget line is tangent to an indifference curve for one price of tuna 
C)  allowing the price of tuna to change and observing the different best, affordable levels of tuna 
D)  changing the indifference curves and seeing the changes in the quantity of tuna the consumer demands 
E)  It is impossible to derive a demand curve from an indifference curve graph. 
A)  observing what happens to the consumption of tuna for different income levels 
B)  finding where the budget line is tangent to an indifference curve for one price of tuna 
C)  allowing the price of tuna to change and observing the different best, affordable levels of tuna 
D)  changing the indifference curves and seeing the changes in the quantity of tuna the consumer demands 
E)  It is impossible to derive a demand curve from an indifference curve graph.

Question 3

-The table above gives Sam's marginal utility schedule for bananas and apples.Sam's fruit budget is $10.
a.If bananas cost $1 per pound and apples cost $2 per bag,what is Sam's marginal utility per dollar for all quantities of both goods?
b.What is the utility maximizing combination of bananas and apples for Sam?
c.If the price of bananas increases to $2 per pound,how does Sam's marginal utility per dollar for bananas change?
d.At the banana price of $2 per pound,what is the new utility maximizing combination of bananas and apples for Sam?
e.List two points on Sam's demand curve for bananas.

Accepted Answer

@#IMG-DLM& 
a.The table above has Sam's marginal u

Question 4

An increase in the price of a good

Accepted Answer

A)  rotates the budget line inward and changes its slope. 
B)  rotates the budget line outward and changes its slope. 
C)  results in a movement downward along the budget line. 
D)  results in a movement upward along the budget line. 
E)  shifts the budget line inward and does not change its slope. 
A)  rotates the budget line inward and changes its slope. 
B)  rotates the budget line outward and changes its slope. 
C)  results in a movement downward along the budget line. 
D)  results in a movement upward along the budget line. 
E)  shifts the budget line inward and does not change its slope.

Question 5

Suppose you have a $20 budget per week,the price of soda is $1 per bottle,and the price of pizza is $4 per slice.In the above below,draw a budget line for soda and pizza,placing soda on the horizontal axis.Correctly label the axes.

Accepted Answer

@#IMG-DLM& The budget line is

Question 6

Jen consumes 5 CDs and 2 tacos.She receives 500 units of utility from her 5th CD and 200 units of utility from her 2nd taco.The price of a CD is $10,the price of a taco is $4,and she is spending her entire budget.Which of the following is true regarding Jen's choices?

Accepted Answer

A)  Jen is consuming on her demand curve for tacos. 
B)  Jen is maximizing utility. 
C)  Jen is consuming on her demand curve for CDs. 
D)  Only answers A and B are correct 
E)  Answers A, B, and C are correct. 
A)  Jen is consuming on her demand curve for tacos. 
B)  Jen is maximizing utility. 
C)  Jen is consuming on her demand curve for CDs. 
D)  Only answers A and B are correct 
E)  Answers A, B, and C are correct.

Question 7

As a consumer moves away from the origin onto higher indifference curves,what happens?

Accepted Answer

A)  Nothing 
B)  The consumer reaches more preferred combinations of goods. 
C)  The consumer reaches less preferred combinations of goods. 
D)  The consumer reaches more affordable combinations of goods. 
E)  None of the above because it is impossible to move from one indifference curve to another. 
A)  Nothing 
B)  The consumer reaches more preferred combinations of goods. 
C)  The consumer reaches less preferred combinations of goods. 
D)  The consumer reaches more affordable combinations of goods. 
E)  None of the above because it is impossible to move from one indifference curve to another.

Question 8

What is the marginal rate of substitution and how does it relate to an indifference curve?

Accepted Answer

The marginal rate of substitution is the

Question 9

-The table gives the total utility Jamal derives from the consumption of eclairs and cream puffs.Jamal has $12 to spend on these two confectionery goods.The price of an eclair is $3 and the price of a cream puff is $1.50.
a.Jamal's budget is $12.In order for Jamal to maximize his utility,how many eclairs and cream puffs should he buy?
b.Suppose the price of an eclair increase to $6.Jamal's income does not change and neither does the price of a cream puff.What combination of eclairs and cream puffs will Jamal buy now?
c.Using your answers to parts (a)and (b),derive two points on Jamal's demand curve for eclairs.

Accepted Answer

a.Jamal's utility maximizing combination

Question 10

-Amy has the total utility values given above for video rentals a week.Complete the table by calculating her marginal utilities.

Accepted Answer

@#IMG-DLM& The compl

Question 11

The paradox of value with respect to water and diamonds can be explained using consumer surplus because

Accepted Answer

A)  water is cheap but provides a large consumer surplus, while diamonds are expensive with a small consumer surplus. 
B)  diamonds are in large supply relative to their demand, while water is scarce in supply relative to its demand. 
C)  water is cheap but provides a small consumer surplus, while diamonds are expensive but provide a large consumer surplus. 
D)  the total consumer surplus from diamonds is greater than the total consumer surplus from water. 
E)  None of the above answers is correct. 
A)  water is cheap but provides a large consumer surplus, while diamonds are expensive with a small consumer surplus. 
B)  diamonds are in large supply relative to their demand, while water is scarce in supply relative to its demand. 
C)  water is cheap but provides a small consumer surplus, while diamonds are expensive but provide a large consumer surplus. 
D)  the total consumer surplus from diamonds is greater than the total consumer surplus from water. 
E)  None of the above answers is correct.

Question 12

"The marginal rate of substitution of the good measured along the x-axis increases as a consumer moves downward along an indifference curve." Is the previous statement correct or not?

Accepted Answer

The statement is incorrect bec

Question 13

In order to draw Lucky's budget line,we need to know

Accepted Answer

A)  only Lucky's budget. 
B)  only the prices of the goods Lucky consumes. 
C)  both Lucky's budget and the prices of the goods Lucky consumes. 
D)  Lucky's budget, the prices of the goods lucky consumes, and the utilities of the goods Lucky does not consume. 
E)  the utilities of the goods Lucky consumes. 
A)  only Lucky's budget. 
B)  only the prices of the goods Lucky consumes. 
C)  both Lucky's budget and the prices of the goods Lucky consumes. 
D)  Lucky's budget, the prices of the goods lucky consumes, and the utilities of the goods Lucky does not consume. 
E)  the utilities of the goods Lucky consumes.

Question 14

The point where the budget line intersects the y-axis represents a combination of goods that contains

Accepted Answer

A)  some of both goods. 
B)  only the good measured on the y-axis. 
C)  only the good measured on the x-axis. 
D)  no goods. 
E)  the quantity of the good measured on the y-axis that has zero marginal utility. 
A)  some of both goods. 
B)  only the good measured on the y-axis. 
C)  only the good measured on the x-axis. 
D)  no goods. 
E)  the quantity of the good measured on the y-axis that has zero marginal utility.

Question 15

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.If Sarah spends $170 per week on sushi,the maximum quantity of rose bushes can she buy each week is ________ bushes.

Accepted Answer

A)  33 
B)  330 
C)  3 
D)  17 
E)  None of the above answers is correct. 
A)  33 
B)  330 
C)  3 
D)  17 
E)  None of the above answers is correct.

Question 16

"As Rob consumes more dates over the course of a day,it is likely that his marginal utility from date consumption will rise." Is the previous statement likely correct or incorrect?

Accepted Answer

The statement is incorrect.The

Question 17

Suppose the consumer has allocated his or her entire budget.Which of the following conditions is also required for total utility to be maximized?

Accepted Answer

A)  Marginal utility has decreased to zero for all goods. 
B)  The least inexpensive combination of goods has been purchased. 
C)  The marginal utility for each good is equal. 
D)  The marginal utility divided by price for each good is equal. 
E)  The number of units of each good consumed must be the same. 
A)  Marginal utility has decreased to zero for all goods. 
B)  The least inexpensive combination of goods has been purchased. 
C)  The marginal utility for each good is equal. 
D)  The marginal utility divided by price for each good is equal. 
E)  The number of units of each good consumed must be the same.

Question 18

-The table above has different combinations of hamburgers and hot dogs that Alex can buy.After labeling the axes,graph Alex's budget line in the figure,putting hot dogs on the x-axis.
   
a.Alex's income is $8 per day.What is the price of a hot dog? Of a hamburger?
b.What is the slope of the budget line?

Accepted Answer

@#IMG-DLM& 
The figure above has Alex's

Question 19

How is a budget line similar to a production possibilities frontier? How do they differ?

Accepted Answer

Both the budget line and the production

Question 20

The fact that diamonds have a much higher price than water

Accepted Answer

A)  violates the rules of utility maximization because water is necessary for life. 
B)  does not violate the rules of utility maximization because globally, fresh water is actually very rare. 
C)  does not violate the rules of utility maximization because water's marginal utility is low. 
D)  violates the rules of utility maximization because diamonds are not necessities. 
E)  violates the rules of utility maximization because the consumer actually consumes a large amount of water. 
A)  violates the rules of utility maximization because water is necessary for life. 
B)  does not violate the rules of utility maximization because globally, fresh water is actually very rare. 
C)  does not violate the rules of utility maximization because water's marginal utility is low. 
D)  violates the rules of utility maximization because diamonds are not necessities. 
E)  violates the rules of utility maximization because the consumer actually consumes a large amount of water.

Over the past 10 years,the price of a downloaded song has which has lead to .

A consumer's demand for tuna can be found from an indifference curve diagram by doing which of the following?

An increase in the price of a good

Suppose you have a $20 budget per week,the price of soda is $1 per bottle,and the price of pizza is $4 per slice.In the above below,draw a budget line for soda and pizza,placing soda on the horizontal axis.Correctly label the axes.

Jen consumes 5 CDs and 2 tacos.She receives 500 units of utility from her 5th CD and 200 units of utility from her 2nd taco.The price of a CD is $10,the price of a taco is $4,and she is spending her entire budget.Which of the following is true regarding Jen's choices?

As a consumer moves away from the origin onto higher indifference curves,what happens?

What is the marginal rate of substitution and how does it relate to an indifference curve?

-Amy has the total utility values given above for video rentals a week.Complete the table by calculating her marginal utilities.

The paradox of value with respect to water and diamonds can be explained using consumer surplus because

"The marginal rate of substitution of the good measured along the x-axis increases as a consumer moves downward along an indifference curve." Is the previous statement correct or not?

In order to draw Lucky's budget line,we need to know

The point where the budget line intersects the y-axis represents a combination of goods that contains

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.If Sarah spends $170 per week on sushi,the maximum quantity of rose bushes can she buy each week is ________ bushes.

"As Rob consumes more dates over the course of a day,it is likely that his marginal utility from date consumption will rise." Is the previous statement likely correct or incorrect?

Suppose the consumer has allocated his or her entire budget.Which of the following conditions is also required for total utility to be maximized?

How is a budget line similar to a production possibilities frontier? How do they differ?

The fact that diamonds have a much higher price than water

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

Over the past 10 years,the price of a downloaded song has ________ which has lead to ________.

A consumer's demand for tuna can be found from an indifference curve diagram by doing which of the following?

An increase in the price of a good

Suppose you have a $20 budget per week,the price of soda is $1 per bottle,and the price of pizza is $4 per slice.In the above below,draw a budget line for soda and pizza,placing soda on the horizontal axis.Correctly label the axes.

Jen consumes 5 CDs and 2 tacos.She receives 500 units of utility from her 5th CD and 200 units of utility from her 2nd taco.The price of a CD is $10,the price of a taco is $4,and she is spending her entire budget.Which of the following is true regarding Jen's choices?

As a consumer moves away from the origin onto higher indifference curves,what happens?

What is the marginal rate of substitution and how does it relate to an indifference curve?

-Amy has the total utility values given above for video rentals a week.Complete the table by calculating her marginal utilities.

The paradox of value with respect to water and diamonds can be explained using consumer surplus because

"The marginal rate of substitution of the good measured along the x-axis increases as a consumer moves downward along an indifference curve." Is the previous statement correct or not?

In order to draw Lucky's budget line,we need to know

The point where the budget line intersects the y-axis represents a combination of goods that contains

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.If Sarah spends $170 per week on sushi,the maximum quantity of rose bushes can she buy each week is ________ bushes.

"As Rob consumes more dates over the course of a day,it is likely that his marginal utility from date consumption will rise." Is the previous statement likely correct or incorrect?

Suppose the consumer has allocated his or her entire budget.Which of the following conditions is also required for total utility to be maximized?

How is a budget line similar to a production possibilities frontier? How do they differ?

The fact that diamonds have a much higher price than water

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

Over the past 10 years,the price of a downloaded song has which has lead to .