Question 1

Related to the paradox of value,which of the following statements is correct?

Accepted Answer

A)  The marginal utility of water is enormous but the total utility is small. 
B)  We consume so much water so its marginal utility is enormous. 
C)  The marginal utility of water is small but the total utility is enormous. 
D)  The consumer surplus from water is small. 
E)  The total utility of water is equal to the marginal utility of water. 
A)  The marginal utility of water is enormous but the total utility is small. 
B)  We consume so much water so its marginal utility is enormous. 
C)  The marginal utility of water is small but the total utility is enormous. 
D)  The consumer surplus from water is small. 
E)  The total utility of water is equal to the marginal utility of water.

Question 2

If your budget increases,what is the effect on your budget line?

Accepted Answer

Your budget line shi

Question 3

In a preference map,consumption combinations on higher indifference curves

Accepted Answer

A)  always cost more than any combination on a lower indifference curve. 
B)  always are preferred to combinations on lower indifference curves. 
C)  always cost less than any combination on a lower indifference curve. 
D)  always are less preferred than combinations on lower indifference curves. 
E)  are sometimes more preferred, sometimes less preferred, and sometimes equally preferred to any combination on a lower indifference curve. 
A)  always cost more than any combination on a lower indifference curve. 
B)  always are preferred to combinations on lower indifference curves. 
C)  always cost less than any combination on a lower indifference curve. 
D)  always are less preferred than combinations on lower indifference curves. 
E)  are sometimes more preferred, sometimes less preferred, and sometimes equally preferred to any combination on a lower indifference curve.

Question 4

The marginal rate of substitution is equal to the magnitude of the

Accepted Answer

A)  slope of the demand curve. 
B)  price of the good measured along the x-axis. 
C)  slope of the indifference curve. 
D)  relative prices of the two goods. 
E)  price of the good measured along the y-axis. 
A)  slope of the demand curve. 
B)  price of the good measured along the x-axis. 
C)  slope of the indifference curve. 
D)  relative prices of the two goods. 
E)  price of the good measured along the y-axis.

Question 5

The figure above shows the markets for water and diamonds.
-Based on the figures above,it is the case that the consumer surplus from water ________ the consumer surplus from diamonds and the marginal utility from water ________ the marginal utility from diamonds.

Accepted Answer

A)  is equal to; is equal to 
B)  is larger than; is equal to 
C)  is larger than; is larger than 
D)  is larger than; is smaller than 
E)  is smaller than; is smaller than 
A)  is equal to; is equal to 
B)  is larger than; is equal to 
C)  is larger than; is larger than 
D)  is larger than; is smaller than 
E)  is smaller than; is smaller than

Question 6

Suppose you have one point on a demand curve.To plot another point for this demand curve using a group of indifference curves,

Accepted Answer

A)  transfer all points from the indifference curve to the corresponding demand curve. 
B)  horizontally sum the indifference curves. 
C)  change the price of a good, rotate the budget line, and find the new best affordable point. This new price and quantity is another point on the demand curve. 
D)  calculate the marginal rates of substitution from the indifference curve and transfer these values to the demand curve. 
E)  transfer the budget line so that it becomes the demand curve. 
A)  transfer all points from the indifference curve to the corresponding demand curve. 
B)  horizontally sum the indifference curves. 
C)  change the price of a good, rotate the budget line, and find the new best affordable point. This new price and quantity is another point on the demand curve. 
D)  calculate the marginal rates of substitution from the indifference curve and transfer these values to the demand curve. 
E)  transfer the budget line so that it becomes the demand curve.

Question 7

In order to maximize his or her utility,a consumer must allocate his or her entire budget and

Accepted Answer

A)  buy the combination of goods that makes the marginal utility per dollar from all goods as small as possible. 
B)  buy the combination of goods that equalizes the total utility per dollar from all goods. 
C)  do nothing else because when the entire budget is allocated, utility is maximized. 
D)  buy the combination of goods that equalizes the marginal utility per dollar from all goods. 
E)  buy the combination of goods that makes the marginal utility per dollar from all goods as large as possible. 
A)  buy the combination of goods that makes the marginal utility per dollar from all goods as small as possible. 
B)  buy the combination of goods that equalizes the total utility per dollar from all goods. 
C)  do nothing else because when the entire budget is allocated, utility is maximized. 
D)  buy the combination of goods that equalizes the marginal utility per dollar from all goods. 
E)  buy the combination of goods that makes the marginal utility per dollar from all goods as large as possible.

Question 8

A budget line

Accepted Answer

A)  represents combinations of goods a consumer desires. 
B)  marks the boundary between what a consumer can afford and cannot afford. 
C)  has a positive slope. 
D)  is the same as the production possibilities frontier. 
E)  is the same as a demand curve. 
A)  represents combinations of goods a consumer desires. 
B)  marks the boundary between what a consumer can afford and cannot afford. 
C)  has a positive slope. 
D)  is the same as the production possibilities frontier. 
E)  is the same as a demand curve.

Question 9

The solution to the paradox of value is found by looking at which of the following?

Accepted Answer

A)  total usefulness of different goods 
B)  the difference between marginal utility and total utility 
C)  relative prices and total utility 
D)  the difference between marginal utility and price 
E)  None of the above helps solve the paradox of value. 
A)  total usefulness of different goods 
B)  the difference between marginal utility and total utility 
C)  relative prices and total utility 
D)  the difference between marginal utility and price 
E)  None of the above helps solve the paradox of value.

Question 10

If the price of steak rises,a consumer who had been maximizing his or her utility before will buy less steak because its

Accepted Answer

A)  total utility falls. 
B)  ratio of marginal utility to price is now less than that for other goods. 
C)  marginal utility has fallen. 
D)  ratio of marginal utility to total utility falls. 
E)  ratio of marginal utility to price is now larger than that for other goods. 
A)  total utility falls. 
B)  ratio of marginal utility to price is now less than that for other goods. 
C)  marginal utility has fallen. 
D)  ratio of marginal utility to total utility falls. 
E)  ratio of marginal utility to price is now larger than that for other goods.

Question 11

You are studying with a friend and your friend says "A budget line shows the various combinations of two goods that can be purchased with the buyer's income at current prices." Is your friend's assessment correct or not?

Accepted Answer

Your friend's descri

Question 12

If a consumer has allocated his or her budget and found the combination of goods where all marginal utilities divided by price are equal,what would happen if the consumer were forced to consume some other combination of goods? The consumer

Accepted Answer

A)  will definitely have higher total utility. 
B)  will definitely have lower total utility. 
C)  will definitely not experience any change in total utility. 
D)  might be have higher, lower, or the same total utility, but more information is needed to determine which. 
E)  None of the above answers is correct. 
A)  will definitely have higher total utility. 
B)  will definitely have lower total utility. 
C)  will definitely not experience any change in total utility. 
D)  might be have higher, lower, or the same total utility, but more information is needed to determine which. 
E)  None of the above answers is correct.

Question 13

-The above table shows Homer's utility from boxes of doughnuts.The marginal utility that Homer receives from the third box of doughnuts is equal to

Accepted Answer

A)  75. 
B)  25. 
C)  20. 
D)  3. 
E)  50. 
A)  75. 
B)  25. 
C)  20. 
D)  3. 
E)  50.

Question 14

"Because the price of a diamond is much greater than the price of a gallon of water,the consumer surplus from diamonds is greater than the consumer surplus from water." Is the previous analysis correct? Explain your answer.

Accepted Answer

No,the analysis is incorrect.The paradox

Question 15

Sherry is on vacation and wants to bring souvenirs home to family and friends.Her souvenir budget is $100,and she can choose between T-shirts,which cost $20 each,and key chains,which cost $5 each.
a.Draw a graph of Sherry's budget line in the figure below.
   
b.What is the slope of Sherry's budget line? How does that slope represent an opportunity cost? Suppose that Sherry now finds a store where T-shirts are on sale for $10 each.(Key chains still cost $5 each).
c.Draw the new budget line in the figure.
d.What is the slope of the new budget line? How has the opportunity cost changed?

Accepted Answer

@#IMG-DLM& 
a.The budget line is in the figure abo

Question 16

Which of the following is the best statement of the paradox of value?

Accepted Answer

A)  Why does the amount people are willing to pay for a good vary with the amount consumed? 
B)  Why do some goods like water, which is necessary for life, have a low price while other goods like diamonds have a high price? 
C)  What is the logical relationship between value and price? 
D)  Why is efficiency so valuable for a society? 
E)  None of the above states the paradox of value. 
A)  Why does the amount people are willing to pay for a good vary with the amount consumed? 
B)  Why do some goods like water, which is necessary for life, have a low price while other goods like diamonds have a high price? 
C)  What is the logical relationship between value and price? 
D)  Why is efficiency so valuable for a society? 
E)  None of the above states the paradox of value.

Question 17

An indifference curve shows

Accepted Answer

A)  utility maximizing levels of consumption. 
B)  preferred combinations of goods. 
C)  a diminishing marginal rate of substitution as more of both goods are consumed. 
D)  combinations of goods among which a person is indifferent. 
E)  an increasing marginal rate of substitution for a good as more of it is consumed. 
A)  utility maximizing levels of consumption. 
B)  preferred combinations of goods. 
C)  a diminishing marginal rate of substitution as more of both goods are consumed. 
D)  combinations of goods among which a person is indifferent. 
E)  an increasing marginal rate of substitution for a good as more of it is consumed.

Question 18

If a consumer's marginal rate of substitution is greater than the relative price of the goods,the consumer is

Accepted Answer

A)  at his or her best affordable point. 
B)  perhaps at his or her best affordable point. 
C)  not at his or her best affordable point and should move along his or her indifference curve to a higher budget line. 
D)  not at his or her best affordable point and should move along his or her budget line to a higher indifference curve. 
E)  More information is needed to determine if the consumer is or is not at his or her best affordable point. 
A)  at his or her best affordable point. 
B)  perhaps at his or her best affordable point. 
C)  not at his or her best affordable point and should move along his or her indifference curve to a higher budget line. 
D)  not at his or her best affordable point and should move along his or her budget line to a higher indifference curve. 
E)  More information is needed to determine if the consumer is or is not at his or her best affordable point.

Question 19

When Bo is at his best affordable consumption point,his marginal rate of substitution is

Accepted Answer

A)  greater than the relative price. 
B)  equal to the relative price. 
C)  less than the relative price. 
D)  equal to one. 
E)  maximized. 
A)  greater than the relative price. 
B)  equal to the relative price. 
C)  less than the relative price. 
D)  equal to one. 
E)  maximized.

Question 20

If Bill's income increases from $30,000 per year to $41,000 per year.He consumes pickup trucks and lamb chops,so with his increase in budget Bill's budget line shifts outward.This increase in Bill's budget means he can consume more trucks and more lamb." Are these statements true or false? Briefly explain your answer.

Accepted Answer

The statements are true.The in

Related to the paradox of value,which of the following statements is correct?

If your budget increases,what is the effect on your budget line?

In a preference map,consumption combinations on higher indifference curves

The marginal rate of substitution is equal to the magnitude of the

The figure above shows the markets for water and diamonds. -Based on the figures above,it is the case that the consumer surplus from water the consumer surplus from diamonds and the marginal utility from water the marginal utility from diamonds.

Suppose you have one point on a demand curve.To plot another point for this demand curve using a group of indifference curves,

In order to maximize his or her utility,a consumer must allocate his or her entire budget and

A budget line

The solution to the paradox of value is found by looking at which of the following?

If the price of steak rises,a consumer who had been maximizing his or her utility before will buy less steak because its

You are studying with a friend and your friend says "A budget line shows the various combinations of two goods that can be purchased with the buyer's income at current prices." Is your friend's assessment correct or not?

If a consumer has allocated his or her budget and found the combination of goods where all marginal utilities divided by price are equal,what would happen if the consumer were forced to consume some other combination of goods? The consumer

-The above table shows Homer's utility from boxes of doughnuts.The marginal utility that Homer receives from the third box of doughnuts is equal to

"Because the price of a diamond is much greater than the price of a gallon of water,the consumer surplus from diamonds is greater than the consumer surplus from water." Is the previous analysis correct? Explain your answer.

Which of the following is the best statement of the paradox of value?

An indifference curve shows

If a consumer's marginal rate of substitution is greater than the relative price of the goods,the consumer is

When Bo is at his best affordable consumption point,his marginal rate of substitution 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

Related to the paradox of value,which of the following statements is correct?

If your budget increases,what is the effect on your budget line?

In a preference map,consumption combinations on higher indifference curves

The marginal rate of substitution is equal to the magnitude of the

The figure above shows the markets for water and diamonds. -Based on the figures above,it is the case that the consumer surplus from water ________ the consumer surplus from diamonds and the marginal utility from water ________ the marginal utility from diamonds.

Suppose you have one point on a demand curve.To plot another point for this demand curve using a group of indifference curves,

In order to maximize his or her utility,a consumer must allocate his or her entire budget and

A budget line

The solution to the paradox of value is found by looking at which of the following?

If the price of steak rises,a consumer who had been maximizing his or her utility before will buy less steak because its

You are studying with a friend and your friend says "A budget line shows the various combinations of two goods that can be purchased with the buyer's income at current prices." Is your friend's assessment correct or not?

If a consumer has allocated his or her budget and found the combination of goods where all marginal utilities divided by price are equal,what would happen if the consumer were forced to consume some other combination of goods? The consumer

-The above table shows Homer's utility from boxes of doughnuts.The marginal utility that Homer receives from the third box of doughnuts is equal to

"Because the price of a diamond is much greater than the price of a gallon of water,the consumer surplus from diamonds is greater than the consumer surplus from water." Is the previous analysis correct? Explain your answer.

Which of the following is the best statement of the paradox of value?

An indifference curve shows

If a consumer's marginal rate of substitution is greater than the relative price of the goods,the consumer is

When Bo is at his best affordable consumption point,his marginal rate of substitution 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

The figure above shows the markets for water and diamonds. -Based on the figures above,it is the case that the consumer surplus from water the consumer surplus from diamonds and the marginal utility from water the marginal utility from diamonds.