Question 1

If Sean thinks that the choice between going to Olive Garden or Red Lobster is simply too confusing,a behavioural economist will explain that Sean is showing

Accepted Answer

A) the endowment effect. 
B) bounded rationality. 
C) bounded self-interest. 
D) bounded willpower. 
E) irrational behaviour. 
A) the endowment effect. 
B) bounded rationality. 
C) bounded self-interest. 
D) bounded willpower. 
E) irrational behaviour.

Question 2

Lucky buys hats for $20,but Lucky will not sell one of her hats for less than $35.Lucky is

Accepted Answer

A) displaying the endowment effect. 
B) making decisions using her prefrontal cortex. 
C) exhibiting bounded self-interest. 
D) showing unbounded willpower. 
E) a behavioural economist. 
A) displaying the endowment effect. 
B) making decisions using her prefrontal cortex. 
C) exhibiting bounded self-interest. 
D) showing unbounded willpower. 
E) a behavioural economist.

Question 3

According to a behavioural economist,a person who is unwilling to sell the last kilogram of rice he purchased for the same price that he paid for it is displaying

Accepted Answer

A) the endowment effect. 
B) bounded rationality. 
C) bounded self-interest. 
D) bounded willpower. 
E) rational behaviour. 
A) the endowment effect. 
B) bounded rationality. 
C) bounded self-interest. 
D) bounded willpower. 
E) rational behaviour.

Question 4

The first can of Coke gives 15 units of utility to Witney,while the second can of Coke increases her total utility to 23.What is the marginal utility of the second can of Coke?

Accepted Answer

A) 24 units 
B) 8 units 
C) 38 units 
D) 11.5 units 
E) 7.5 units 
A) 24 units 
B) 8 units 
C) 38 units 
D) 11.5 units 
E) 7.5 units

Question 5

Use the table below to answer the following questions.
Table 8.2.3  
-Refer to Table 8.2.3.If income is $13,then utility is maximized when consumption is

Accepted Answer

A) 6 units of X and 1 unit of Y. 
B) 5 units of X and 3 units of Y. 
C) 4 units of X and 5 units of Y. 
D) 3 units of X and 7 units of Y. 
E) 2 units of X and 9 units of Y. 
A) 6 units of X and 1 unit of Y. 
B) 5 units of X and 3 units of Y. 
C) 4 units of X and 5 units of Y. 
D) 3 units of X and 7 units of Y. 
E) 2 units of X and 9 units of Y.

Question 6

Use the table below to answer the following questions.
Table 8.1.1  
-Refer to Table 8.1.1.The value of C is

Accepted Answer

A) 0. 
B) 13. 
C) 17. 
D) 50. 
E) 3. 
A) 0. 
B) 13. 
C) 17. 
D) 50. 
E) 3.

Question 7

Lucy buys only magazines and CDs.Both are normal goods.Lucy's income decreases,but the prices of magazines and CDs do not change.Marginal utility theory predicts that

Accepted Answer

A) Lucy buys more magazines and more CDs. 
B) Lucy buys fewer magazines and fewer CDs. 
C) Lucy's demand curve for magazines shifts leftward. 
D) Lucy's demand curve for CDs shifts leftward. 
E) B,C,and D are correct. 
A) Lucy buys more magazines and more CDs. 
B) Lucy buys fewer magazines and fewer CDs. 
C) Lucy's demand curve for magazines shifts leftward. 
D) Lucy's demand curve for CDs shifts leftward. 
E) B,C,and D are correct.

Question 8

Use the table below to answer the following questions.
Windsurfing equipment rents for $10 per hour and snorkeling equipment rents for $5 per hour.
Table 8.3.1  
-Devon enjoys windsurfing and snorkeling.His total utility from each activity is summarized in Table 8.3.1.Devon has $35 to spend.How long will Devon choose to windsurf and to snorkel?

Accepted Answer

A) 1 hour windsurfing and 5 hours snorkeling 
B) 2 hours windsurfing and 3 hours snorkeling 
C) 3 hours windsurfing and 1 hour snorkeling 
D) 4 hours windsurfing and no hours snorkeling 
E) 2 hour windsurfing and 4 hours snorkeling 
A) 1 hour windsurfing and 5 hours snorkeling 
B) 2 hours windsurfing and 3 hours snorkeling 
C) 3 hours windsurfing and 1 hour snorkeling 
D) 4 hours windsurfing and no hours snorkeling 
E) 2 hour windsurfing and 4 hours snorkeling

Question 9

Use the table below to answer the following questions.
Table 8.2.1  
-Refer to Table 8.2.1.Consider Sam's utility from sailing and skiing.The price of sailing is $10 per hour and the price of skiing is $20 per hour;Sam's income to spend on these activities is $80.In consumer equilibrium,Sam will sail for

Accepted Answer

A) 3 hours and ski for 2 hours. 
B) 2 hours and ski for 4 hours. 
C) 4 hours. 
D) 4 hours and ski for 2 hours. 
E) 8 hours. 
A) 3 hours and ski for 2 hours. 
B) 2 hours and ski for 4 hours. 
C) 4 hours. 
D) 4 hours and ski for 2 hours. 
E) 8 hours.

Question 10

Suppose you are consuming hot dogs and Cokes and believe you are receiving maximum total utility from the meal for your entire budget of $12.The price of a hot dog is $2 and the price of a Coke is $2.Which one of the following can you conclude?

Accepted Answer

A) The total utility from hot dogs is maximized. 
B) The marginal utilities from hot dogs and Cokes divided by the quantity of each good must be equal. 
C) The total utilities from hot dogs and Cokes must be equal. 
D) You are purchasing three hot dogs and three Cokes. 
E) The marginal utilities from hot dogs and Cokes must be equal. 
A) The total utility from hot dogs is maximized. 
B) The marginal utilities from hot dogs and Cokes divided by the quantity of each good must be equal. 
C) The total utilities from hot dogs and Cokes must be equal. 
D) You are purchasing three hot dogs and three Cokes. 
E) The marginal utilities from hot dogs and Cokes must be equal.

Question 11

Harold can consume apples and oranges.He likes them equally well and currently is in consumer equilibrium.Then the price of oranges rises,while his income remains the same.What will happen to his consumption?

Accepted Answer

A) Consumption of oranges increases;consumption of apples decreases. 
B) Consumption of oranges increases;consumption of apples increases. 
C) Consumption of oranges decreases;consumption of apples decreases. 
D) Consumption of oranges decreases;consumption of apples increases. 
E) Consumption of oranges decreases;consumption of apples could either increase or decrease. 
A) Consumption of oranges increases;consumption of apples decreases. 
B) Consumption of oranges increases;consumption of apples increases. 
C) Consumption of oranges decreases;consumption of apples decreases. 
D) Consumption of oranges decreases;consumption of apples increases. 
E) Consumption of oranges decreases;consumption of apples could either increase or decrease.

Question 12

Childcare workers often get paid fairly low wages,yet it is said that they have "the most important job in the world." This paradox can be resolved by

Accepted Answer

A) distinguishing between price and value. 
B) distinguishing between marginal utility and total utility. 
C) noting that childcare yields no utility since it is a service. 
D) noting that marginal utility does not diminish for childcare. 
E) noting that marginal utility is constant for childcare. 
A) distinguishing between price and value. 
B) distinguishing between marginal utility and total utility. 
C) noting that childcare yields no utility since it is a service. 
D) noting that marginal utility does not diminish for childcare. 
E) noting that marginal utility is constant for childcare.

Question 13

Behavioural economics and neuroeconomics seek to achieve

Accepted Answer

A) the reason why we do not always make rational economic decisions. 
B) a method of using willpower and self-interest to gain utility maximization. 
C) a theory in which consumers are always utility-maximizers. 
D) a new method for the human brain to work out rational choice. 
E) the rational concepts that support the law of demand and the law of supply. 
A) the reason why we do not always make rational economic decisions. 
B) a method of using willpower and self-interest to gain utility maximization. 
C) a theory in which consumers are always utility-maximizers. 
D) a new method for the human brain to work out rational choice. 
E) the rational concepts that support the law of demand and the law of supply.

Question 14

Ron starts out in consumer equilibrium,consuming two goods,X and Y.The price of Y rises.Immediately after the rise in price

Accepted Answer

A) MUX/PX > MUY/PY,and then Ron increases his consumption of Y. 
B) MUX/PX > MUY/PY,and then Ron decreases his consumption of Y. 
C) MUX/PX Y/PY,and then Ron increases his consumption of Y. 
D) MUX/PX Y/PY,and then Ron decreases his consumption of Y. 
E) MUX/PX > MUY/PY,and then Ron increases his consumption of X and Y. 
A) MUX/PX > MUY/PY,and then Ron increases his consumption of Y. 
B) MUX/PX > MUY/PY,and then Ron decreases his consumption of Y. 
C) MUX/PX Y/PY,and then Ron increases his consumption of Y. 
D) MUX/PX Y/PY,and then Ron decreases his consumption of Y. 
E) MUX/PX > MUY/PY,and then Ron increases his consumption of X and Y.

Question 15

Consider Devon's total utility from snorkeling and windsurfing in Table 8.3.1.Suppose Devon's total income is $35.If the price of windsurfing rises to $20 per hour,what is Devon's cross elasticity of demand of snorkeling with respect to the price of windsurfing?

Accepted Answer

A) 1.0 
B) 0.67 
C) 1.5 
D) 10 
E) 1.33 
A) 1.0 
B) 0.67 
C) 1.5 
D) 10 
E) 1.33

Question 16

Use the table below to answer the following questions.
Table 8.2.2  
-Refer to Table 8.2.2.Henry is maximizing his utility by consuming 3 bags of popcorn and 3 bottles of pop.What is the ratio of the price of popcorn to the price of pop?

Accepted Answer

A) 1/2 
B) 1 
C) 3/4 
D) 4/3 
E) 6/5 
A) 1/2 
B) 1 
C) 3/4 
D) 4/3 
E) 6/5

Question 17

Use the table below to answer the following question.
Table 8.1.2  
-Table 8.1.2 gives total utilities for Jim and Sally.Which one of the following statements is true?

Accepted Answer

A) Jim has increasing marginal utility. 
B) For Sally,the marginal utility of the third unit consumed is 6. 
C) If Jim consumes 2 units,his total utility is 34 units. 
D) Jim and Sally receive the same marginal utility from the third unit consumed. 
E) If Sally consumes 2 units,her total utility is 10 units. 
A) Jim has increasing marginal utility. 
B) For Sally,the marginal utility of the third unit consumed is 6. 
C) If Jim consumes 2 units,his total utility is 34 units. 
D) Jim and Sally receive the same marginal utility from the third unit consumed. 
E) If Sally consumes 2 units,her total utility is 10 units.

Question 18

Which of the following statements is true?

Accepted Answer

A) Marginal utility theory predicts that an increase in a consumer's income increases consumption of all goods. 
B) It is possible to derive the law of demand - that a higher price decreases the quantity demanded - using marginal utility theory. 
C) Marginal utility theory makes no prediction about a consumer's responses to hikes in the prices of the goods and services he or she consumes. 
D) Marginal utility theory predicts that all goods are normal goods and that all goods are substitutes for each other. 
E) It is possible to derive the law of demand - that a higher price decreases demand - using marginal utility theory. 
A) Marginal utility theory predicts that an increase in a consumer's income increases consumption of all goods. 
B) It is possible to derive the law of demand - that a higher price decreases the quantity demanded - using marginal utility theory. 
C) Marginal utility theory makes no prediction about a consumer's responses to hikes in the prices of the goods and services he or she consumes. 
D) Marginal utility theory predicts that all goods are normal goods and that all goods are substitutes for each other. 
E) It is possible to derive the law of demand - that a higher price decreases demand - using marginal utility theory.

Question 19

A consumer maximizes his utility by purchasing 2 units of good X at $5 per unit and 3 units of good Y at $7 per unit.What is the ratio of the marginal utility from X to the marginal utility from Y?

Accepted Answer

A) 5/7 
B) 7/5 
C) 2/3 
D) 3/2 
E) 10/21 
A) 5/7 
B) 7/5 
C) 2/3 
D) 3/2 
E) 10/21

Question 20

What is marginal utility?

Accepted Answer

A) the change in total utility divided by the price of a good 
B) the maximum amount of satisfaction from consuming a good 
C) the total satisfaction received from consuming as much of the good that is available for consumption 
D) the additional satisfaction received from consuming one more unit of a good 
E) the change in the price of a good divided by the change in total utility 
A) the change in total utility divided by the price of a good 
B) the maximum amount of satisfaction from consuming a good 
C) the total satisfaction received from consuming as much of the good that is available for consumption 
D) the additional satisfaction received from consuming one more unit of a good 
E) the change in the price of a good divided by the change in total utility

If Sean thinks that the choice between going to Olive Garden or Red Lobster is simply too confusing,a behavioural economist will explain that Sean is showing

Lucky buys hats for $20,but Lucky will not sell one of her hats for less than $35.Lucky is

According to a behavioural economist,a person who is unwilling to sell the last kilogram of rice he purchased for the same price that he paid for it is displaying

The first can of Coke gives 15 units of utility to Witney,while the second can of Coke increases her total utility to 23.What is the marginal utility of the second can of Coke?

Use the table below to answer the following questions. Table 8.2.3 -Refer to Table 8.2.3.If income is $13,then utility is maximized when consumption is

Use the table below to answer the following questions. Table 8.1.1 -Refer to Table 8.1.1.The value of C is

Lucy buys only magazines and CDs.Both are normal goods.Lucy's income decreases,but the prices of magazines and CDs do not change.Marginal utility theory predicts that

Suppose you are consuming hot dogs and Cokes and believe you are receiving maximum total utility from the meal for your entire budget of $12.The price of a hot dog is $2 and the price of a Coke is $2.Which one of the following can you conclude?

Harold can consume apples and oranges.He likes them equally well and currently is in consumer equilibrium.Then the price of oranges rises,while his income remains the same.What will happen to his consumption?

Childcare workers often get paid fairly low wages,yet it is said that they have "the most important job in the world." This paradox can be resolved by

Behavioural economics and neuroeconomics seek to achieve

Ron starts out in consumer equilibrium,consuming two goods,X and Y.The price of Y rises.Immediately after the rise in price

Consider Devon's total utility from snorkeling and windsurfing in Table 8.3.1.Suppose Devon's total income is $35.If the price of windsurfing rises to $20 per hour,what is Devon's cross elasticity of demand of snorkeling with respect to the price of windsurfing?

Use the table below to answer the following questions. Table 8.2.2 -Refer to Table 8.2.2.Henry is maximizing his utility by consuming 3 bags of popcorn and 3 bottles of pop.What is the ratio of the price of popcorn to the price of pop?

Use the table below to answer the following question. Table 8.1.2 -Table 8.1.2 gives total utilities for Jim and Sally.Which one of the following statements is true?

Which of the following statements is true?

A consumer maximizes his utility by purchasing 2 units of good X at $5 per unit and 3 units of good Y at $7 per unit.What is the ratio of the marginal utility from X to the marginal utility from Y?

What is marginal utility?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Exam 8: Utility and Demand

If Sean thinks that the choice between going to Olive Garden or Red Lobster is simply too confusing,a behavioural economist will explain that Sean is showing

Lucky buys hats for $20,but Lucky will not sell one of her hats for less than $35.Lucky is

According to a behavioural economist,a person who is unwilling to sell the last kilogram of rice he purchased for the same price that he paid for it is displaying

The first can of Coke gives 15 units of utility to Witney,while the second can of Coke increases her total utility to 23.What is the marginal utility of the second can of Coke?

Use the table below to answer the following questions. Table 8.2.3 -Refer to Table 8.2.3.If income is $13,then utility is maximized when consumption is

Use the table below to answer the following questions. Table 8.1.1 -Refer to Table 8.1.1.The value of C is

Lucy buys only magazines and CDs.Both are normal goods.Lucy's income decreases,but the prices of magazines and CDs do not change.Marginal utility theory predicts that

Suppose you are consuming hot dogs and Cokes and believe you are receiving maximum total utility from the meal for your entire budget of $12.The price of a hot dog is $2 and the price of a Coke is $2.Which one of the following can you conclude?

Harold can consume apples and oranges.He likes them equally well and currently is in consumer equilibrium.Then the price of oranges rises,while his income remains the same.What will happen to his consumption?

Childcare workers often get paid fairly low wages,yet it is said that they have "the most important job in the world." This paradox can be resolved by

Behavioural economics and neuroeconomics seek to achieve

Ron starts out in consumer equilibrium,consuming two goods,X and Y.The price of Y rises.Immediately after the rise in price

Consider Devon's total utility from snorkeling and windsurfing in Table 8.3.1.Suppose Devon's total income is $35.If the price of windsurfing rises to $20 per hour,what is Devon's cross elasticity of demand of snorkeling with respect to the price of windsurfing?

Use the table below to answer the following questions. Table 8.2.2 -Refer to Table 8.2.2.Henry is maximizing his utility by consuming 3 bags of popcorn and 3 bottles of pop.What is the ratio of the price of popcorn to the price of pop?

Use the table below to answer the following question. Table 8.1.2 -Table 8.1.2 gives total utilities for Jim and Sally.Which one of the following statements is true?

Which of the following statements is true?

A consumer maximizes his utility by purchasing 2 units of good X at $5 per unit and 3 units of good Y at $7 per unit.What is the ratio of the marginal utility from X to the marginal utility from Y?

What is marginal utility?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters