Question 1

Graphically,as a consumer buys more of a good,the marginal utility line will

Accepted Answer

A) Increase as more goods are consumed. 
B) Increase steadily and then decline. 
C) Continuously decline if diminishing returns are present. 
D) Follow the same shape as the total utility line. 
A) Increase as more goods are consumed. 
B) Increase steadily and then decline. 
C) Continuously decline if diminishing returns are present. 
D) Follow the same shape as the total utility line.

Question 2

Consumer theory predicts that a consumer will purchase the product with the highest marginal utility per dollar.

Accepted Answer

A) True 
 B)False

Question 3

If marginal utility is negative,then

Accepted Answer

A) Total utility will increase with additional consumption. 
B) Total utility will decrease with additional consumption. 
C) The good or service being consumed is an inferior good. 
D) Total utility is at a minimum. 
A) Total utility will increase with additional consumption. 
B) Total utility will decrease with additional consumption. 
C) The good or service being consumed is an inferior good. 
D) Total utility is at a minimum.

Question 4

Marginal utility is the

Accepted Answer

A) Change in total utility obtained by spending one extra dollar on a good or service. 
B) Change in total utility obtained by consuming one extra unit of a good or service. 
C) Change in total utility obtained by selling one extra unit of a good or service. 
D) Utility received from consuming the optimal combination of goods and services. 
A) Change in total utility obtained by spending one extra dollar on a good or service. 
B) Change in total utility obtained by consuming one extra unit of a good or service. 
C) Change in total utility obtained by selling one extra unit of a good or service. 
D) Utility received from consuming the optimal combination of goods and services.

Question 5

Two indifference curves can cross one another.

Accepted Answer

A) True 
 B)False

Question 6

Utility refers to the

Accepted Answer

A) Satisfaction obtained from a good or service. 
B) Additional satisfaction obtained from one more unit of a good or service. 
C) Willingness to buy specific quantities of a good or service at a particular price. 
D) Decrease in satisfaction as more of a good or service is consumed. 
A) Satisfaction obtained from a good or service. 
B) Additional satisfaction obtained from one more unit of a good or service. 
C) Willingness to buy specific quantities of a good or service at a particular price. 
D) Decrease in satisfaction as more of a good or service is consumed.

Question 7

Which of the following is not a determinant of demand?

Accepted Answer

A) Desire for the good. 
B) Income of the consumer. 
C) The cost of the factor inputs. 
D) The price of other goods. 
A) Desire for the good. 
B) Income of the consumer. 
C) The cost of the factor inputs. 
D) The price of other goods.

Question 8

Refer to Figure 19.2.The total utility of five apples is

Accepted Answer

A) 1 utils. 
B) 17 utils. 
C) 18 utils. 
D) 20 utils. 
A) 1 utils. 
B) 17 utils. 
C) 18 utils. 
D) 20 utils.

Question 9

Explain the benefits consumers enjoy from competitive markets.

Accepted Answer

Many consumers in the market are willing

Question 10

The point where the budget constraint and an indifference curve are tangent

Accepted Answer

A) Represents maximum total revenue. 
B) Indicates the optimal level of production. 
C) Represents the optimal consumption point. 
D) Indicates profit maximization. 
A) Represents maximum total revenue. 
B) Indicates the optimal level of production. 
C) Represents the optimal consumption point. 
D) Indicates profit maximization.

Question 11

Price discrimination occurs when

Accepted Answer

A) Minorities pay a higher price for a product than everyone else. 
B) Sellers charge a higher price than is reasonable. 
C) Sellers charge two separate prices for the same product to separate consumers. 
D) Sellers charge one price to all consumers but not wholesalers. 
A) Minorities pay a higher price for a product than everyone else. 
B) Sellers charge a higher price than is reasonable. 
C) Sellers charge two separate prices for the same product to separate consumers. 
D) Sellers charge one price to all consumers but not wholesalers.

Question 12

Table 19.2 $\begin{array}{c}
\begin{array}{|c|}
\hline\text { Quantity Consumed }\
\hline1 \
\hline 2 \
\hline 3 \
\hline 4\
\hline
\end{array}
\begin{array}{c|}
\hline\text { Total Utility}\
\hline15\
\hline\
\hline30\
\hline\
\hline
\end{array}
\begin{array}{c|}
\hline\text { Marginal Utility}\
\hline15\
\hline9\
\hline\
\hline3\
\hline
\end{array}

\end{array}$

In Table 19.2,diminishing marginal utility occurs

Accepted Answer

A) With the second and fourth units only. 
B) With the first and third units only. 
C) Only with the second unit. 
D) With all units after the first. 
A) With the second and fourth units only. 
B) With the first and third units only. 
C) Only with the second unit. 
D) With all units after the first.

Question 13

Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. Table 19.3
Michael's Utility Schedule
$\begin{array} { | c | r | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Units of } \
\text { Cola }
\end{array} & \text { TU of Cola } & \begin{array} { c } 
\text { MU of } \
\text { Cola }
\end{array} & \begin{array} { c } 
\text { Units of } \
\text { Pretzels }
\end{array} & \begin{array} { c } 
\text { TU of } \
\text { Pretzels }
\end{array} & \begin{array} { c } 
\text { MU of } \
\text { Pretzels }
\end{array} \
\hline 1 & 46 & 40 & 1 & 30 & 30 \
\hline 2 & & 32 & 2 & & 20 \
\hline 3 & 96 & 24 & 3 & 66 & 16 \
\hline 4 & 112 & & 4 & 78 & \
\hline 5 & 124 & & 5 & 84 & \
\hline
\end{array}$ Refer to Table 19.3.If Michael has $28 dollars to spend,why will three colas and four pretzels not be optimal?

Accepted Answer

A) This combination has less total utility. 
B) This combination is affordable but does not maximize utility. 
C) This combination is not affordable. 
D) This combination has less marginal utility per dollar. 
A) This combination has less total utility. 
B) This combination is affordable but does not maximize utility. 
C) This combination is not affordable. 
D) This combination has less marginal utility per dollar.

Question 14

Which of the following is not held constant when considering the demand for pizza?

Accepted Answer

A) Consumer incomes. 
B) The price of pizza. 
C) The price of spaghetti (a substitute). 
D) Expectations of higher prices for pizzas. 
A) Consumer incomes. 
B) The price of pizza. 
C) The price of spaghetti (a substitute). 
D) Expectations of higher prices for pizzas.

Question 15

Advertisers currently spend about $100 million per year to change the demand for products.

Accepted Answer

A) True 
 B)False

Question 16

A consumer can purchase a product that is outside her or his budget constraint if it is on a higher indifference curve.

Accepted Answer

A) True 
 B)False

Question 17

Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question.Assume the price of Y is $1 per unit.In Figure 19.3,point E

Accepted Answer

A) Is optimal and affordable. 
B) Gives the consumer a very high level of utility and is affordable. 
C) Is a high level of utility but not affordable. 
D) Represents a very low level of utility and is not desirable. 
A) Is optimal and affordable. 
B) Gives the consumer a very high level of utility and is affordable. 
C) Is a high level of utility but not affordable. 
D) Represents a very low level of utility and is not desirable.

Question 18

If a good had a zero price (i.e. ,the good was free),a rational person would consume

Accepted Answer

A) An infinite amount of the good. 
B) The good until total utility was zero. 
C) The good until the marginal utility was maximized. 
D) The good until the marginal utility of the last unit was zero. 
A) An infinite amount of the good. 
B) The good until total utility was zero. 
C) The good until the marginal utility was maximized. 
D) The good until the marginal utility of the last unit was zero.

Question 19

An indifference map shows

Accepted Answer

A) A set of indifference curves. 
B) One indifference curve. 
C) A set of indifference curves and a set of budget constraints. 
D) A set of budget constraints and one indifference curve. 
A) A set of indifference curves. 
B) One indifference curve. 
C) A set of indifference curves and a set of budget constraints. 
D) A set of budget constraints and one indifference curve.

Question 20

Price discrimination occurs when stores mark down products for sale.

Accepted Answer

A) True 
 B)False

Exam 19: Consumer Choice

Graphically,as a consumer buys more of a good,the marginal utility line will

Consumer theory predicts that a consumer will purchase the product with the highest marginal utility per dollar.

If marginal utility is negative,then

Marginal utility is the

Two indifference curves can cross one another.

Utility refers to the

Which of the following is not a determinant of demand?

Refer to Figure 19.2.The total utility of five apples is

Explain the benefits consumers enjoy from competitive markets.

The point where the budget constraint and an indifference curve are tangent

Price discrimination occurs when

Table 19.2 Quantity Consumed 1 2 3 4 Total Utility 15 30 Marginal Utility 15 9 3 In Table 19.2,diminishing marginal utility occurs

Which of the following is not held constant when considering the demand for pizza?

Advertisers currently spend about $100 million per year to change the demand for products.

A consumer can purchase a product that is outside her or his budget constraint if it is on a higher indifference curve.

Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question.Assume the price of Y is $1 per unit.In Figure 19.3,point E

If a good had a zero price (i.e. ,the good was free),a rational person would consume

An indifference map shows

Price discrimination occurs when stores mark down products for sale.

Economics: the Core Issues

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