Question 1

Explain how a rational consumer decides which goods to buy.

Accepted Answer

Rational consumers are aware of their bu

Question 2

Consumer surplus is represented graphically under the demand curve and below the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 3

Explain how a successful advertising campaign will affect the demand curve for the product being advertised.

Accepted Answer

A successful advertising campaign will s

Question 4

Which of the following is used to depict all combinations of goods that are affordable with a given income and given prices?

Accepted Answer

A) An indifference curve. 
B) An indifference map. 
C) A demand curve. 
D) A budget constraint. 
A) An indifference curve. 
B) An indifference map. 
C) A demand curve. 
D) A budget constraint.

Question 5

Which of these examples is an example of price discrimination?

Accepted Answer

A) Goods are marked down on sale. 
B) Wholesale prices differ from retail prices. 
C) Seniors pay one price at the movie theater and adults pay more. 
D) Cereal manufacturers put discount coupons inside their cereal boxes. 
A) Goods are marked down on sale. 
B) Wholesale prices differ from retail prices. 
C) Seniors pay one price at the movie theater and adults pay more. 
D) Cereal manufacturers put discount coupons inside their cereal boxes.

Question 6

An indifference curve shows the combinations of two goods that yield the same level of utility.

Accepted Answer

A) True 
 B)False

Question 7

Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question.Assume that the price of both goods X and Y are $1 each.Point D on the graph.

Accepted Answer

A) Is not affordable. 
B) Is affordable but does not yield the highest utility possible. 
C) Is affordable and is the optimal consumption bundle for this individual. 
D) Lies on an indifference curve that is not obtainable. 
A) Is not affordable. 
B) Is affordable but does not yield the highest utility possible. 
C) Is affordable and is the optimal consumption bundle for this individual. 
D) Lies on an indifference curve that is not obtainable.

Question 8

Consumers who actually purchase a good either were willing to pay that price or more.

Accepted Answer

A) True 
 B)False

Question 9

The slope of the budget constraint,when a consumer has reached optimal consumption of two goods,is equal to the

Accepted Answer

A) Marginal rate of substitution. 
B) Cross-price elasticity of the two goods. 
C) Total utility for the two goods. 
D) Marginal rate of indifference. 
A) Marginal rate of substitution. 
B) Cross-price elasticity of the two goods. 
C) Total utility for the two goods. 
D) Marginal rate of indifference.

Question 10

Refer to Figure 19.2.Total utility is maximized at

Accepted Answer

A) 6 apples. 
B) 7 apples. 
C) 1 apple. 
D) 3 apples. 
A) 6 apples. 
B) 7 apples. 
C) 1 apple. 
D) 3 apples.

Question 11

Sociopsychiatric explanations of consumer behavior include the

Accepted Answer

A) Desire for ego and status. 
B) Level of income. 
C) Level of wealth. 
D) Prices of other goods. 
A) Desire for ego and status. 
B) Level of income. 
C) Level of wealth. 
D) Prices of other goods.

Question 12

Economists focus on the effect of changes in income and prices in influencing actual consumer purchases.

Accepted Answer

A) True 
 B)False

Question 13

The ________ of the demand curve corresponds to the idea that the marginal utility for the first few goods is ________.

Accepted Answer

A) top;lower 
B) bottom;lower 
C) top;higher 
D) bottom;higher 
A) top;lower 
B) bottom;lower 
C) top;higher 
D) bottom;higher

Question 14

Colleges do not engage in price discrimination because it is illegal.

Accepted Answer

A) True 
 B)False

Question 15

As compared to sociologists and psychologists,economists accept consumer tastes as given and instead focus on

Accepted Answer

A) How price will affect actual consumer purchases. 
B) How culture affects consumer preferences. 
C) How advertising molds consumer desires. 
D) What consumers desire. 
A) How price will affect actual consumer purchases. 
B) How culture affects consumer preferences. 
C) How advertising molds consumer desires. 
D) What consumers desire.

Question 16

Utility maximization is always achieved where total revenue is maximized.

Accepted Answer

A) True 
 B)False

Question 17

An individual's consumer surplus is the difference between the maximum price that she or he is willing to pay and the actual price.

Accepted Answer

A) True 
 B)False

Question 18

The additional pleasure or satisfaction from a good declines as more of it is consumed in a given period.This is the definition of the

Accepted Answer

A) Law of demand. 
B) Law of diminishing marginal utility. 
C) Law of diminishing total utility. 
D) Total revenue rule. 
A) Law of demand. 
B) Law of diminishing marginal utility. 
C) Law of diminishing total utility. 
D) Total revenue rule.

Question 19

Optimal consumption is the mix of consumer goods sold that maximizes utility for producers.

Accepted Answer

A) True 
 B)False

Question 20

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.Suppose Michael has $28 to spend on cola and pretzels.What combination should he purchase in order to maximize his utility?

Accepted Answer

A) Three colas and four pretzels. 
B) One cola and five pretzels. 
C) Three colas and one pretzel. 
D) Two colas and three pretzels. 
A) Three colas and four pretzels. 
B) One cola and five pretzels. 
C) Three colas and one pretzel. 
D) Two colas and three pretzels.

Exam 19: Consumer Choice

Explain how a rational consumer decides which goods to buy.

Consumer surplus is represented graphically under the demand curve and below the equilibrium price.

Explain how a successful advertising campaign will affect the demand curve for the product being advertised.

Which of the following is used to depict all combinations of goods that are affordable with a given income and given prices?

Which of these examples is an example of price discrimination?

An indifference curve shows the combinations of two goods that yield the same level of utility.

Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question.Assume that the price of both goods X and Y are $1 each.Point D on the graph.

Consumers who actually purchase a good either were willing to pay that price or more.

The slope of the budget constraint,when a consumer has reached optimal consumption of two goods,is equal to the

Refer to Figure 19.2.Total utility is maximized at

Sociopsychiatric explanations of consumer behavior include the

Economists focus on the effect of changes in income and prices in influencing actual consumer purchases.

The ________ of the demand curve corresponds to the idea that the marginal utility for the first few goods is ________.

Colleges do not engage in price discrimination because it is illegal.

As compared to sociologists and psychologists,economists accept consumer tastes as given and instead focus on

Utility maximization is always achieved where total revenue is maximized.

An individual's consumer surplus is the difference between the maximum price that she or he is willing to pay and the actual price.

The additional pleasure or satisfaction from a good declines as more of it is consumed in a given period.This is the definition of the

Optimal consumption is the mix of consumer goods sold that maximizes utility for producers.

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty

Filters

The of the demand curve corresponds to the idea that the marginal utility for the first few goods is .