Question 1

In which of the following settings is an interpersonal utility comparison being made?

Accepted Answer

A)  Brandon says to Jack, "I get a lot more satisfaction out of eating pizza than you do." 
B)  Stephanie says, "I don't know what Taylor is feeling or thinking; I can't read a person's heart or mind." 
C)  David says to Maria, "I know you like this course a lot more than I do." 
D)  a and c 
E)  a, b, and c 
A)  Brandon says to Jack, "I get a lot more satisfaction out of eating pizza than you do." 
B)  Stephanie says, "I don't know what Taylor is feeling or thinking; I can't read a person's heart or mind." 
C)  David says to Maria, "I know you like this course a lot more than I do." 
D)  a and c 
E)  a, b, and c

Question 2

Suppose you are eating slices of pizza and after consuming the first slice you receive 14 utils of total utility,after the second you receive 22 utils of total utility,and after the third 25 utils of total utility.Then

Accepted Answer

A)  the law of diminishing marginal utility is not applicable because your total utility is increasing instead of diminishing. 
B)  your total utility is 61 utils. 
C)  your total utility is 25 utils, and the marginal utility of the first slice is 8 utils (22 - 14). 
D)  your total utility is 25 utils, and the marginal utility of the third slice is 3 utils. 
A)  the law of diminishing marginal utility is not applicable because your total utility is increasing instead of diminishing. 
B)  your total utility is 61 utils. 
C)  your total utility is 25 utils, and the marginal utility of the first slice is 8 utils (22 - 14). 
D)  your total utility is 25 utils, and the marginal utility of the third slice is 3 utils.

Question 3

Suppose that there are two cities that are alike in every way except that one city has significantly better weather than the other city. Call the city with good weather Good-Weather City (GWC)and the other Bad-Weather City (BWC). Assume that the median price of a home in the two cities is originally the same. If the marginal utility of living in GWC is 500 and the marginal utility of living in BWC is 300,to make themselves better off economic theory tells us that

Accepted Answer

A)  at least some people will move from BWC to GWC, which will make housing prices rise in GWC and BWC. 
B)  at least some people will move from GWC to BWC, which make housing prices rise in BWC and GWC. 
C)  at least some people will move from BWC to GWC, which will make housing prices rise in GWC and fall in BWC. 
D)  at least some people will move from GWC to BWC, which will make housing prices rise in BWC and fall in GWC. 
A)  at least some people will move from BWC to GWC, which will make housing prices rise in GWC and BWC. 
B)  at least some people will move from GWC to BWC, which make housing prices rise in BWC and GWC. 
C)  at least some people will move from BWC to GWC, which will make housing prices rise in GWC and fall in BWC. 
D)  at least some people will move from GWC to BWC, which will make housing prices rise in BWC and fall in GWC.

Question 4

Which of the following statements is false?

Accepted Answer

A)  A millionaire definitely receives less utility from an additional dollar than a poor person. 
B)  A poor person definitely receives less utility from an additional dollar than a rich person. 
C)  A millionaire definitely receives the same utility from an additional dollar as a poor person. 
D)  A millionaire generally receives less utility from an additional dollar than a poor person. 
E)  We do not know if any of the statements are true or false, because we do not know how much utility one person receives relative to another. 
A)  A millionaire definitely receives less utility from an additional dollar than a poor person. 
B)  A poor person definitely receives less utility from an additional dollar than a rich person. 
C)  A millionaire definitely receives the same utility from an additional dollar as a poor person. 
D)  A millionaire generally receives less utility from an additional dollar than a poor person. 
E)  We do not know if any of the statements are true or false, because we do not know how much utility one person receives relative to another.

Question 5

Suppose the marginal utility (MU)of paperback books is 40 utils and each costs $5 while the MU of DVD rentals is 20 utils and each rents for $4.If you consume one movie and one book per week,are you attaining consumer equilibrium?

Accepted Answer

A)  Yes, so there is no need to change. 
B)  No. You need to buy more books and rent fewer DVDs. 
C)  No. You need to rent more DVDs and buy fewer books. 
D)  There is not enough information to answer the question. 
A)  Yes, so there is no need to change. 
B)  No. You need to buy more books and rent fewer DVDs. 
C)  No. You need to rent more DVDs and buy fewer books. 
D)  There is not enough information to answer the question.

Question 6

Total utility is defined as the

Accepted Answer

A)  change in marginal utility a person derives from the consumption of a good. 
B)  change in total utility a person derives from the consumption of a good divided by the price of that good. 
C)  change in total utility a person derives from the consumption of a good divided by the change in the consumption of that good. 
D)  sum of the amounts of satisfaction a person receives from consuming a good. 
E)  change in total utility a person derives from the consumption of a good. 
A)  change in marginal utility a person derives from the consumption of a good. 
B)  change in total utility a person derives from the consumption of a good divided by the price of that good. 
C)  change in total utility a person derives from the consumption of a good divided by the change in the consumption of that good. 
D)  sum of the amounts of satisfaction a person receives from consuming a good. 
E)  change in total utility a person derives from the consumption of a good.

Question 7

Brain researchers think that the best reason the brain might weight the present high and the future low when faced with a present-future tradeoff is that:

Accepted Answer

A)  responding quickly and definitively to present rewards might have come with an evolutionary advantage. 
B)  people are naturally short-run thinkers. 
C)  the future is harder to visualize than the present. 
D)  people naturally think they may die in the future. 
E)  a and c 
A)  responding quickly and definitively to present rewards might have come with an evolutionary advantage. 
B)  people are naturally short-run thinkers. 
C)  the future is harder to visualize than the present. 
D)  people naturally think they may die in the future. 
E)  a and c

Question 8

Suppose you are eating buffalo wings at a local happy hour.The total utils from doing so after the fourth,fifth,sixth,and seventh wings are 30,50,65,72,respectively.In this situation we have __________ marginal utility,which is generally __________ in the analysis of consumer choice.

Accepted Answer

A)  increasing; assumed 
B)  increasing; not assumed 
C)  diminishing; assumed 
D)  diminishing; not assumed 
A)  increasing; assumed 
B)  increasing; not assumed 
C)  diminishing; assumed 
D)  diminishing; not assumed

Question 9

Exhibit 21-4
  
-Refer to Exhibit 21-4. What value goes in blank (C)?

Accepted Answer

A)  25 
B)  5 
C)  14.5 
D)  10 
E)  There is not enough information to answer this question. 
A)  25 
B)  5 
C)  14.5 
D)  10 
E)  There is not enough information to answer this question.

Question 10

A util is an artificial construct used as a means of measuring the

Accepted Answer

A)  price of a good. 
B)  satisfaction one receives from the consumption of a good. 
C)  costs of producing a good. 
D)  difference between the price and the value of a good. 
A)  price of a good. 
B)  satisfaction one receives from the consumption of a good. 
C)  costs of producing a good. 
D)  difference between the price and the value of a good.

Question 11

Suppose that a consumer purchases a combination of X and Y such that MUX/PX = 15 utils per dollar and MUY /PY = 10 utils per dollar.To maximize utility,the consumer should buy

Accepted Answer

A)  less of X and more of Y. 
B)  more of X and less of Y. 
C)  more of both X and Y. 
D)  less of both X and Y. 
E)  neither X nor Y. 
A)  less of X and more of Y. 
B)  more of X and less of Y. 
C)  more of both X and Y. 
D)  less of both X and Y. 
E)  neither X nor Y.

Question 12

As presented in the text,research on neuroeconomics has shown that when individuals are presented with present-future choices the

Accepted Answer

A)  analytic system (which weights the future heavily) seems to win out over the limbic system (which weights the present heavily). 
B)  limbic system (which weights the present heavily) seems to win out over the analytic system (which weights the future heavily). 
C)  limbic system and the analytic system are equally weighted, making the individuals indifferent to the choices presented. 
D)  limbic system (which weights the future heavily) seems to win out over the analytic system (which weights the present heavily). 
A)  analytic system (which weights the future heavily) seems to win out over the limbic system (which weights the present heavily). 
B)  limbic system (which weights the present heavily) seems to win out over the analytic system (which weights the future heavily). 
C)  limbic system and the analytic system are equally weighted, making the individuals indifferent to the choices presented. 
D)  limbic system (which weights the future heavily) seems to win out over the analytic system (which weights the present heavily).

Question 13

Ari is currently consuming 10 hot dogs and 8 hamburgers per week.The last hot dog she consumed yielded 20 utils while the last hamburger she ate gave her 25 utils.If hot dogs cost $2 and hamburgers cost $2.50,is Ari consuming the correct quantities of these two goods to be in consumer equilibrium?

Accepted Answer

A)  No, she should consume more hamburgers and fewer hot dogs. 
B)  No, she should consume more hot dogs and fewer hamburgers. 
C)  Yes, so there is no need to change her eating habits. 
D)  There is not enough information to answer the question. 
A)  No, she should consume more hamburgers and fewer hot dogs. 
B)  No, she should consume more hot dogs and fewer hamburgers. 
C)  Yes, so there is no need to change her eating habits. 
D)  There is not enough information to answer the question.

Question 14

If the MU/P ratio for good X is less than the MU/P ratio for good Y,this means that

Accepted Answer

A)  an individual is receiving more utility per dollar from good Y than good X. 
B)  the price of good X is lower than the price of good Y. 
C)  the price of good Y is lower than the price of good X. 
D)  the MU of good X is lower than the MU of good Y. 
E)  none of the above 
A)  an individual is receiving more utility per dollar from good Y than good X. 
B)  the price of good X is lower than the price of good Y. 
C)  the price of good Y is lower than the price of good X. 
D)  the MU of good X is lower than the MU of good Y. 
E)  none of the above

Question 15

Consumer equilibrium exists when the

Accepted Answer

A)  slope of the indifference curve is greater than the slope of the budget constraint. 
B)  consumer is on his highest indifference curve. 
C)  marginal rate of substitution equals the slope of the budget constraint. 
D)  slope of the indifference curve equals the slope of the budget constraint. 
E)  c and d 
A)  slope of the indifference curve is greater than the slope of the budget constraint. 
B)  consumer is on his highest indifference curve. 
C)  marginal rate of substitution equals the slope of the budget constraint. 
D)  slope of the indifference curve equals the slope of the budget constraint. 
E)  c and d

Question 16

Given that MUX/PX < MUY/PY,consumers who spend all their income on these two goods

Accepted Answer

A)  can never maximize utility. 
B)  have maximized total utility. 
C)  can increase utility by buying more of X and less of Y. 
D)  can increase utility by buying more of Y and less of X. 
E)  a and b 
A)  can never maximize utility. 
B)  have maximized total utility. 
C)  can increase utility by buying more of X and less of Y. 
D)  can increase utility by buying more of Y and less of X. 
E)  a and b

Question 17

Economists David Zizzo and Andrew Oswald found that the majority of their study participants made themselves worse off in order to make someone else worse off.

Accepted Answer

A) True 
 B)False

Question 18

Exhibit 21-1
  
-Refer to Exhibit 21-1.The marginal utility of the second plum is

Accepted Answer

A)  18.5 utils. 
B)  7.5 utils. 
C)  37 utils. 
D)  12 utils. 
A)  18.5 utils. 
B)  7.5 utils. 
C)  37 utils. 
D)  12 utils.

Question 19

Research conducted by Nicholas Epley and his colleagues at Harvard showed that people will spend a _________________ percentage of money given to them if it is ________________ rather than

Accepted Answer

A)  smaller; cash; a rebate check. 
B)  greater; termed a rebate; a bonus. 
C)  greater; termed a bonus; a rebate. 
D)  smaller; a rebate check; cash. 
A)  smaller; cash; a rebate check. 
B)  greater; termed a rebate; a bonus. 
C)  greater; termed a bonus; a rebate. 
D)  smaller; a rebate check; cash.

Question 20

A person is in consumer equilibrium,and then the price rises for one of the goods she purchases.If she wants to restore herself to consumer equilibrium,she will (most likely)

Accepted Answer

A)  buy less of the good whose price has risen and more of the relatively lower priced goods. 
B)  try to increase the marginal utility she receives from the good whose price has risen. 
C)  try to decrease the marginal utility she receives from the goods whose prices did not rise. 
D)  buy more of both the good whose price has risen and of the goods whose prices have not risen. 
E)  There is not enough information to answer the question. 
A)  buy less of the good whose price has risen and more of the relatively lower priced goods. 
B)  try to increase the marginal utility she receives from the good whose price has risen. 
C)  try to decrease the marginal utility she receives from the goods whose prices did not rise. 
D)  buy more of both the good whose price has risen and of the goods whose prices have not risen. 
E)  There is not enough information to answer the question.

Exam 21: Consumer Choice: Maximizing Utility and Behavioral Economics

In which of the following settings is an interpersonal utility comparison being made?

Suppose you are eating slices of pizza and after consuming the first slice you receive 14 utils of total utility,after the second you receive 22 utils of total utility,and after the third 25 utils of total utility.Then

Which of the following statements is false?

Suppose the marginal utility (MU)of paperback books is 40 utils and each costs $5 while the MU of DVD rentals is 20 utils and each rents for $4.If you consume one movie and one book per week,are you attaining consumer equilibrium?

Total utility is defined as the

Brain researchers think that the best reason the brain might weight the present high and the future low when faced with a present-future tradeoff is that:

Suppose you are eating buffalo wings at a local happy hour.The total utils from doing so after the fourth,fifth,sixth,and seventh wings are 30,50,65,72,respectively.In this situation we have __________ marginal utility,which is generally __________ in the analysis of consumer choice.

Exhibit 21-4 -Refer to Exhibit 21-4. What value goes in blank (C)?

A util is an artificial construct used as a means of measuring the

Suppose that a consumer purchases a combination of X and Y such that MUX/PX = 15 utils per dollar and MUY /PY = 10 utils per dollar.To maximize utility,the consumer should buy

As presented in the text,research on neuroeconomics has shown that when individuals are presented with present-future choices the

Ari is currently consuming 10 hot dogs and 8 hamburgers per week.The last hot dog she consumed yielded 20 utils while the last hamburger she ate gave her 25 utils.If hot dogs cost $2 and hamburgers cost $2.50,is Ari consuming the correct quantities of these two goods to be in consumer equilibrium?

If the MU/P ratio for good X is less than the MU/P ratio for good Y,this means that

Consumer equilibrium exists when the

Given that MUX/PX < MUY/PY,consumers who spend all their income on these two goods

Economists David Zizzo and Andrew Oswald found that the majority of their study participants made themselves worse off in order to make someone else worse off.

Exhibit 21-1 -Refer to Exhibit 21-1.The marginal utility of the second plum is

Research conducted by Nicholas Epley and his colleagues at Harvard showed that people will spend a _________________ percentage of money given to them if it is ________________ rather than

A person is in consumer equilibrium,and then the price rises for one of the goods she purchases.If she wants to restore herself to consumer equilibrium,she will (most likely)

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Suppose you are eating buffalo wings at a local happy hour.The total utils from doing so after the fourth,fifth,sixth,and seventh wings are 30,50,65,72,respectively.In this situation we have marginal utility,which is generally in the analysis of consumer choice.

Research conducted by Nicholas Epley and his colleagues at Harvard showed that people will spend a _ percentage of money given to them if it is rather than