Question 1

The absolute value of the slope of the budget constraint is also known as the marginal rate of substitution.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 21-7
  
-Refer to Exhibit 21-7.Which of the following graphs represents a budget constraint of a consumer whose income is $120?

Accepted Answer

A)  (1) 
B)  (2) 
C)  (3) 
D)  (1) and (2) 
E)  This cannot be determined from the information provided. 
A)  (1) 
B)  (2) 
C)  (3) 
D)  (1) and (2) 
E)  This cannot be determined from the information provided.

Question 3

Marginal utility is

Accepted Answer

A)  the extra satisfaction derived from consuming an additional unit of a good. 
B)  the total satisfaction derived from consuming an additional unit of a good. 
C)  the total satisfaction derived from consuming a good. 
D)  the change in total satisfaction as an additional unit of a good is consumed. 
E)  a and d 
A)  the extra satisfaction derived from consuming an additional unit of a good. 
B)  the total satisfaction derived from consuming an additional unit of a good. 
C)  the total satisfaction derived from consuming a good. 
D)  the change in total satisfaction as an additional unit of a good is consumed. 
E)  a and d

Question 4

In the Texas A & M study of the "buying" behavior of two white rats,as the "relative price" of one beverage was raised,

Accepted Answer

A)  both white rats began to consume more of the higher-priced beverage. 
B)  both white rats began to consume less of the higher-priced beverage. 
C)  one white rat began to consume more of the higher-priced beverage and the other began to consume less. 
D)  both white rats continued consuming the same amount of the beverage as before its price was raised. 
E)  There was no study done at Texas A & M with white rats. 
A)  both white rats began to consume more of the higher-priced beverage. 
B)  both white rats began to consume less of the higher-priced beverage. 
C)  one white rat began to consume more of the higher-priced beverage and the other began to consume less. 
D)  both white rats continued consuming the same amount of the beverage as before its price was raised. 
E)  There was no study done at Texas A & M with white rats.

Question 5

If total utility of a good is high while the price of the good is low,it is likely that the good

Accepted Answer

A)  is plentiful. 
B)  is inferior. 
C)  is rare. 
D)  has high marginal utility. 
A)  is plentiful. 
B)  is inferior. 
C)  is rare. 
D)  has high marginal utility.

Question 6

The marginal utility curve for units 6 through 8 of good Z lies below the horizontal axis. What does this imply must be true about the total utility curve for units 6 through 8 of good Z?

Accepted Answer

A)  That portion of good Z's total utility curve must be upward sloping. 
B)  That portion of good Z's total utility curve must be downward sloping. 
C)  That portion of good Z's total utility curve must be horizontal. 
D)  That portion of good Z's total utility curve must also lie below the horizontal axis. 
A)  That portion of good Z's total utility curve must be upward sloping. 
B)  That portion of good Z's total utility curve must be downward sloping. 
C)  That portion of good Z's total utility curve must be horizontal. 
D)  That portion of good Z's total utility curve must also lie below the horizontal axis.

Question 7

Dan is currently consuming 10 Cokes and 5 slices of pizza per week such that the marginal utility of the tenth Coke is 12 utils and that of the fifth slice of pizza is also 12 utils.How should Dan redirect his purchases so as to attain consumer equilibrium?

Accepted Answer

A)  He should buy more pizza slices and less Coke. 
B)  He should buy fewer pizza slices and more Coke. 
C)  He is currently attaining consumer equilibrium and should not redirect his purchases. 
D)  He could gain more satisfaction by buying less of both and more of something else. 
E)  There is not enough information to answer the question. 
A)  He should buy more pizza slices and less Coke. 
B)  He should buy fewer pizza slices and more Coke. 
C)  He is currently attaining consumer equilibrium and should not redirect his purchases. 
D)  He could gain more satisfaction by buying less of both and more of something else. 
E)  There is not enough information to answer the question.

Question 8

Suppose you could quantify the amount of satisfaction you receive from consuming ice cream in money terms.You might say,"I expect to get $3 worth of satisfaction from this ice cream cone." According to traditional economic theory,if the price of this ice cream cone were $3.05,would you buy one?

Accepted Answer

A)  Sure, why not? What's a nickel? 
B)  Absolutely. It's worth it at that price. 
C)  No way, because it's not worth it. 
D)  There is no way to answer this question because you really can't compare the price of something and the amount of satisfaction you expect to receive from it. 
A)  Sure, why not? What's a nickel? 
B)  Absolutely. It's worth it at that price. 
C)  No way, because it's not worth it. 
D)  There is no way to answer this question because you really can't compare the price of something and the amount of satisfaction you expect to receive from it.

Question 9

Exhibit 21-5
  
-Refer to Exhibit 21-5. What value goes in blank (B)?

Accepted Answer

A)  27 
B)  38 
C)  40 
D)  35 
E)  There is not enough information to answer this question. 
A)  27 
B)  38 
C)  40 
D)  35 
E)  There is not enough information to answer this question.

Question 10

Exhibit 21-2
  
-Refer to Exhibit 21-2.Total utility for the first four oranges is

Accepted Answer

A)  11 utils. 
B)  60 utils. 
C)  52 utils. 
D)  15 utils. 
E)  40 utils. 
A)  11 utils. 
B)  60 utils. 
C)  52 utils. 
D)  15 utils. 
E)  40 utils.

Question 11

Consumer equilibrium exists when

Accepted Answer

A)  marginal utility for all goods is the same. 
B)  total utility is constant. 
C)  prices for all goods are the same. 
D)  total utility for all goods is the same. 
E)  the MU/P ratio for all goods is the same. 
A)  marginal utility for all goods is the same. 
B)  total utility is constant. 
C)  prices for all goods are the same. 
D)  total utility for all goods is the same. 
E)  the MU/P ratio for all goods is the same.

Question 12

The diamond-water paradox is the observation that

Accepted Answer

A)  those things that have the greatest price often have little value in exchange and those things that have the lowest price often have the greatest value in exchange. 
B)  those things that have the greatest value in use often have little value in exchange and those things that have little value in use often have the greatest value in exchange. 
C)  those things that have the least value in use often have little value in exchange and those things that have the greatest value in use often have the greatest value in exchange. 
D)  those things that have the least price often have little value in exchange and those things that have the greatest price often have the greatest value in exchange. 
A)  those things that have the greatest price often have little value in exchange and those things that have the lowest price often have the greatest value in exchange. 
B)  those things that have the greatest value in use often have little value in exchange and those things that have little value in use often have the greatest value in exchange. 
C)  those things that have the least value in use often have little value in exchange and those things that have the greatest value in use often have the greatest value in exchange. 
D)  those things that have the least price often have little value in exchange and those things that have the greatest price often have the greatest value in exchange.

Question 13

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 80,116,136,146,respectively.The marginal utility of the seventh wing is __________ utils.

Accepted Answer

A)  14 
B)  146 
C)  10 
D)  20.9 
A)  14 
B)  146 
C)  10 
D)  20.9

Question 14

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

Accepted Answer

A)  132 
B)  111 
C)  118 
D)  25 
E)  There is not enough information to answer this question. 
A)  132 
B)  111 
C)  118 
D)  25 
E)  There is not enough information to answer this question.

Question 15

The budget constraint cuts the horizontal axis at 12 units of good X and it cuts the vertical axis at 20 units of good Y.If the price of good X is $20 and the price of good Y is $12,then what does income equal?

Accepted Answer

A)  $200 
B)  $240 
C)  $520 
D)  $280 
E)  There is not enough information to answer the question. 
A)  $200 
B)  $240 
C)  $520 
D)  $280 
E)  There is not enough information to answer the question.

Question 16

Which of the following best describes an interpersonal utility comparison?

Accepted Answer

A)  Jones likes computers produced by Dell Computer Corporation and Smith likes computers produced by Apple Computer Inc. 
B)  Smith gets more utility from working on his computer than Jones gets from working on his computer. 
C)  Smith got less utility from eating the 30th cookie than eating the 29th cookie, and the same holds for Jones. 
D)  Usually, Smith seems a lot happier than Jones. 
E)  Smith usually eats more in a day than Jones eats in a day. 
A)  Jones likes computers produced by Dell Computer Corporation and Smith likes computers produced by Apple Computer Inc. 
B)  Smith gets more utility from working on his computer than Jones gets from working on his computer. 
C)  Smith got less utility from eating the 30th cookie than eating the 29th cookie, and the same holds for Jones. 
D)  Usually, Smith seems a lot happier than Jones. 
E)  Smith usually eats more in a day than Jones eats in a day.

Exam 21: Consumer Choice: Maximizing Utility and Behavioral Economics

The absolute value of the slope of the budget constraint is also known as the marginal rate of substitution.

Exhibit 21-7 -Refer to Exhibit 21-7.Which of the following graphs represents a budget constraint of a consumer whose income is $120?

Marginal utility is

In the Texas A & M study of the "buying" behavior of two white rats,as the "relative price" of one beverage was raised,

If total utility of a good is high while the price of the good is low,it is likely that the good

The marginal utility curve for units 6 through 8 of good Z lies below the horizontal axis. What does this imply must be true about the total utility curve for units 6 through 8 of good Z?

Dan is currently consuming 10 Cokes and 5 slices of pizza per week such that the marginal utility of the tenth Coke is 12 utils and that of the fifth slice of pizza is also 12 utils.How should Dan redirect his purchases so as to attain consumer equilibrium?

Suppose you could quantify the amount of satisfaction you receive from consuming ice cream in money terms.You might say,"I expect to get $3 worth of satisfaction from this ice cream cone." According to traditional economic theory,if the price of this ice cream cone were $3.05,would you buy one?

Exhibit 21-5 -Refer to Exhibit 21-5. What value goes in blank (B)?

Exhibit 21-2 -Refer to Exhibit 21-2.Total utility for the first four oranges is

Consumer equilibrium exists when

The diamond-water paradox is the observation 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 80,116,136,146,respectively.The marginal utility of the seventh wing is __________ utils.

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

The budget constraint cuts the horizontal axis at 12 units of good X and it cuts the vertical axis at 20 units of good Y.If the price of good X is $20 and the price of good Y is $12,then what does income equal?

Which of the following best describes an interpersonal utility comparison?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

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