Question 1

FIGURE 6- 1
-Refer to Figure 6- 1. The consumer's total utility is

Accepted Answer

A)  constant. 
B)  increasing at a decreasing rate.. 
C)  decreasing at an increasing rate 
D)  decreasing at a decreasing rate. 
E)  increasing at an increasing rate. 
A)  constant. 
B)  increasing at a decreasing rate.. 
C)  decreasing at an increasing rate 
D)  decreasing at a decreasing rate. 
E)  increasing at an increasing rate.

Question 2

An equal proportional increase in money income and all money prices will

Accepted Answer

A)  rotate the budget line inward from the vertical axis. 
B)  shift the budget line to the left parallel to the original budget line. 
C)  shift the budget line to the right parallel to the original budget line. 
D)  rotate the budget line inward from the horizontal axis. 
E)  leave the position of the budget line unchanged. 
A)  rotate the budget line inward from the vertical axis. 
B)  shift the budget line to the left parallel to the original budget line. 
C)  shift the budget line to the right parallel to the original budget line. 
D)  rotate the budget line inward from the horizontal axis. 
E)  leave the position of the budget line unchanged.

Question 3

If money income is reduced by half, and the prices of all goods consumed by the household are reduced by half, the household's budget line will

Accepted Answer

A)  become steeper. 
B)  become flatter. 
C)  shift outward. 
D)  shift inward. 
E)  not change. 
A)  become steeper. 
B)  become flatter. 
C)  shift outward. 
D)  shift inward. 
E)  not change.

Question 4

FIGURE 6- 10
-Refer to Figure 6- 10. The line joining points E1 and E3 is known as , which shows how
.

Accepted Answer

A)  an income consumption line; consumption changes as income changes, with relative prices held constant 
B)  a price consumption line; consumption changes as one price changes, with money income held constant 
C)  a price consumption line; consumption changes as money income and relative prices change 
D)  an income consumption line; consumption changes with changing relative prices and constant income 
A)  an income consumption line; consumption changes as income changes, with relative prices held constant 
B)  a price consumption line; consumption changes as one price changes, with money income held constant 
C)  a price consumption line; consumption changes as money income and relative prices change 
D)  an income consumption line; consumption changes with changing relative prices and constant income

Question 5

FIGURE 6- 1
-Refer to Figure 6- 1. This figure illustrates the law of

Accepted Answer

A)  diminishing marginal utility. 
B)  diminishing total utility. 
C)  maximizing utility. 
D)  increasing total utility. 
E)  increasing marginal utility. 
A)  diminishing marginal utility. 
B)  diminishing total utility. 
C)  maximizing utility. 
D)  increasing total utility. 
E)  increasing marginal utility.

Question 6

FIGURE 6- 3
-Refer to Figure 6- 3. For both goods, the price falls from P0 to P1. The substitution effect is illustrated by the change in quantity demanded from A to B; the income effect is illustrated by the change in quantity demanded from B to C. Good Y is certainly a(n) good.

Accepted Answer

A)  luxury 
B)  normal 
C)  inferior 
D)  necessity 
E)  Giffen 
A)  luxury 
B)  normal 
C)  inferior 
D)  necessity 
E)  Giffen

Question 7

Suppose a utility- maximizing person consumes only two goods, hamburgers and milkshakes. Suppose the price of milkshakes rises and all other variables remain constant. As a result, this person will certainly

Accepted Answer

A)  reduce his/her consumption of both milkshakes and hamburgers. 
B)  not increase his consumption of both milkshakes and hamburgers. 
C)  purchase more milkshakes and fewer hamburgers. 
D)  increase his/her consumption of milkshakes. 
E)  consume more hamburgers and the same amount of milkshakes. 
A)  reduce his/her consumption of both milkshakes and hamburgers. 
B)  not increase his consumption of both milkshakes and hamburgers. 
C)  purchase more milkshakes and fewer hamburgers. 
D)  increase his/her consumption of milkshakes. 
E)  consume more hamburgers and the same amount of milkshakes.

Question 8

Given a particular market demand curve, consumer surplus is

Accepted Answer

A)  greater the lower the price and the larger the output. 
B)  less the lower the price and the larger the output. 
C)  greater the lower the price and the smaller the output. 
D)  less the lower the price and the smaller the output. 
E)  greater the higher the price and the smaller the output. 
A)  greater the lower the price and the larger the output. 
B)  less the lower the price and the larger the output. 
C)  greater the lower the price and the smaller the output. 
D)  less the lower the price and the smaller the output. 
E)  greater the higher the price and the smaller the output.

Question 9

Given a particular consumer's indifference map, the further the indifference curve is from the origin

Accepted Answer

A)  the higher the level of satisfaction. 
B)  the lower the marginal rate of substitution. 
C)  the more goods are included. 
D)  the higher the marginal rate of substitution. 
E)  the lower the level of satisfaction. 
A)  the higher the level of satisfaction. 
B)  the lower the marginal rate of substitution. 
C)  the more goods are included. 
D)  the higher the marginal rate of substitution. 
E)  the lower the level of satisfaction.

Question 10

As a consumer moves along an indifference curve

Accepted Answer

A)  his level of utility will vary as the combinations of goods varies. 
B)  the combination of goods and the consumer's income level will remain constant. 
C)  the combination of goods will vary but the level of utility remains constant. 
D)  the combination of goods will vary, but the level of money income remains constant. 
E)  the combination of goods he prefers will remain constant, but the level of satisfaction will vary. 
A)  his level of utility will vary as the combinations of goods varies. 
B)  the combination of goods and the consumer's income level will remain constant. 
C)  the combination of goods will vary but the level of utility remains constant. 
D)  the combination of goods will vary, but the level of money income remains constant. 
E)  the combination of goods he prefers will remain constant, but the level of satisfaction will vary.

Question 11

FIGURE 6- 6
-Refer to Figure 6- 6. Suppose that price is P0. The total value placed on all units of the commodity consumed is given by the area

Accepted Answer

A)  below P0 and to the left of Q0. 
B)  under the demand curve and above P0. 
C)  under the demand curve and to the right of Q0. 
D)  under the demand curve. 
E)  under the demand curve to the left of Q0. 
A)  below P0 and to the left of Q0. 
B)  under the demand curve and above P0. 
C)  under the demand curve and to the right of Q0. 
D)  under the demand curve. 
E)  under the demand curve to the left of Q0.

Question 12

Given a typical downward- sloping demand curve in a market that has reached its equilibrium, the consumer surplus

Accepted Answer

A)  is calculated as the product of market price and quantity consumed. 
B)  is measured by the area below the market price and under the demand curve. 
C)  is measured by the area above the market price and under the demand curve. 
D)  is measured by the area immediately above the demand curve. 
E)  cannot be measured given the information. 
A)  is calculated as the product of market price and quantity consumed. 
B)  is measured by the area below the market price and under the demand curve. 
C)  is measured by the area above the market price and under the demand curve. 
D)  is measured by the area immediately above the demand curve. 
E)  cannot be measured given the information.

Question 13

The diagram below shows a set of budget lines facing a household.   FIGURE 6- 7
-Refer to Figure 6- 7. The movement of the budget line from ab to db could be caused by

Accepted Answer

A)  a decrease in the price of housing. 
B)  a decrease in the price of food. 
C)  an increase in the price of housing. 
D)  an increase in the price of food. 
E)  a decrease in money income. 
A)  a decrease in the price of housing. 
B)  a decrease in the price of food. 
C)  an increase in the price of housing. 
D)  an increase in the price of food. 
E)  a decrease in money income.

Question 14

The figures below show Chris's consumption of specialty coffee per week.   FIGURE 6- 9
-Refer to Figure 6- 9. The absolute value of the slope of the budget lines is equal to , which reflects the of specialty coffees in terms of all other goods.

Accepted Answer

A)  the relative price ratio (Pall other goods/Pspecialty coffee); demand 
B)  the dollar value of all other goods divided by the number of specialty coffees consumed per week; demand 
C)  the quantity of all other goods consumed divided by the quantity of specialty coffees consumed; quantity 
D)  $15/value of all other goods; opportunity cost 
E)  the relative price ratio (Pspecialty coffee/Pall other goods); opportunity cost 
A)  the relative price ratio (Pall other goods/Pspecialty coffee); demand 
B)  the dollar value of all other goods divided by the number of specialty coffees consumed per week; demand 
C)  the quantity of all other goods consumed divided by the quantity of specialty coffees consumed; quantity 
D)  $15/value of all other goods; opportunity cost 
E)  the relative price ratio (Pspecialty coffee/Pall other goods); opportunity cost

Question 15

The figures below show Chris's consumption of specialty coffee per week.   FIGURE 6- 9
-Refer to Figure 6- 9. The two diagrams in Figure 6- 9 are showing

Accepted Answer

A)  that Chris is indifferent between bundles A, B and C. 
B)  the derivation of Chris's demand curve for specialty coffee. 
C)  the change in Chris's preferences toward specialty coffee. 
D)  that Chris is indifferent between points D, E and F. 
E)  the derivation of Chris's indifference curve for specialty coffee. 
A)  that Chris is indifferent between bundles A, B and C. 
B)  the derivation of Chris's demand curve for specialty coffee. 
C)  the change in Chris's preferences toward specialty coffee. 
D)  that Chris is indifferent between points D, E and F. 
E)  the derivation of Chris's indifference curve for specialty coffee.

Question 16

FIGURE 6- 2
-Refer to Figure 6- 2. If the price of X is $2 and the price of Y is $1 and the consumer is buying 4 units of X and 2 units of Y, the consumer's total utility is

Accepted Answer

A)  8. 
B)  10. 
C)  52. 
D)  56. 
E)  69. 
A)  8. 
B)  10. 
C)  52. 
D)  56. 
E)  69.

Question 17

Since there is a limited supply of diamonds in the world, the consumption of diamonds

Accepted Answer

A)  takes place at relatively high marginal value. 
B)  takes place at relatively low marginal value. 
C)  takes priority over some other good. 
D)  is no less important than consumption of water. 
E)  should be regulated by the government. 
A)  takes place at relatively high marginal value. 
B)  takes place at relatively low marginal value. 
C)  takes priority over some other good. 
D)  is no less important than consumption of water. 
E)  should be regulated by the government.

Question 18

FIGURE 6- 2
-Refer to Figure 6- 2. Suppose the price of Y is $1, the consumer's income is $10, and the consumer is currently buying 3 units of good X and 4 units of good Y. If this consumer is maximizing her utility, then the price of X must be

Accepted Answer

A)  $1. 
B)  $2. 
C)  $3. 
D)  $4. 
E)  impossible to tell with the given information. 
A)  $1. 
B)  $2. 
C)  $3. 
D)  $4. 
E)  impossible to tell with the given information.

Question 19

The figures below show Chris's consumption of specialty coffee per week.   FIGURE 6- 9
-Refer to Figure 6- 9. The line connecting points A, B and C is _ . The line connecting points D, E and F is .

Accepted Answer

A)  the budget line; the price- consumption line 
B)  the demand curve; the budget line 
C)  the income- consumption line; the demand curve 
D)  the price- consumption line; the demand curve 
E)  the income- consumption line; the budget line 
A)  the budget line; the price- consumption line 
B)  the demand curve; the budget line 
C)  the income- consumption line; the demand curve 
D)  the price- consumption line; the demand curve 
E)  the income- consumption line; the budget line

Question 20

$\text { Toffee (bars) \quad Cashews (bags) }$
$\begin{array}{|l|l|l|l|l|}
\hline \text { Units } & \begin{array}{l}
\text { Marginal } \
\text { Utility }
\end{array} & \begin{array}{l}
\text { Total } \
\text { Utility }
\end{array} & \text { Marginal } & \text { Total } \
&&& \text { Utility } & \text { Utility } \
\hline 1 & 10 & 10 & 12 & 12 \
\hline 2 & 8 & 18 & 10 & 22 \
\hline 3 & 5 & 23 & 7 & 29 \
\hline 4 & 3 & 26 & 5 & 34 \
\hline 5 & 1 & 27 & 2 & 36 \
\hline 6 & 0 & 27 & 1 & 37 \
\hline 7 & 0 & 27 & 0 & 27 \
\hline
\end{array}$
$\text { TABLE 6- } 1$
-Refer to Table 6- 1. If the price of toffee bars is $1 each, bags of cashews are $2 each, and this consumer has $7 per week to spend on these two snacks, how many of each will he/she purchase to maximize utility?

Accepted Answer

A)  2 toffee bars and 2 bags of cashews. 
B)  7 toffee bars and 0 bags of cashews. 
C)  0 toffee bars and 3 bags of cashews. 
D)  1 toffee bars and 3 bags of cashews. 
E)  3 toffee bars and 2 bags of cashews. 
A)  2 toffee bars and 2 bags of cashews. 
B)  7 toffee bars and 0 bags of cashews. 
C)  0 toffee bars and 3 bags of cashews. 
D)  1 toffee bars and 3 bags of cashews. 
E)  3 toffee bars and 2 bags of cashews.

FIGURE 6- 1 -Refer to Figure 6- 1. The consumer's total utility is

An equal proportional increase in money income and all money prices will

If money income is reduced by half, and the prices of all goods consumed by the household are reduced by half, the household's budget line will

FIGURE 6- 10 -Refer to Figure 6- 10. The line joining points E1 and E3 is known as , which shows how .

FIGURE 6- 1 -Refer to Figure 6- 1. This figure illustrates the law of

FIGURE 6- 3 -Refer to Figure 6- 3. For both goods, the price falls from P0 to P1. The substitution effect is illustrated by the change in quantity demanded from A to B; the income effect is illustrated by the change in quantity demanded from B to C. Good Y is certainly a(n) good.

Suppose a utility- maximizing person consumes only two goods, hamburgers and milkshakes. Suppose the price of milkshakes rises and all other variables remain constant. As a result, this person will certainly

Given a particular market demand curve, consumer surplus is

Given a particular consumer's indifference map, the further the indifference curve is from the origin

As a consumer moves along an indifference curve

FIGURE 6- 6 -Refer to Figure 6- 6. Suppose that price is P0. The total value placed on all units of the commodity consumed is given by the area

Given a typical downward- sloping demand curve in a market that has reached its equilibrium, the consumer surplus

The diagram below shows a set of budget lines facing a household. FIGURE 6- 7 -Refer to Figure 6- 7. The movement of the budget line from ab to db could be caused by

The figures below show Chris's consumption of specialty coffee per week. FIGURE 6- 9 -Refer to Figure 6- 9. The absolute value of the slope of the budget lines is equal to , which reflects the of specialty coffees in terms of all other goods.

The figures below show Chris's consumption of specialty coffee per week. FIGURE 6- 9 -Refer to Figure 6- 9. The two diagrams in Figure 6- 9 are showing

FIGURE 6- 2 -Refer to Figure 6- 2. If the price of X is $2 and the price of Y is $1 and the consumer is buying 4 units of X and 2 units of Y, the consumer's total utility is

Since there is a limited supply of diamonds in the world, the consumption of diamonds

FIGURE 6- 2 -Refer to Figure 6- 2. Suppose the price of Y is $1, the consumer's income is $10, and the consumer is currently buying 3 units of good X and 4 units of good Y. If this consumer is maximizing her utility, then the price of X must be

The figures below show Chris's consumption of specialty coffee per week. FIGURE 6- 9 -Refer to Figure 6- 9. The line connecting points A, B and C is _ . The line connecting points D, E and F is .

Economic Issues and Concepts

Economic Theories, Data, and Graphs

Demand, Supply, and Price

Elasticity

Markets in Action

Producers in the Short Run

Producers in the Long Run

Competitive Markets

Monopoly, Cartels, and Price Discrimination

Imperfect Competition

Economic Efficiency and Public Policy

How Factor Markets Work

Labour Markets

Interest Rates and the Capital Market

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

The Gains From International Trade

Trade Policy

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Exam 6: Consumer Behaviour

FIGURE 6- 1 -Refer to Figure 6- 1. The consumer's total utility is

An equal proportional increase in money income and all money prices will

If money income is reduced by half, and the prices of all goods consumed by the household are reduced by half, the household's budget line will

FIGURE 6- 10 -Refer to Figure 6- 10. The line joining points E1 and E3 is known as , which shows how .

FIGURE 6- 1 -Refer to Figure 6- 1. This figure illustrates the law of

FIGURE 6- 3 -Refer to Figure 6- 3. For both goods, the price falls from P0 to P1. The substitution effect is illustrated by the change in quantity demanded from A to B; the income effect is illustrated by the change in quantity demanded from B to C. Good Y is certainly a(n) good.

Suppose a utility- maximizing person consumes only two goods, hamburgers and milkshakes. Suppose the price of milkshakes rises and all other variables remain constant. As a result, this person will certainly

Given a particular market demand curve, consumer surplus is

Given a particular consumer's indifference map, the further the indifference curve is from the origin

As a consumer moves along an indifference curve

FIGURE 6- 6 -Refer to Figure 6- 6. Suppose that price is P0. The total value placed on all units of the commodity consumed is given by the area

Given a typical downward- sloping demand curve in a market that has reached its equilibrium, the consumer surplus

The diagram below shows a set of budget lines facing a household. FIGURE 6- 7 -Refer to Figure 6- 7. The movement of the budget line from ab to db could be caused by

The figures below show Chris's consumption of specialty coffee per week. FIGURE 6- 9 -Refer to Figure 6- 9. The absolute value of the slope of the budget lines is equal to , which reflects the of specialty coffees in terms of all other goods.

The figures below show Chris's consumption of specialty coffee per week. FIGURE 6- 9 -Refer to Figure 6- 9. The two diagrams in Figure 6- 9 are showing

FIGURE 6- 2 -Refer to Figure 6- 2. If the price of X is $2 and the price of Y is $1 and the consumer is buying 4 units of X and 2 units of Y, the consumer's total utility is

Since there is a limited supply of diamonds in the world, the consumption of diamonds

FIGURE 6- 2 -Refer to Figure 6- 2. Suppose the price of Y is $1, the consumer's income is $10, and the consumer is currently buying 3 units of good X and 4 units of good Y. If this consumer is maximizing her utility, then the price of X must be

The figures below show Chris's consumption of specialty coffee per week. FIGURE 6- 9 -Refer to Figure 6- 9. The line connecting points A, B and C is _ . The line connecting points D, E and F is .

Economic Issues and Concepts

Economic Theories, Data, and Graphs

Demand, Supply, and Price

Elasticity

Markets in Action

Producers in the Short Run

Producers in the Long Run

Competitive Markets

Monopoly, Cartels, and Price Discrimination

Imperfect Competition

Economic Efficiency and Public Policy

How Factor Markets Work

Labour Markets

Interest Rates and the Capital Market

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

The Gains From International Trade

Trade Policy

Filters