Question 1

Refer to the following graph:

The consumer's income is $1,200.
-What is Y1?

Accepted Answer

A)  30 
B)  80 
C)  110 
D)  120 
E)  none of the above 
A)  30 
B)  80 
C)  110 
D)  120 
E)  none of the above

Question 2

Refer to the following graphs:

The price of Y is $15 per unit.
- What is $X _ { 1 }$ ?

Accepted Answer

A)  10 
B)  12 
C)  18 
D)  20 
E)  none of the above 
A)  10 
B)  12 
C)  18 
D)  20 
E)  none of the above

Question 3

Refer to the following graphs:

The price of Y is $15 per unit.
-At point B,

Accepted Answer

A)  the consumer can exchange one unit of X for one unit of Y and keep income unchanged. 
B)  the marginal rate of substitution of X for Y is greater than it is at point A. 
C)  the consumer's utility is greater than it is at point A. 
D)  both a and b 
E)  all of the above 
A)  the consumer can exchange one unit of X for one unit of Y and keep income unchanged. 
B)  the marginal rate of substitution of X for Y is greater than it is at point A. 
C)  the consumer's utility is greater than it is at point A. 
D)  both a and b 
E)  all of the above

Question 4

The price of Y is $10.
-The marginal rate of substitution of X for Y at point C is:

Accepted Answer

A)  5 
B)  2 
C)  0.5 
D)  0.3 
E)  none of the above 
A)  5 
B)  2 
C)  0.5 
D)  0.3 
E)  none of the above

Question 5

Refer to the following graph:

The consumer's income is $600.
-If the price of X is $7.50 per unit, how many units of X will a utility-maximizing consumer choose?

Accepted Answer

A)  25 
B)  30 
C)  35 
D)  50 
E)  none of the above 
A)  25 
B)  30 
C)  35 
D)  50 
E)  none of the above

Question 6

Which of the following is NOT a characteristic of a typical indifference curve?

Accepted Answer

A)  The curve shows all combinations of goods that give the consumer the same level of utility. 
B)  As a consumer has less of a good, he is less willing to exchange less of it for one more unit of another good. 
C)  The marginal rate of substitution is measured by the slope of the tangent to the curve. 
D)  The curve will shift out if income increases. 
A)  The curve shows all combinations of goods that give the consumer the same level of utility. 
B)  As a consumer has less of a good, he is less willing to exchange less of it for one more unit of another good. 
C)  The marginal rate of substitution is measured by the slope of the tangent to the curve. 
D)  The curve will shift out if income increases.

Question 7

Suppose that 25 units of X and 16 units of Y give a consumer the same satisfaction as 15 units of X and 18 units of Y. Then

Accepted Answer

A)  the consumer can exchange five units of X for one unit of Y and keep utility unchanged. 
B)  the consumer can exchange one unit of X for 1/5 unit of Y and keep utility unchanged. 
C)  the market rate of exchange of X for Y is 1/5. 
D)  both a and b 
E)  all of the above 
A)  the consumer can exchange five units of X for one unit of Y and keep utility unchanged. 
B)  the consumer can exchange one unit of X for 1/5 unit of Y and keep utility unchanged. 
C)  the market rate of exchange of X for Y is 1/5. 
D)  both a and b 
E)  all of the above

Question 8

Refer to the following graph:

The consumer's income is $600.
-One point on the consumer's demand curve for X is

Accepted Answer

A)  60 units at a price of $10. 
B)  35 units at a price of $10. 
C)  35 units at a price of $6. 
D)  25 units at a price of $10. 
E)  25 units at a price of $7.50. 
A)  60 units at a price of $10. 
B)  35 units at a price of $10. 
C)  35 units at a price of $6. 
D)  25 units at a price of $10. 
E)  25 units at a price of $7.50.

Question 9

Refer to the following figure:
   
The consumer's income is $800.
-Why doesn't the consumer choose the combination at point B?

Accepted Answer

A)  The consumer is willing to give up more X for additional units of Y than the rate in the market. 
B)  The marginal utility of Y exceeds the marginal utility of X. 
C)  The marginal utility per dollar spent on Y exceeds the marginal utility per dollar spent on X. 
D)  both a and c 
E)  both b and c 
A)  The consumer is willing to give up more X for additional units of Y than the rate in the market. 
B)  The marginal utility of Y exceeds the marginal utility of X. 
C)  The marginal utility per dollar spent on Y exceeds the marginal utility per dollar spent on X. 
D)  both a and c 
E)  both b and c

Question 10

Refer to the following indifference map for a consumer who has an income of $48 to spend on goods X and Y and the market prices of X and Y are both equal to $4:
  
-After the price of good X increases to $12 while the price of good Y remains $4, how many units of good X would be purchased?

Accepted Answer

A)  0 
B)  2 
C)  4 
D)  8 
E)  12 
A)  0 
B)  2 
C)  4 
D)  8 
E)  12

Question 11

For the questions  , assume James purchases only two goods, steak and chicken, with his weekly income of $60. The price of steak is $10 and the price of chicken is $5. The following table shows the marginal utility James obtains from each additional pound of steak and chicken:

$$\begin{array} { l ccc} 
\text { Quantity } & \begin{array} { l } 
\text { Marginal utility of } \
\text { steak }
\end{array} & \begin{array} { c } 
\text { Marginal utility of } \
\text { chicken }
\end{array} &  \
\hline 1 & 70 & 50 \
2 & 60 & 40 & \
 3 & 50 & 30 & \
4 & 40 & 20 & \
5 & 32 & 10 &
\end{array}$$
-What quantities of steak and chicken should James purchase to maximize his utility?

Accepted Answer

A)  3 steak, 2 chicken 
B)  5 steak, 2 chicken 
C)  4 steak, 4 chicken 
D)  2 steak, 5 chicken 
E)  none of the above 
A)  3 steak, 2 chicken 
B)  5 steak, 2 chicken 
C)  4 steak, 4 chicken 
D)  2 steak, 5 chicken 
E)  none of the above

Question 12

Lulu consumes only candy and cookies; she is currently buying more cookies than candy with her limited income. The last bag of candy gave Lulu the same additional utility as the last bag of cookies, and the prices of candy and cookies are the same. Lulu

Accepted Answer

A)  is maximizing utility given a limited income because the prices of candy and cookies are the same. 
B)  is maximizing satisfaction given a limited income because the marginal utility per dollar is the same for candy and cookies. 
C)  could get more satisfaction from the same income by buying more candy and less cookies. 
D)  could get more satisfaction from the same income by buying more cookies and less candy. 
A)  is maximizing utility given a limited income because the prices of candy and cookies are the same. 
B)  is maximizing satisfaction given a limited income because the marginal utility per dollar is the same for candy and cookies. 
C)  could get more satisfaction from the same income by buying more candy and less cookies. 
D)  could get more satisfaction from the same income by buying more cookies and less candy.

Question 13

If Mary prefers bananas to plums and plums to peaches, but is indifferent between bananas and oranges, she

Accepted Answer

A)  prefers oranges to peaches. 
B)  prefers plums to oranges. 
C)  is indifferent between oranges and plums. 
D)  is indifferent between oranges and peaches. 
A)  prefers oranges to peaches. 
B)  prefers plums to oranges. 
C)  is indifferent between oranges and plums. 
D)  is indifferent between oranges and peaches.

Question 14

The market demand curve

Accepted Answer

A)  shows how much all consumers demand at various prices. 
B)  is the vertical summation of the demand curves of all the consumers in the market. 
C)  is quite complex to construct, given the demand curves of the individual consumers. 
D)  all of the above 
A)  shows how much all consumers demand at various prices. 
B)  is the vertical summation of the demand curves of all the consumers in the market. 
C)  is quite complex to construct, given the demand curves of the individual consumers. 
D)  all of the above

Question 15

Refer to the following:

The consumer faces a budget constraint because the market price of X is $3, the market price of Y is $3, and the consumer's budget is $90.
-Given this budget constraint, how many units of X and Y would be purchased?

Accepted Answer

A)  0 units of X, 0 units of Y. 
B)  10 units of X, 20 units of Y. 
C)  20 units of X, 20 units of Y. 
D)  30 units of X, 30 units of Y. 
A)  0 units of X, 0 units of Y. 
B)  10 units of X, 20 units of Y. 
C)  20 units of X, 20 units of Y. 
D)  30 units of X, 30 units of Y.

Question 16

For questions  assume that an individual consumes two goods X and Y. The total utility (assumed measurable) of each good is independent of the rate of consumption of other goods. The prices of X and Y are, respectively, $5 and $10.

$\begin{array}{lcc}
\text { Units of the Good } & \text { TotalUtility of } X & \text { Total Utility of } Y \
1 & 50 & 400 \
2 & 95 & 750 \
3 & 135 & 950 \
4 & 170 & 1100 \
5 & 200 & 1220 \
6 & 225 & 1320 \
7 & 245 & 1400 \
8 & 260 & 1450
\end{array}$
-If the consumer has $110 to spend on X and Y, which combination will the consumer choose?

Accepted Answer

A)  5X and 4Y 
B)  6X and 8Y 
C)  7X and 6Y 
D)  8X and 7Y 
E)  7X and 7Y 
A)  5X and 4Y 
B)  6X and 8Y 
C)  7X and 6Y 
D)  8X and 7Y 
E)  7X and 7Y

Question 17

An individual's demand curve for X

Accepted Answer

A)  shows how the utility-maximizing choice of X changes as the price of X changes. 
B)  shows how the individual's preferences change as the price of X changes. 
C)  shows how the individual's preferences change as the consumer income changes. 
D)  both a and b 
E)  both a and c 
A)  shows how the utility-maximizing choice of X changes as the price of X changes. 
B)  shows how the individual's preferences change as the price of X changes. 
C)  shows how the individual's preferences change as the consumer income changes. 
D)  both a and b 
E)  both a and c

Question 18

According to the Rolling Stones, "You can't always get what you want." What does this mean in the context of utility maximization?

Accepted Answer

A)  A bundle of goods between the budget line and the origin. 
B)  Vertical indifference curves. 
C)  A bundle of goods above the budget line. 
D)  Downward-sloping indifference curves. 
A)  A bundle of goods between the budget line and the origin. 
B)  Vertical indifference curves. 
C)  A bundle of goods above the budget line. 
D)  Downward-sloping indifference curves.

Question 19

Alexandra consumes only caviar and champagne, but she does have a limited income of $400. Her current consumption choice is 5 ounces of caviar, at a price of $50 per ounce, and 6 bottles of champagne, at $25 each. The last ounce of caviar added 100 units to Alexandra's total utility, while the last bottle of champagne added 75 units. If Alexandra chooses 4 ounces of caviar and 8 bottles of champagne instead:

Accepted Answer

A)  her total utility will increase by 150 units 
B)  her total utility will decrease by 150 units 
C)  her total utility will increase by 100 units 
D)  her total utility will decrease by 100 units 
E)  her total utility will increase by 50 units 
A)  her total utility will increase by 150 units 
B)  her total utility will decrease by 150 units 
C)  her total utility will increase by 100 units 
D)  her total utility will decrease by 100 units 
E)  her total utility will increase by 50 units

Question 20

Refer to the following graph:

The consumer's income is $1,200.
-At point B,

Accepted Answer

A)  the rate at which the consumer is willing to substitute X for Y is greater than it is at point A. 
B)  the consumer is willing to give up more Y in order to gain an extra unit of X than at point A. 
C)  the consumer will receive more Y for each unit of X exchanged in the market than at point A. 
D)  both a and b 
E)  all of the above 
A)  the rate at which the consumer is willing to substitute X for Y is greater than it is at point A. 
B)  the consumer is willing to give up more Y in order to gain an extra unit of X than at point A. 
C)  the consumer will receive more Y for each unit of X exchanged in the market than at point A. 
D)  both a and b 
E)  all of the above

Refer to the following graph: The consumer's income is $1,200. -What is Y₁?

Refer to the following graphs: $Refer to the following graphs: The price of Y is $15 per unit. - What is X _ { 1 } ?$ The price of Y is $15 per unit. - What is $X _ { 1 }$ ?

Refer to the following graphs: The price of Y is $15 per unit. -At point B,

The price of Y is $10. -The marginal rate of substitution of X for Y at point C is:

Refer to the following graph: The consumer's income is $600. -If the price of X is $7.50 per unit, how many units of X will a utility-maximizing consumer choose?

Which of the following is NOT a characteristic of a typical indifference curve?

Suppose that 25 units of X and 16 units of Y give a consumer the same satisfaction as 15 units of X and 18 units of Y. Then

Refer to the following graph: The consumer's income is $600. -One point on the consumer's demand curve for X is

Refer to the following figure: The consumer's income is $800. -Why doesn't the consumer choose the combination at point B?

Refer to the following indifference map for a consumer who has an income of $48 to spend on goods X and Y and the market prices of X and Y are both equal to $4: -After the price of good X increases to $12 while the price of good Y remains $4, how many units of good X would be purchased?

Lulu consumes only candy and cookies; she is currently buying more cookies than candy with her limited income. The last bag of candy gave Lulu the same additional utility as the last bag of cookies, and the prices of candy and cookies are the same. Lulu

If Mary prefers bananas to plums and plums to peaches, but is indifferent between bananas and oranges, she

The market demand curve

Refer to the following: The consumer faces a budget constraint because the market price of X is $3, the market price of Y is $3, and the consumer's budget is $90. -Given this budget constraint, how many units of X and Y would be purchased?

An individual's demand curve for X

According to the Rolling Stones, "You can't always get what you want." What does this mean in the context of utility maximization?

Refer to the following graph: The consumer's income is $1,200. -At point B,

Managers, Profits, and Markets

Demand, Supply, and Market Equilibrium

Marginal Analysis for Optimal Decisions

Basic Estimation Techniques

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters

Exam 5: Theory of Consumer Behavior

Refer to the following graph: The consumer's income is $1,200. -What is Y1?

Refer to the following graphs: The price of Y is $15 per unit. - What is X1X _ { 1 }X1​ ?

Refer to the following graphs: The price of Y is $15 per unit. -At point B,

The price of Y is $10. -The marginal rate of substitution of X for Y at point C is:

Refer to the following graph: The consumer's income is $600. -If the price of X is $7.50 per unit, how many units of X will a utility-maximizing consumer choose?

Which of the following is NOT a characteristic of a typical indifference curve?

Suppose that 25 units of X and 16 units of Y give a consumer the same satisfaction as 15 units of X and 18 units of Y. Then

Refer to the following graph: The consumer's income is $600. -One point on the consumer's demand curve for X is

Refer to the following figure: The consumer's income is $800. -Why doesn't the consumer choose the combination at point B?

Refer to the following indifference map for a consumer who has an income of $48 to spend on goods X and Y and the market prices of X and Y are both equal to $4: -After the price of good X increases to $12 while the price of good Y remains $4, how many units of good X would be purchased?

Lulu consumes only candy and cookies; she is currently buying more cookies than candy with her limited income. The last bag of candy gave Lulu the same additional utility as the last bag of cookies, and the prices of candy and cookies are the same. Lulu

If Mary prefers bananas to plums and plums to peaches, but is indifferent between bananas and oranges, she

The market demand curve

Refer to the following: The consumer faces a budget constraint because the market price of X is $3, the market price of Y is $3, and the consumer's budget is $90. -Given this budget constraint, how many units of X and Y would be purchased?

An individual's demand curve for X

According to the Rolling Stones, "You can't always get what you want." What does this mean in the context of utility maximization?

Refer to the following graph: The consumer's income is $1,200. -At point B,

Managers, Profits, and Markets

Demand, Supply, and Market Equilibrium

Marginal Analysis for Optimal Decisions

Basic Estimation Techniques

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters

Refer to the following graph: The consumer's income is $1,200. -What is Y₁?

Refer to the following graphs: $Refer to the following graphs: The price of Y is $15 per unit. - What is X _ { 1 } ?$ The price of Y is $15 per unit. - What is $X _ { 1 }$ ?