Question 1

​Which of the following best describes the economic concept of utility?

Accepted Answer

A)  Utility is the total number of units a consumer buys. 
B)  Utility measures the usefulness of goods, such as tools or food, and so goods such as artwork or attractive landscaping by definition has no utility. 
C)  Utility measures the satisfaction, or pleasure, that people receive from consuming a good or service. 
D)  None of the above are correct. 
A)  Utility is the total number of units a consumer buys. 
B)  Utility measures the usefulness of goods, such as tools or food, and so goods such as artwork or attractive landscaping by definition has no utility. 
C)  Utility measures the satisfaction, or pleasure, that people receive from consuming a good or service. 
D)  None of the above are correct. C

Question 2

Bonnie gets her hair cut at her usual salon and is very happy with the results. Later that afternoon, she goes to the mall and sees that a hair salon is giving away free haircuts only on that day. If Bonnie does not take advantage of the giveaway, it is because the:

Accepted Answer

A)  marginal utility of the next haircut would be zero or negative. 
B)  marginal utility of the next haircut would increase. 
C)  marginal utility of the next haircut would be zero or positive. 
D)  total utility of both haircuts would be zero or negative. 
E)  total utility of both haircuts would be higher than just one haircut. 
A)  marginal utility of the next haircut would be zero or negative. 
B)  marginal utility of the next haircut would increase. 
C)  marginal utility of the next haircut would be zero or positive. 
D)  total utility of both haircuts would be zero or negative. 
E)  total utility of both haircuts would be higher than just one haircut. A

Question 3

Exhibit 6A-3 Consumer equilibrium
​  
-Given the budge line and indifference curves shown in Exhibit 6A-3, consumer equilibrium occurs at a tangency to which of the following indifference curves?

Accepted Answer

A)  I1. 
B)  I2. 
C)  I3. 
D)  I1 or I2. 
A)  I1. 
B)  I2. 
C)  I3. 
D)  I1 or I2. B

Question 4

Consuming one more of a good increases its marginal-utility-to-price ratio, and consuming one less of the other good lowers its marginal-utility-to-price ratio.

Accepted Answer

A) True 
 B)False

Question 5

If marginal utility is positive, then total utility is:

Accepted Answer

A)  constant. 
B)  negative. 
C)  increasing. 
D)  decreasing. 
E)  zero. 
A)  constant. 
B)  negative. 
C)  increasing. 
D)  decreasing. 
E)  zero.

Question 6

Typically, total utility derived decreases as more of a good is consumed.

Accepted Answer

A) True 
 B)False

Question 7

Total utility is maximized in the consumption of two goods by equating the:

Accepted Answer

A)  prices of both goods for the last dollar spent on each good. 
B)  marginal utilities of both goods for the last dollar spent on each good. 
C)  ratios of marginal utility to the price of both goods for the last dollar spent on each good. 
D)  marginal utility of one good to the price of the other. 
A)  prices of both goods for the last dollar spent on each good. 
B)  marginal utilities of both goods for the last dollar spent on each good. 
C)  ratios of marginal utility to the price of both goods for the last dollar spent on each good. 
D)  marginal utility of one good to the price of the other.

Question 8

If Mr. McLean thinks the last dollar spent on bowling yields more satisfaction than the last dollar spent on hamburgers, and McLean is a utility-maximizing consumer, he should:

Accepted Answer

A)  bowl less, so the marginal satisfaction from expenditures in this area will increase. 
B)  spend more on hamburgers, so total satisfaction from that activity will increase. 
C)  eliminate spending on hamburgers. 
D)  bowl more and spend less on hamburgers. 
A)  bowl less, so the marginal satisfaction from expenditures in this area will increase. 
B)  spend more on hamburgers, so total satisfaction from that activity will increase. 
C)  eliminate spending on hamburgers. 
D)  bowl more and spend less on hamburgers.

Question 9

If a consumer is choosing the optimal combinations of two goods X and Y, and then the price of good Y decreases, this causes:

Accepted Answer

A)  MU/P of good X to increase, so the consumer now must buy more X to find a new optimal combination. 
B)  demand for good X to increase. 
C)  MU/P of good Y to increase, so the consumer now must buy more Y to find a new optimal combination. 
D)  MU/P of good Y to decrease, so the consumer now must buy more Y to find a new optimal combination. 
E)  the demand for good X and good Y will not change. 
A)  MU/P of good X to increase, so the consumer now must buy more X to find a new optimal combination. 
B)  demand for good X to increase. 
C)  MU/P of good Y to increase, so the consumer now must buy more Y to find a new optimal combination. 
D)  MU/P of good Y to decrease, so the consumer now must buy more Y to find a new optimal combination. 
E)  the demand for good X and good Y will not change.

Question 10

Total utility is measured by a mythical unit called the:

Accepted Answer

A)  bliss unit. 
B)  useful unit. 
C)  pleasure unit. 
D)  util. 
A)  bliss unit. 
B)  useful unit. 
C)  pleasure unit. 
D)  util.

Question 11

Exhibit 6-7 Marginal utility for sandwiches and sodas $$\begin{array} { | c | c | c | } 
\hline \text { Quantity } & \text { Sandwiches } & \text { Sodas } \
\hline 1 & 10 & 5 \
2 & 8 & 4 \
3 & 6 & 3 \
4 & 3 & 1 \
5 & - 1 & 0 \
\hline
\end{array}$$
-Refer to Exhibit 6-7. If the price of a sandwich is $1 and the price of a soda is $1, Marian should spend her first dollar on a ____ and her second dollar on a ____.

Accepted Answer

A)  sandwich; soda 
B)  sandwich; sandwich 
C)  soda; sandwich 
D)  soda; soda 
E)  neither good should be purchased since she has diminishing marginal utility 
A)  sandwich; soda 
B)  sandwich; sandwich 
C)  soda; sandwich 
D)  soda; soda 
E)  neither good should be purchased since she has diminishing marginal utility

Question 12

Consumer equilibrium occurs where the budget line is ____ to the ____ possible indifference curve.

Accepted Answer

A)  tangent; highest 
B)  equal; lowest 
C)  marginal; maximum 
D)  differential; highest 
A)  tangent; highest 
B)  equal; lowest 
C)  marginal; maximum 
D)  differential; highest

Question 13

Exhibit 6A-4 Consumer equilibrium
​  
-Given the budget line and indifference curves shown in Exhibit 6A-4, point E is:

Accepted Answer

A)  inferior to point X. 
B)  lowest attainable level of total utility. 
C)  consumer equilibrium. 
D)  unobtainable. 
A)  inferior to point X. 
B)  lowest attainable level of total utility. 
C)  consumer equilibrium. 
D)  unobtainable.

Question 14

Exhibit 6A-5 Consumer Equilibrium
​  
-Given the budget lines and indifference curves shown in Exhibit 6A-5, if the budget line shifts from AC to AB, then the consumer will purchase:

Accepted Answer

A)  more of both goods Y and X. 
B)  a higher level of total utility. 
C)  less of both goods X and Y. 
D)  more of good Y and less of good X. 
A)  more of both goods Y and X. 
B)  a higher level of total utility. 
C)  less of both goods X and Y. 
D)  more of good Y and less of good X.

Question 15

The ____ is the absolute value of the slope of an indifference curve.

Accepted Answer

A)  marginal rate of substitution 
B)  average rate of transitivity 
C)  relative rate of utility 
D)  marginal rate of transposition 
A)  marginal rate of substitution 
B)  average rate of transitivity 
C)  relative rate of utility 
D)  marginal rate of transposition

Question 16

Utility is most closely defined by which of the following terms?

Accepted Answer

A)  Useful. 
B)  Worthiness. 
C)  Necessary. 
D)  Satisfaction. 
A)  Useful. 
B)  Worthiness. 
C)  Necessary. 
D)  Satisfaction.

Question 17

Assume the price of Levi jeans increases. As a result, you decrease the quantity of Levi jeans purchased each month and purchase more Lee jeans. This is an example of the:

Accepted Answer

A)  consumption effect. 
B)  utility effect. 
C)  income effect. 
D)  substitution effect. 
A)  consumption effect. 
B)  utility effect. 
C)  income effect. 
D)  substitution effect.

Question 18

Exhibit 6-1 Total utility for good X $$\begin{array} { | l | r | r | r | r | r | r | } 
\hline \text { Total utility (utils) } & 0 & 80 & 120 & 148 & 160 & 155 \
\hline \text { Quantity con sumed per day } & 0 & 1 & 2 & 3 & 4 & 5 \
\hline
\end{array}$$
-As shown in Exhibit 6-1, the marginal utility for the second unit consumed is:

Accepted Answer

A)  0. 
B)  40. 
C)  80. 
D)  200. 
A)  0. 
B)  40. 
C)  80. 
D)  200.

Question 19

The utility of a good measures its satisfaction rather than its usefulness.

Accepted Answer

A) True 
 B)False

Question 20

Assume the total utilities corresponding to the first four units of a product consumed are 8, 12, 14, and 15, respectively. The marginal utility of the second unit consumed is:

Accepted Answer

A)  0. 
B)  4. 
C)  12. 
D)  20. 
A)  0. 
B)  4. 
C)  12. 
D)  20.

Which of the following best describes the economic concept of utility?

Bonnie gets her hair cut at her usual salon and is very happy with the results. Later that afternoon, she goes to the mall and sees that a hair salon is giving away free haircuts only on that day. If Bonnie does not take advantage of the giveaway, it is because the:

Exhibit 6A-3 Consumer equilibrium -Given the budge line and indifference curves shown in Exhibit 6A-3, consumer equilibrium occurs at a tangency to which of the following indifference curves?

Consuming one more of a good increases its marginal-utility-to-price ratio, and consuming one less of the other good lowers its marginal-utility-to-price ratio.

If marginal utility is positive, then total utility is:

Typically, total utility derived decreases as more of a good is consumed.

Total utility is maximized in the consumption of two goods by equating the:

If Mr. McLean thinks the last dollar spent on bowling yields more satisfaction than the last dollar spent on hamburgers, and McLean is a utility-maximizing consumer, he should:

If a consumer is choosing the optimal combinations of two goods X and Y, and then the price of good Y decreases, this causes:

Total utility is measured by a mythical unit called the:

Exhibit 6-7 Marginal utility for sandwiches and sodas Quantity Sandwiches Sodas 1 10 5 2 8 4 3 6 3 4 3 1 5 -1 0 -Refer to Exhibit 6-7. If the price of a sandwich is $1 and the price of a soda is $1, Marian should spend her first dollar on a and her second dollar on a .

Consumer equilibrium occurs where the budget line is to the possible indifference curve.

Exhibit 6A-4 Consumer equilibrium -Given the budget line and indifference curves shown in Exhibit 6A-4, point E is:

Exhibit 6A-5 Consumer Equilibrium -Given the budget lines and indifference curves shown in Exhibit 6A-5, if the budget line shifts from AC to AB, then the consumer will purchase:

The ____ is the absolute value of the slope of an indifference curve.

Utility is most closely defined by which of the following terms?

Assume the price of Levi jeans increases. As a result, you decrease the quantity of Levi jeans purchased each month and purchase more Lee jeans. This is an example of the:

Exhibit 6-1 Total utility for good X Total utility (utils) 0 80 120 148 160 155 Quantity con sumed per day 0 1 2 3 4 5 -As shown in Exhibit 6-1, the marginal utility for the second unit consumed is:

The utility of a good measures its satisfaction rather than its usefulness.

Assume the total utilities corresponding to the first four units of a product consumed are 8, 12, 14, and 15, respectively. The marginal utility of the second unit consumed is:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exam 6: Consumer Choice Theory

​Which of the following best describes the economic concept of utility?

Bonnie gets her hair cut at her usual salon and is very happy with the results. Later that afternoon, she goes to the mall and sees that a hair salon is giving away free haircuts only on that day. If Bonnie does not take advantage of the giveaway, it is because the:

Exhibit 6A-3 Consumer equilibrium ​ -Given the budge line and indifference curves shown in Exhibit 6A-3, consumer equilibrium occurs at a tangency to which of the following indifference curves?

Consuming one more of a good increases its marginal-utility-to-price ratio, and consuming one less of the other good lowers its marginal-utility-to-price ratio.

If marginal utility is positive, then total utility is:

Typically, total utility derived decreases as more of a good is consumed.

Total utility is maximized in the consumption of two goods by equating the:

If Mr. McLean thinks the last dollar spent on bowling yields more satisfaction than the last dollar spent on hamburgers, and McLean is a utility-maximizing consumer, he should:

If a consumer is choosing the optimal combinations of two goods X and Y, and then the price of good Y decreases, this causes:

Total utility is measured by a mythical unit called the:

Exhibit 6-7 Marginal utility for sandwiches and sodas Quantity Sandwiches Sodas 1 10 5 2 8 4 3 6 3 4 3 1 5 -1 0 -Refer to Exhibit 6-7. If the price of a sandwich is $1 and the price of a soda is $1, Marian should spend her first dollar on a ____ and her second dollar on a ____.

Consumer equilibrium occurs where the budget line is ____ to the ____ possible indifference curve.

Exhibit 6A-4 Consumer equilibrium ​ -Given the budget line and indifference curves shown in Exhibit 6A-4, point E is:

Exhibit 6A-5 Consumer Equilibrium ​ -Given the budget lines and indifference curves shown in Exhibit 6A-5, if the budget line shifts from AC to AB, then the consumer will purchase:

The ____ is the absolute value of the slope of an indifference curve.

Utility is most closely defined by which of the following terms?

Assume the price of Levi jeans increases. As a result, you decrease the quantity of Levi jeans purchased each month and purchase more Lee jeans. This is an example of the:

Exhibit 6-1 Total utility for good X Total utility (utils) 0 80 120 148 160 155 Quantity con sumed per day 0 1 2 3 4 5 -As shown in Exhibit 6-1, the marginal utility for the second unit consumed is:

The utility of a good measures its satisfaction rather than its usefulness.

Assume the total utilities corresponding to the first four units of a product consumed are 8, 12, 14, and 15, respectively. The marginal utility of the second unit consumed is:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Which of the following best describes the economic concept of utility?

Exhibit 6A-3 Consumer equilibrium -Given the budge line and indifference curves shown in Exhibit 6A-3, consumer equilibrium occurs at a tangency to which of the following indifference curves?

Exhibit 6-7 Marginal utility for sandwiches and sodas Quantity Sandwiches Sodas 1 10 5 2 8 4 3 6 3 4 3 1 5 -1 0 -Refer to Exhibit 6-7. If the price of a sandwich is $1 and the price of a soda is $1, Marian should spend her first dollar on a and her second dollar on a .

Consumer equilibrium occurs where the budget line is to the possible indifference curve.

Exhibit 6A-4 Consumer equilibrium -Given the budget line and indifference curves shown in Exhibit 6A-4, point E is:

Exhibit 6A-5 Consumer Equilibrium -Given the budget lines and indifference curves shown in Exhibit 6A-5, if the budget line shifts from AC to AB, then the consumer will purchase: