Question 1

Consumer equilibrium is a condition in which total utility cannot increase by spending more of a given budget on one good and spending ____ on another good.

Accepted Answer

A)  an equal amount 
B)  more 
C)  less 
D)  zero 
A)  an equal amount 
B)  more 
C)  less 
D)  zero

Question 2

John loves to travel. He would never turn down the opportunity to go on a trip. This means that, for John:

Accepted Answer

A)  the total utility of travel always increases. 
B)  marginal utility of travel never decreases. 
C)  the law of diminishing marginal utility does not apply to travel. 
D)  marginal utility of travel is always zero. 
E)  extra travel yields zero consumer surplus. 
A)  the total utility of travel always increases. 
B)  marginal utility of travel never decreases. 
C)  the law of diminishing marginal utility does not apply to travel. 
D)  marginal utility of travel is always zero. 
E)  extra travel yields zero consumer surplus.

Question 3

A util:

Accepted Answer

A)  can measure satisfaction with factual accuracy. 
B)  is not a valid concept. 
C)  applies to a good but not to a service. 
D)  is purely a fictitious measure of the satisfaction a consumer derives from a product. 
E)  can be used in place of money in some countries. 
A)  can measure satisfaction with factual accuracy. 
B)  is not a valid concept. 
C)  applies to a good but not to a service. 
D)  is purely a fictitious measure of the satisfaction a consumer derives from a product. 
E)  can be used in place of money in some countries.

Question 4

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 fifth unit consumed is:

Accepted Answer

A)  305. 
B)  155. 
C)  5. 
D)  0. 
A)  305. 
B)  155. 
C)  5. 
D)  0.

Question 5

If the marginal utility of each good consumers buy does not diminish but remains constant, we should witness consumers:

Accepted Answer

A)  buying no goods at all. 
B)  spending all of their income on the good with the highest MU. 
C)  buying one of each good. 
D)  buying only the least expensive goods. 
E)  become indifferent to what goods they buy. 
A)  buying no goods at all. 
B)  spending all of their income on the good with the highest MU. 
C)  buying one of each good. 
D)  buying only the least expensive goods. 
E)  become indifferent to what goods they buy.

Question 6

____ is the subjective measure of the physical and mental satisfaction that is anticipated from consumption.

Accepted Answer

A)  Demand 
B)  Supply 
C)  Recognition 
D)  Utility 
E)  Cognition 
A)  Demand 
B)  Supply 
C)  Recognition 
D)  Utility 
E)  Cognition

Question 7

Exhibit 6A-5 Consumer Equilibrium
​  
-Given the budget lines and indifference curves shown in Exhibit 6A-5, if the budget line shifts from AB to AC, then the equilibrium points X and Y:

Accepted Answer

A)  result from a decrease in the price of good X. 
B)  are two points along a downward sloping demand curve for good X. 
C)  result from a decrease in the consumer's budget. 
D)  result from a decrease in the price of good Y. 
A)  result from a decrease in the price of good X. 
B)  are two points along a downward sloping demand curve for good X. 
C)  result from a decrease in the consumer's budget. 
D)  result from a decrease in the price of good Y.

Question 8

Exhibit 6-4 Total utility for multiplex tickets, video rentals, and popcorn $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Total Utility } \
\text { from Multiplex Tickets }
\end{array} & \begin{array} { c } 
\text { T otal Utility } \
\text { from Video Rentals }
\end{array} & \begin{array} { c } 
\text { Total Utility } \
\text { from Popcorn }
\end{array} \
\hline 1 \text { movie ( } 30 \text { utils) } & 1 \text { video (14 utils) } & 1 \text { bag (8 utils) } \
2 \text { movies (54 utils) } & 2 \text { videos (24 utils) } & 2 \text { bags (13 utils) } \
3 \text { movies (72 utils) } & 3 \text { videos (30 utils) } & 3 \text { bags } ( 15 \text { utils) } \
4 \text { movies (84 utils) } & 4 \text { videos (32utils) } & 4 \text { bags (16 utils) } \
\hline
\end{array}$$
-In Exhibit 6-4, assume the Multiplex tickets cost $6 each, video rentals cost $2 each, and bags of popcorn cost $1 each. Suppose the consumer has $12 per week to spend on multiplex tickets, video rentals, and popcorn. What combination of goods will give the consumer the most utility?

Accepted Answer

A)  1 movie, 3 videos, and no popcorn. 
B)  1 movie, 2 videos, and 2 bags of popcorn. 
C)  1 movie, 1 video, and 4 bags of popcorn. 
D)  2 movies, no videos, and no bags of popcorn. 
A)  1 movie, 3 videos, and no popcorn. 
B)  1 movie, 2 videos, and 2 bags of popcorn. 
C)  1 movie, 1 video, and 4 bags of popcorn. 
D)  2 movies, no videos, and no bags of popcorn.

Question 9

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

Accepted Answer

A)  2. 
B)  14. 
C)  3 
D)  34. 
A)  2. 
B)  14. 
C)  3 
D)  34.

Question 10

Consumers always ____ indifference curves that are farther from the origin.

Accepted Answer

A)  reject 
B)  cross 
C)  prefer 
D)  maximize 
A)  reject 
B)  cross 
C)  prefer 
D)  maximize

Question 11

The total utilities associated with the first 5 units of consumption of good X are 15, 30, 40, 47, and 50, respectively. What is the marginal utility associated with the third unit?

Accepted Answer

A)  15. 
B)  70. 
C)  85. 
D)  10. 
E)  45. 
A)  15. 
B)  70. 
C)  85. 
D)  10. 
E)  45.

Question 12

Assume an indifference curve yields a consumer 1,000 utils of total utility. If the consumer's budget increases by 50 percent, then the indifference curve:

Accepted Answer

A)  shifts rightward. 
B)  shifts leftward. 
C)  becomes more linear. 
D)  is unchanged. 
A)  shifts rightward. 
B)  shifts leftward. 
C)  becomes more linear. 
D)  is unchanged.

Question 13

The marginal utilities associated with the first 4 units of consumption of good Y are 10, 12, 9, and 7, respectively. What is the total utility associated with the third unit?

Accepted Answer

A)  3. 
B)  9. 
C)  25. 
D)  31. 
E)  The amount cannot be determined from the marginal utilities. 
A)  3. 
B)  9. 
C)  25. 
D)  31. 
E)  The amount cannot be determined from the marginal utilities.

Question 14

A utility-maximizing consumer would never purchase a good if the:

Accepted Answer

A)  MU/P is positive. 
B)  marginal utility is positive. 
C)  marginal utility is negative. 
D)  none of these is correct. 
A)  MU/P is positive. 
B)  marginal utility is positive. 
C)  marginal utility is negative. 
D)  none of these is correct.

Question 15

The consumer equilibrium condition for two goods is achieved by equating the:

Accepted Answer

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

Question 16

If Allison's marginal utility of her 100th dollar of income is greater than Brad's marginal utility of his 10th dollar, then we can conclude:

Accepted Answer

A)  money means more to Allison. 
B)  money means more to Brad. 
C)  Brad is richer than Allison. 
D)  Allison is richer than Brad. 
E)  nothing, since we can't make interpersonal utility comparisons. 
A)  money means more to Allison. 
B)  money means more to Brad. 
C)  Brad is richer than Allison. 
D)  Allison is richer than Brad. 
E)  nothing, since we can't make interpersonal utility comparisons.

Question 17

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

Accepted Answer

A)  Px exceeds Py. 
B)  MRS = Px / Py. 
C)  MUx = MUy. 
D)  MRS = Py / Px. 
A)  Px exceeds Py. 
B)  MRS = Px / Py. 
C)  MUx = MUy. 
D)  MRS = Py / Px.

Question 18

An increase in the consumption of a good resulting from a reduction in price that makes the good cheaper in relation to other goods is called the:

Accepted Answer

A)  substitution effect. 
B)  income effect. 
C)  real balance effect. 
D)  inelasticity effect. 
A)  substitution effect. 
B)  income effect. 
C)  real balance effect. 
D)  inelasticity effect.

Question 19

Which of the following is a characteristic of an indifference curve?

Accepted Answer

A)  Positive slope. 
B)  Concave shape. 
C)  Negative slope. 
D)  Zero slope. 
A)  Positive slope. 
B)  Concave shape. 
C)  Negative slope. 
D)  Zero slope.

Question 20

Exhibit 6A-4 Consumer equilibrium
​  
-Given the budget line and indifference curves shown in Exhibit 6A-4, assume the consumer is initially at point C. To maximize total utility, the consumer should:

Accepted Answer

A)  purchase more of good X and less of good Y. 
B)  remain at point C. 
C)  move to point B and then point A. 
D)  purchase more of good Y and less of good X. 
A)  purchase more of good X and less of good Y. 
B)  remain at point C. 
C)  move to point B and then point A. 
D)  purchase more of good Y and less of good X.

Consumer equilibrium is a condition in which total utility cannot increase by spending more of a given budget on one good and spending ____ on another good.

John loves to travel. He would never turn down the opportunity to go on a trip. This means that, for John:

A util:

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 fifth unit consumed is:

If the marginal utility of each good consumers buy does not diminish but remains constant, we should witness consumers:

____ is the subjective measure of the physical and mental satisfaction that is anticipated from consumption.

Exhibit 6A-5 Consumer Equilibrium -Given the budget lines and indifference curves shown in Exhibit 6A-5, if the budget line shifts from AB to AC, then the equilibrium points X and Y:

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

Consumers always ____ indifference curves that are farther from the origin.

The total utilities associated with the first 5 units of consumption of good X are 15, 30, 40, 47, and 50, respectively. What is the marginal utility associated with the third unit?

Assume an indifference curve yields a consumer 1,000 utils of total utility. If the consumer's budget increases by 50 percent, then the indifference curve:

The marginal utilities associated with the first 4 units of consumption of good Y are 10, 12, 9, and 7, respectively. What is the total utility associated with the third unit?

A utility-maximizing consumer would never purchase a good if the:

The consumer equilibrium condition for two goods is achieved by equating the:

If Allison's marginal utility of her 100th dollar of income is greater than Brad's marginal utility of his 10th dollar, then we can conclude:

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

An increase in the consumption of a good resulting from a reduction in price that makes the good cheaper in relation to other goods is called the:

Which of the following is a characteristic of an indifference curve?

Exhibit 6A-4 Consumer equilibrium -Given the budget line and indifference curves shown in Exhibit 6A-4, assume the consumer is initially at point C. To maximize total utility, the consumer should:

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

Consumer equilibrium is a condition in which total utility cannot increase by spending more of a given budget on one good and spending ____ on another good.

John loves to travel. He would never turn down the opportunity to go on a trip. This means that, for John:

A util:

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 fifth unit consumed is:

If the marginal utility of each good consumers buy does not diminish but remains constant, we should witness consumers:

____ is the subjective measure of the physical and mental satisfaction that is anticipated from consumption.

Exhibit 6A-5 Consumer Equilibrium ​ -Given the budget lines and indifference curves shown in Exhibit 6A-5, if the budget line shifts from AB to AC, then the equilibrium points X and Y:

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

Consumers always ____ indifference curves that are farther from the origin.

The total utilities associated with the first 5 units of consumption of good X are 15, 30, 40, 47, and 50, respectively. What is the marginal utility associated with the third unit?

Assume an indifference curve yields a consumer 1,000 utils of total utility. If the consumer's budget increases by 50 percent, then the indifference curve:

The marginal utilities associated with the first 4 units of consumption of good Y are 10, 12, 9, and 7, respectively. What is the total utility associated with the third unit?

A utility-maximizing consumer would never purchase a good if the:

The consumer equilibrium condition for two goods is achieved by equating the:

If Allison's marginal utility of her 100th dollar of income is greater than Brad's marginal utility of his 10th dollar, then we can conclude:

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

An increase in the consumption of a good resulting from a reduction in price that makes the good cheaper in relation to other goods is called the:

Which of the following is a characteristic of an indifference curve?

Exhibit 6A-4 Consumer equilibrium ​ -Given the budget line and indifference curves shown in Exhibit 6A-4, assume the consumer is initially at point C. To maximize total utility, the consumer should:

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

Exhibit 6A-5 Consumer Equilibrium -Given the budget lines and indifference curves shown in Exhibit 6A-5, if the budget line shifts from AB to AC, then the equilibrium points X and Y:

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

Exhibit 6A-4 Consumer equilibrium -Given the budget line and indifference curves shown in Exhibit 6A-4, assume the consumer is initially at point C. To maximize total utility, the consumer should: