Question 1

Exhibit 6A-1 Budget line
​  
-​As shown in Exhibit 6A-1, a rightward shift in the budget line from AB to CD would result from:

Accepted Answer

A)  ​a price reduction in good X. 
B)  ​a price reduction in good Y. 
C)  ​a change in consumer preference. 
D)  ​an increase in consumer income. 
A)  ​a price reduction in good X. 
B)  ​a price reduction in good Y. 
C)  ​a change in consumer preference. 
D)  ​an increase in consumer income.

Question 2

Moving along a budget line, the prices of both goods:

Accepted Answer

A)  vary and the consumer's budget is held constant. 
B)  are held constant and the consumer's budget varies. 
C)  and the consumer's budget are held constant. 
D)  and the consumer's budget vary. 
A)  vary and the consumer's budget is held constant. 
B)  are held constant and the consumer's budget varies. 
C)  and the consumer's budget are held constant. 
D)  and the consumer's budget vary.

Question 3

An indifference map states:

Accepted Answer

A)  indifference curves farther from the origin yield higher levels of total utility. 
B)  that the consumer's income varies with the level of the indifference curve. 
C)  indifference curves closer to the origin yield higher levels of total utility. 
D)  that the points on either parts of indifference curves are preferred to the midpoint. 
A)  indifference curves farther from the origin yield higher levels of total utility. 
B)  that the consumer's income varies with the level of the indifference curve. 
C)  indifference curves closer to the origin yield higher levels of total utility. 
D)  that the points on either parts of indifference curves are preferred to the midpoint.

Question 4

Exhibit 6A-2 Consumer Equilibrium
​  
-Given the budget lines and indifference curves shown in Exhibit 6A-2, points D, A, and E yield:

Accepted Answer

A)  more total utility than point B. 
B)  more total utility than points B and F. 
C)  less total utility than points B and C. 
D)  equal total utility to points B, F, and C. 
A)  more total utility than point B. 
B)  more total utility than points B and F. 
C)  less total utility than points B and C. 
D)  equal total utility to points B, F, and C.

Question 5

Exhibit 6A-3 Consumer equilibrium
​  
-Given the budget line and indifference curves shown in Exhibit 6A-3, assume the consumer is initially at point W. To maximize total utility, the consumer should:

Accepted Answer

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

Question 6

Exhibit 6A-1 Budget line
​  
-​As shown in Exhibit 6A-1, a leftward shift in the budget line from CD to AB would result from:

Accepted Answer

A)  ​a price reduction in good X. 
B)  ​a price reduction in good Y. 
C)  ​a decrease in consumer income. 
D)  ​an increase in consumer income. 
A)  ​a price reduction in good X. 
B)  ​a price reduction in good Y. 
C)  ​a decrease in consumer income. 
D)  ​an increase in consumer income.

Question 7

Indifference curves that are closest to the origin are preferable to ones that are farther from the origin.

Accepted Answer

A) True 
 B)False

Question 8

Assume that an individual consumes only coffee and bagels and that the last cup of coffee yields 12 utils and the last bagel 6 utils. If the price of a cup of coffee is $1 and the price of the bagel is $.50, we can conclude that the:

Accepted Answer

A)  consumer should consume more coffee and fewer bagels. 
B)  price of coffee is too high relative to bagels. 
C)  consumer should consume less coffee and more bagels. 
D)  consumer is in equilibrium. 
A)  consumer should consume more coffee and fewer bagels. 
B)  price of coffee is too high relative to bagels. 
C)  consumer should consume less coffee and more bagels. 
D)  consumer is in equilibrium.

Question 9

Given the prices of two goods, all quantity combinations inside the budget line are:

Accepted Answer

A)  indifferent. 
B)  efficient. 
C)  unattainable. 
D)  attainable. 
A)  indifferent. 
B)  efficient. 
C)  unattainable. 
D)  attainable.

Question 10

The marginal rate of substitution ____ as one moves downward along the indifference curve.

Accepted Answer

A)  increase 
B)  remains constant 
C)  decreases 
D)  increases and then decreases 
A)  increase 
B)  remains constant 
C)  decreases 
D)  increases and then decreases

Question 11

Exhibit 6A-7 Consumer equilibrium
​  
-As shown in Exhibit 6A-7, the total utility a consumer receives at point B is ____ the total utility at point A.

Accepted Answer

A)  greater than 
B)  equal to 
C)  less than 
D)  equal to the marginal rate of substitution (MRS) plus 
A)  greater than 
B)  equal to 
C)  less than 
D)  equal to the marginal rate of substitution (MRS) plus

Question 12

Exhibit 6A-3 Consumer equilibrium
​  
-Given the budget line and indifference curves shown in Exhibit 6A-3, point V is:

Accepted Answer

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

Question 13

The income effect is the concept that changes in consumption of a good result from changes in purchasing power.

Accepted Answer

A) True 
 B)False

Question 14

The slope of an indifference curve is equal to the ratio of the ____ of the good on the horizontal axis to the ____ of the good on the vertical axis.

Accepted Answer

A)  marginal utility (MU); marginal utility (MU) 
B)  total utility (TU); total utility (TU) 
C)  marginal product (MP); marginal product (MP) 
D)  price (P); total utility (TU) 
A)  marginal utility (MU); marginal utility (MU) 
B)  total utility (TU); total utility (TU) 
C)  marginal product (MP); marginal product (MP) 
D)  price (P); total utility (TU)

Question 15

The negative slope of an indifference curve means that the consumer must give up quantity of one good as the quantity of another good increases in order for total utility to ____.

Accepted Answer

A)  remain constant. 
B)  increase 
C)  decrease 
D)  normalize. 
A)  remain constant. 
B)  increase 
C)  decrease 
D)  normalize.

Question 16

Consumer equilibrium exists when:

Accepted Answer

A)  the marginal utility of each good and service consumed is equal. 
B)  the total utility of each good and service consumed is equal. 
C)  the marginal utility of each good and service consumed equals its price. 
D)  ratio of marginal utility to price for all goods and services is equal. 
A)  the marginal utility of each good and service consumed is equal. 
B)  the total utility of each good and service consumed is equal. 
C)  the marginal utility of each good and service consumed equals its price. 
D)  ratio of marginal utility to price for all goods and services is equal.

Question 17

Lori plans to buy a convertible this weekend. Her two favorite cars are the BMW, which would give her 160,000 utils of satisfaction, and the Mitsubishi Eclipse Spyder, which would give her only 124,000 utils of satisfaction. The BMW that she wants sells for $37,220, while the Mitsubishi sells for $28,200. She can afford either car.
a.
Which car will she buy in order to maximize her utility?
b.
To what price will her second choice have to fall to get her to make her first choice?

Accepted Answer

a.
She will buy the Mitsubishi, because

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 law of diminishing marginal utility is first observed at the:

Accepted Answer

A)  first unit. 
B)  second unit. 
C)  third unit. 
D)  fourth unit. 
E)  fifth unit. 
A)  first unit. 
B)  second unit. 
C)  third unit. 
D)  fourth unit. 
E)  fifth unit.

Question 19

A util represents a unit of measurement for the:

Accepted Answer

A)  dollars a consumer spends on a good. 
B)  profit a firm makes from producing a good. 
C)  way a consumer will respond to a change in price. 
D)  happiness a person obtains from consuming a good. 
E)  way a producer will respond to a change in price. 
A)  dollars a consumer spends on a good. 
B)  profit a firm makes from producing a good. 
C)  way a consumer will respond to a change in price. 
D)  happiness a person obtains from consuming a good. 
E)  way a producer will respond to a change in price.

Question 20

In the consumer choice problem, consumers are confronted with which of the following?

Accepted Answer

A)  ​A set of different consumer goods and services to choose from. 
B)  A set of prices for those goods and services.​ 
C)  ​A finite budget that constrains the quantity of goods and services that consumers can buy. 
D)  ​Preferences or utility associated with consuming different quantities of each of the different goods and services. 
E)  All of the above answers are correct.​​ 
A)  ​A set of different consumer goods and services to choose from. 
B)  A set of prices for those goods and services.​ 
C)  ​A finite budget that constrains the quantity of goods and services that consumers can buy. 
D)  ​Preferences or utility associated with consuming different quantities of each of the different goods and services. 
E)  All of the above answers are correct.​​

Exhibit 6A-1 Budget line -As shown in Exhibit 6A-1, a rightward shift in the budget line from AB to CD would result from:

Moving along a budget line, the prices of both goods:

An indifference map states:

Exhibit 6A-2 Consumer Equilibrium -Given the budget lines and indifference curves shown in Exhibit 6A-2, points D, A, and E yield:

Exhibit 6A-3 Consumer equilibrium -Given the budget line and indifference curves shown in Exhibit 6A-3, assume the consumer is initially at point W. To maximize total utility, the consumer should:

Exhibit 6A-1 Budget line -As shown in Exhibit 6A-1, a leftward shift in the budget line from CD to AB would result from:

Indifference curves that are closest to the origin are preferable to ones that are farther from the origin.

Assume that an individual consumes only coffee and bagels and that the last cup of coffee yields 12 utils and the last bagel 6 utils. If the price of a cup of coffee is $1 and the price of the bagel is $.50, we can conclude that the:

Given the prices of two goods, all quantity combinations inside the budget line are:

The marginal rate of substitution ____ as one moves downward along the indifference curve.

Exhibit 6A-7 Consumer equilibrium -As shown in Exhibit 6A-7, the total utility a consumer receives at point B is ____ the total utility at point A.

Exhibit 6A-3 Consumer equilibrium -Given the budget line and indifference curves shown in Exhibit 6A-3, point V is:

The income effect is the concept that changes in consumption of a good result from changes in purchasing power.

The slope of an indifference curve is equal to the ratio of the of the good on the horizontal axis to the of the good on the vertical axis.

The negative slope of an indifference curve means that the consumer must give up quantity of one good as the quantity of another good increases in order for total utility to ____.

Consumer equilibrium exists when:

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 law of diminishing marginal utility is first observed at the:

A util represents a unit of measurement for the:

In the consumer choice problem, consumers are confronted with which of the following?

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

Exhibit 6A-1 Budget line ​ -​As shown in Exhibit 6A-1, a rightward shift in the budget line from AB to CD would result from:

Moving along a budget line, the prices of both goods:

An indifference map states:

Exhibit 6A-2 Consumer Equilibrium ​ -Given the budget lines and indifference curves shown in Exhibit 6A-2, points D, A, and E yield:

Exhibit 6A-3 Consumer equilibrium ​ -Given the budget line and indifference curves shown in Exhibit 6A-3, assume the consumer is initially at point W. To maximize total utility, the consumer should:

Exhibit 6A-1 Budget line ​ -​As shown in Exhibit 6A-1, a leftward shift in the budget line from CD to AB would result from:

Indifference curves that are closest to the origin are preferable to ones that are farther from the origin.

Assume that an individual consumes only coffee and bagels and that the last cup of coffee yields 12 utils and the last bagel 6 utils. If the price of a cup of coffee is $1 and the price of the bagel is $.50, we can conclude that the:

Given the prices of two goods, all quantity combinations inside the budget line are:

The marginal rate of substitution ____ as one moves downward along the indifference curve.

Exhibit 6A-7 Consumer equilibrium ​ -As shown in Exhibit 6A-7, the total utility a consumer receives at point B is ____ the total utility at point A.

Exhibit 6A-3 Consumer equilibrium ​ -Given the budget line and indifference curves shown in Exhibit 6A-3, point V is:

The income effect is the concept that changes in consumption of a good result from changes in purchasing power.

The slope of an indifference curve is equal to the ratio of the ____ of the good on the horizontal axis to the ____ of the good on the vertical axis.

The negative slope of an indifference curve means that the consumer must give up quantity of one good as the quantity of another good increases in order for total utility to ____.

Consumer equilibrium exists when:

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 law of diminishing marginal utility is first observed at the:

A util represents a unit of measurement for the:

In the consumer choice problem, consumers are confronted with which of the following?

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-1 Budget line -As shown in Exhibit 6A-1, a rightward shift in the budget line from AB to CD would result from:

Exhibit 6A-2 Consumer Equilibrium -Given the budget lines and indifference curves shown in Exhibit 6A-2, points D, A, and E yield:

Exhibit 6A-3 Consumer equilibrium -Given the budget line and indifference curves shown in Exhibit 6A-3, assume the consumer is initially at point W. To maximize total utility, the consumer should:

Exhibit 6A-1 Budget line -As shown in Exhibit 6A-1, a leftward shift in the budget line from CD to AB would result from:

Exhibit 6A-7 Consumer equilibrium -As shown in Exhibit 6A-7, the total utility a consumer receives at point B is ____ the total utility at point A.

Exhibit 6A-3 Consumer equilibrium -Given the budget line and indifference curves shown in Exhibit 6A-3, point V is:

The slope of an indifference curve is equal to the ratio of the of the good on the horizontal axis to the of the good on the vertical axis.