Question 1

If a consumer purchases a combination of commodities a and b such that MUa/Pa = 40 and MUb/Pb = 60, to maximize utility, the consumer should buy:

Accepted Answer

A) less of both a and b. 
B) less of a and more of b. 
C) more of both a and b. 
D) more of a and less of b. 
A) less of both a and b. 
B) less of a and more of b. 
C) more of both a and b. 
D) more of a and less of b.

Question 2

-(Exhibit: Consumer Equilibrium 3)The highest level of utility shown in the exhibit is at point:

Accepted Answer

A) G. 
B) H. 
C) I. 
D) J. 
A) G. 
B) H. 
C) I. 
D) J.

Question 3

Marginal utility is at a maximum when it is zero.

Accepted Answer

A) True 
 B)False

Question 4

The substitution and income effects work in opposite directions for:

Accepted Answer

A) complement goods. 
B) substitute goods. 
C) normal goods. 
D) inferior goods. 
A) complement goods. 
B) substitute goods. 
C) normal goods. 
D) inferior goods.

Question 5

For a(n)_______ good, an increase in income will lead to an increase in _______ .

Accepted Answer

A) inferior; consumption 
B) normal; supply 
C) normal; consumption 
D) inferior; supply 
A) inferior; consumption 
B) normal; supply 
C) normal; consumption 
D) inferior; supply

Question 6

If the first four units of a good consumed have marginal utilities of 60, 50, 40, and 30, respectively, this trend is an indication of the:

Accepted Answer

A) maximization of utility. 
B) law of diminishing marginal utility. 
C) law of consumer equilibrium. 
D) minimization of utility. 
A) maximization of utility. 
B) law of diminishing marginal utility. 
C) law of consumer equilibrium. 
D) minimization of utility.

Question 7

If a consumer purchases a combination of commodities a and b such that MUa/Pa = 50 and MUb/Pb = 40, to maximize utility, the consumer should buy:

Accepted Answer

A) less of both a and b. 
B) more of both a and b. 
C) more of a and less of b. 
D) less of a and more of b. 
A) less of both a and b. 
B) more of both a and b. 
C) more of a and less of b. 
D) less of a and more of b.

Question 8

How much utility is gained by spending an additional dollar on good X?

Accepted Answer

A) It is the average utility of good X divided by the price of good X. 
B) MUx/Px  
C) TUx/Px  
D) None of the above are correct. 
A) It is the average utility of good X divided by the price of good X. 
B) MUx/Px  
C) TUx/Px  
D) None of the above are correct.

Question 9

The marginal rate of substitution assumes that:

Accepted Answer

A) prices remain unchanged. 
B) money income remains unchanged. 
C) satisfaction remains unchanged. 
D) the quantities of both goods remain unchanged. 
A) prices remain unchanged. 
B) money income remains unchanged. 
C) satisfaction remains unchanged. 
D) the quantities of both goods remain unchanged.

Question 10

-Consumers generally try to obtain:

Accepted Answer

A) a point of intersection between indifference curves. 
B) any budget line/indifference curve intersection. 
C) the highest indifference curve. 
D) the lowest indifference curve. 
A) a point of intersection between indifference curves. 
B) any budget line/indifference curve intersection. 
C) the highest indifference curve. 
D) the lowest indifference curve.

Question 11

According to the text, Giffen goods for people:

Accepted Answer

A) are rare but a few have been found. 
B) are quite abundant. 
C) have not been found. 
D) are the same thing as an inferior goods. 
A) are rare but a few have been found. 
B) are quite abundant. 
C) have not been found. 
D) are the same thing as an inferior goods.

Question 12

The income effect of a normal good will not reinforce the substitution effect.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is true because of the law of diminishing marginal utility?

Accepted Answer

A) When a customer continues to eat more pie at the Pie Palace, each additional piece of pie gives a larger amount of marginal utility. 
B) When a customer continues to eat more pie at the Pie Palace, each additional piece of pie gives a smaller amount of marginal utility. 
C) The marginal utility of a piece of pie is maximum when the total utility of pie is zero. 
D) The total utility of pie is at a maximum while the marginal utility of pie is still increasing. 
A) When a customer continues to eat more pie at the Pie Palace, each additional piece of pie gives a larger amount of marginal utility. 
B) When a customer continues to eat more pie at the Pie Palace, each additional piece of pie gives a smaller amount of marginal utility. 
C) The marginal utility of a piece of pie is maximum when the total utility of pie is zero. 
D) The total utility of pie is at a maximum while the marginal utility of pie is still increasing.

Question 14

Total utility falls as marginal utility declines.

Accepted Answer

A) True 
 B)False

Question 15

A theoretical good for which the demand curve is upward sloping is a(n):

Accepted Answer

A) Giffen good. 
B) substitute good. 
C) normal good. 
D) complement good. 
A) Giffen good. 
B) substitute good. 
C) normal good. 
D) complement good.

Question 16

Which of the following is true regarding a budget constraint?

Accepted Answer

A) The budget constraint indicates that consumers desire more income. 
B) The budget constraint indicates that there are limits on the consumption possibilities for a consumer. 
C) The budget constraint is based on some, but not all of the prices for goods that consumers may want to buy. 
D) All of the above statements describe the budget constraint. 
A) The budget constraint indicates that consumers desire more income. 
B) The budget constraint indicates that there are limits on the consumption possibilities for a consumer. 
C) The budget constraint is based on some, but not all of the prices for goods that consumers may want to buy. 
D) All of the above statements describe the budget constraint.

Question 17

Higher indifference curves have greater levels of satisfaction.

Accepted Answer

A) True 
 B)False

Question 18

The law of diminishing marginal utility exists for the first three units of a good if they have total utilities of:

Accepted Answer

A) 8, 17, 27. 
B) 9, 17, 27. 
C) 9, 19, 30. 
D) 10, 19, 27. 
A) 8, 17, 27. 
B) 9, 17, 27. 
C) 9, 19, 30. 
D) 10, 19, 27.

Question 19

The total utility of a good is equal to the marginal utility of the last unit consumed.

Accepted Answer

A) True 
 B)False

Question 20

If a consumer buys more of good X and less of good Y, the _______ of good X will _______ , and the ________ of good Y will _______ .

Accepted Answer

A) marginal utility; fall; marginal utility; rise 
B) marginal utility; rise; marginal utility; fall 
C) total utility; fall; marginal utility; rise 
D) marginal utility; rise; total utility; rise 
A) marginal utility; fall; marginal utility; rise 
B) marginal utility; rise; marginal utility; fall 
C) total utility; fall; marginal utility; rise 
D) marginal utility; rise; total utility; rise

Exam 7: Aggregate Demand and Aggregate Supply

If a consumer purchases a combination of commodities a and b such that MUa/Pa = 40 and MUb/Pb = 60, to maximize utility, the consumer should buy:

-(Exhibit: Consumer Equilibrium 3)The highest level of utility shown in the exhibit is at point:

Marginal utility is at a maximum when it is zero.

The substitution and income effects work in opposite directions for:

For a(n)_______ good, an increase in income will lead to an increase in _______ .

If the first four units of a good consumed have marginal utilities of 60, 50, 40, and 30, respectively, this trend is an indication of the:

If a consumer purchases a combination of commodities a and b such that MUa/Pa = 50 and MUb/Pb = 40, to maximize utility, the consumer should buy:

How much utility is gained by spending an additional dollar on good X?

The marginal rate of substitution assumes that:

-Consumers generally try to obtain:

According to the text, Giffen goods for people:

The income effect of a normal good will not reinforce the substitution effect.

Which of the following statements is true because of the law of diminishing marginal utility?

Total utility falls as marginal utility declines.

A theoretical good for which the demand curve is upward sloping is a(n):

Which of the following is true regarding a budget constraint?

Higher indifference curves have greater levels of satisfaction.

The law of diminishing marginal utility exists for the first three units of a good if they have total utilities of:

The total utility of a good is equal to the marginal utility of the last unit consumed.

If a consumer buys more of good X and less of good Y, the _______ of good X will _______ , and the ________ of good Y will _______ .

Economics: the Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Economic Growth

The Nature and Creation of Money

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Inflation and Unemployment

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Macroeconomics: the Big Picture

Measuring Total Income and Output

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Macro Inflation and Unemployment

Macro a Brief History of Macroeconomic Thought and Policy

Economic Development

Socialist Economies in Transition

Filters

If a consumer purchases a combination of commodities a and b such that MU_a/P_a = 40 and MU_b/P_b = 60, to maximize utility, the consumer should buy:

For a(n)_ good, an increase in income will lead to an increase in _ .

If a consumer purchases a combination of commodities a and b such that MU_a/P_a = 50 and MU_b/P_b = 40, to maximize utility, the consumer should buy:

If a consumer buys more of good X and less of good Y, the ___ of good X will _ , and the of good Y will _ .