Question 1

As the price of a good rises, the consumer will experience

Accepted Answer

A) a desire to consume a different bundle. 
B) a decrease in utility. 
C) a downward or leftward movement on the indifference map. 
D) All of the above. 
A) a desire to consume a different bundle. 
B) a decrease in utility. 
C) a downward or leftward movement on the indifference map. 
D) All of the above.

Question 2

The indifference curves for left shoes and right shoes would most likely be

Accepted Answer

A) upward sloping and concave to the origin. 
B) downward sloping and convex to the origin. 
C) downward sloping and straight lines. 
D) L-shaped. 
A) upward sloping and concave to the origin. 
B) downward sloping and convex to the origin. 
C) downward sloping and straight lines. 
D) L-shaped.

Question 3

What is the difference between ordinal and cardinal measurement?

Accepted Answer

Prices are measured in money, which is a

Question 4

If Fred's marginal utility of pizza equals 10 and his marginal utility of salad equals 2, then

Accepted Answer

A) he would give up 5 pizzas to get the next salad. 
B) he would give up 5 salads to get the next pizza. 
C) he will eat five times as much pizza as salad. 
D) he will eat five times as much salad as pizza. 
A) he would give up 5 pizzas to get the next salad. 
B) he would give up 5 salads to get the next pizza. 
C) he will eat five times as much pizza as salad. 
D) he will eat five times as much salad as pizza.

Question 5

Which is a behavioral economics justification for limiting advertising directed towards children?

Accepted Answer

A) Children have no money. 
B) Children pester their parents too much. 
C) Children have no memory. 
D) Children do not always have transitive preferences. 
A) Children have no money. 
B) Children pester their parents too much. 
C) Children have no memory. 
D) Children do not always have transitive preferences.

Question 6

Utility is the set of numerical values that

Accepted Answer

A) yields an absolute level of pleasure from a bundle of goods. 
B) reflects the relative ranking of various bundles of goods. 
C) describes how much more a consumer prefers one bundle to another. 
D) yields a cardinal ranking of bundles. 
A) yields an absolute level of pleasure from a bundle of goods. 
B) reflects the relative ranking of various bundles of goods. 
C) describes how much more a consumer prefers one bundle to another. 
D) yields a cardinal ranking of bundles.

Question 7

If Fred's marginal rate of substitution of salad for pizza equals 5, then

Accepted Answer

A) he would give up 5 pizzas to get the next salad. 
B) he would give up 5 salads to get the next pizza. 
C) he will eat five times as much pizza as salad. 
D) he will eat five times as much salad as pizza. 
A) he would give up 5 pizzas to get the next salad. 
B) he would give up 5 salads to get the next pizza. 
C) he will eat five times as much pizza as salad. 
D) he will eat five times as much salad as pizza.

Question 8

Perfect substitutes

Accepted Answer

A) always have indifference curves with slopes of -1. 
B) always have indifference curves with slopes of 1. 
C) have fixed rates of trading off one good for another. 
D) have horizontal indifference curves. 
A) always have indifference curves with slopes of -1. 
B) always have indifference curves with slopes of 1. 
C) have fixed rates of trading off one good for another. 
D) have horizontal indifference curves.

Question 9

Joe's income is $500, the price of food (F, y-axis)is $2, and the price of shelter (S, x-axis)is $100. Which of the following bundles is in Joe's opportunity set?

Accepted Answer

A) 50 units of food, 5 units of shelter 
B) 200 units of food, 2 units of shelter 
C) 100 units of food, 1 unit of shelter 
D) 150 units of food, 3 units of shelter 
A) 50 units of food, 5 units of shelter 
B) 200 units of food, 2 units of shelter 
C) 100 units of food, 1 unit of shelter 
D) 150 units of food, 3 units of shelter

Question 10

An optimum that occurs as a corner solution

Accepted Answer

A) includes only one good. 
B) cannot be an equilibrium. 
C) cannot exhaust the budget constraint. 
D) includes the exact same amounts of each good. 
A) includes only one good. 
B) cannot be an equilibrium. 
C) cannot exhaust the budget constraint. 
D) includes the exact same amounts of each good.

Question 11

Economists assume consumers select a bundle of goods that maximizes their well-being subject to

Accepted Answer

A) their budget constraint. 
B) their wealth. 
C) relative prices. 
D) their marginal rate of substitution. 
A) their budget constraint. 
B) their wealth. 
C) relative prices. 
D) their marginal rate of substitution.

Question 12

Joe's income is $500, the price of food (F, y-axis)is $2 per unit, and the price of shelter (S, x-axis)is $100. Which of the following represents his budget constraint?

Accepted Answer

A) 500 = 2F + 100S 
B) F = 250 - 50S 
C) S = 5 - .02F 
D) All of the above. 
A) 500 = 2F + 100S 
B) F = 250 - 50S 
C) S = 5 - .02F 
D) All of the above.

Question 13

Lisa eats both pizzas and burritos. If the price of a pizza increases, Lisa's opportunity set

Accepted Answer

A) becomes larger. 
B) becomes smaller. 
C) is unchanged. 
D) cannot be determined without more information. 
A) becomes larger. 
B) becomes smaller. 
C) is unchanged. 
D) cannot be determined without more information.

Question 14

An interior solution to a consumer's utility maximization problem implies

Accepted Answer

A) consuming a positive amount of one good and a negative amount of the other good. 
B) consuming negative amounts of all goods. 
C) consuming optimal amounts of all goods. 
D) consuming less than an optimal amount of at least one good. 
A) consuming a positive amount of one good and a negative amount of the other good. 
B) consuming negative amounts of all goods. 
C) consuming optimal amounts of all goods. 
D) consuming less than an optimal amount of at least one good.

Question 15

Clifford lives by the motto "Eat, drink, and be merry today, for tomorrow doesn't matter." If today's consumption is represented by "x" and tomorrow's consumption is represented by "y," then which of the following best represents Clifford's utility function?

Accepted Answer

A) U = x - y 
B) U = x/y 
C) U = x 
D) U = y 
A) U = x - y 
B) U = x/y 
C) U = x 
D) U = y

Question 16

In behavioral economics, the endowment effect refers to the fact that

Accepted Answer

A) most people believe that most wealthy people inherit their wealth. 
B) many people would be indifferent between being endowed with money or knowledge. 
C) many people place a higher value on what they own than the same item they are considering purchasing. 
D) most people respond to tax incentives to provide an endowment for their children. 
A) most people believe that most wealthy people inherit their wealth. 
B) many people would be indifferent between being endowed with money or knowledge. 
C) many people place a higher value on what they own than the same item they are considering purchasing. 
D) most people respond to tax incentives to provide an endowment for their children.

Question 17

A consumer's utility-maximizing bundle contains positive amounts of both goods. This implies

Accepted Answer

A) there is an interior solution. 
B) there is a corner solution. 
C) MRT does not equal MRS. 
D) the budget constraint is not tangent to the indifference curve. 
A) there is an interior solution. 
B) there is a corner solution. 
C) MRT does not equal MRS. 
D) the budget constraint is not tangent to the indifference curve.

Question 18

Which of the following might explain the evidence of an endowment effect in behavioral economics?

Accepted Answer

A) government regulation 
B) knowledge and experience 
C) the federal tax code 
D) class envy 
A) government regulation 
B) knowledge and experience 
C) the federal tax code 
D) class envy

Question 19

What is the intuition that an expansion of an individual's budget set represents a gain?

Accepted Answer

A) More options are preferred to less. 
B) Money is the root of all happiness. 
C) Information is power. 
D) Scarcity is avoidable with prosperity. 
A) More options are preferred to less. 
B) Money is the root of all happiness. 
C) Information is power. 
D) Scarcity is avoidable with prosperity.

Question 20

The assumption of completeness means that

Accepted Answer

A) the consumer can rank all possible consumption bundles. 
B) more of a good is always better. 
C) the consumers can rank all affordable consumption bundles. 
D) all preferences conditions are met. 
A) the consumer can rank all possible consumption bundles. 
B) more of a good is always better. 
C) the consumers can rank all affordable consumption bundles. 
D) all preferences conditions are met.

As the price of a good rises, the consumer will experience

The indifference curves for left shoes and right shoes would most likely be

What is the difference between ordinal and cardinal measurement?

If Fred's marginal utility of pizza equals 10 and his marginal utility of salad equals 2, then

Which is a behavioral economics justification for limiting advertising directed towards children?

Utility is the set of numerical values that

If Fred's marginal rate of substitution of salad for pizza equals 5, then

Perfect substitutes

Joe's income is $500, the price of food (F, y-axis)is $2, and the price of shelter (S, x-axis)is $100. Which of the following bundles is in Joe's opportunity set?

An optimum that occurs as a corner solution

Economists assume consumers select a bundle of goods that maximizes their well-being subject to

Joe's income is $500, the price of food (F, y-axis)is $2 per unit, and the price of shelter (S, x-axis)is $100. Which of the following represents his budget constraint?

Lisa eats both pizzas and burritos. If the price of a pizza increases, Lisa's opportunity set

An interior solution to a consumer's utility maximization problem implies

Clifford lives by the motto "Eat, drink, and be merry today, for tomorrow doesn't matter." If today's consumption is represented by "x" and tomorrow's consumption is represented by "y," then which of the following best represents Clifford's utility function?

In behavioral economics, the endowment effect refers to the fact that

A consumer's utility-maximizing bundle contains positive amounts of both goods. This implies

Which of the following might explain the evidence of an endowment effect in behavioral economics?

What is the intuition that an expansion of an individual's budget set represents a gain?

The assumption of completeness means that

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 4: Consumer Choice

As the price of a good rises, the consumer will experience

The indifference curves for left shoes and right shoes would most likely be

What is the difference between ordinal and cardinal measurement?

If Fred's marginal utility of pizza equals 10 and his marginal utility of salad equals 2, then

Which is a behavioral economics justification for limiting advertising directed towards children?

Utility is the set of numerical values that

If Fred's marginal rate of substitution of salad for pizza equals 5, then

Perfect substitutes

Joe's income is $500, the price of food (F, y-axis)is $2, and the price of shelter (S, x-axis)is $100. Which of the following bundles is in Joe's opportunity set?

An optimum that occurs as a corner solution

Economists assume consumers select a bundle of goods that maximizes their well-being subject to

Joe's income is $500, the price of food (F, y-axis)is $2 per unit, and the price of shelter (S, x-axis)is $100. Which of the following represents his budget constraint?

Lisa eats both pizzas and burritos. If the price of a pizza increases, Lisa's opportunity set

An interior solution to a consumer's utility maximization problem implies

Clifford lives by the motto "Eat, drink, and be merry today, for tomorrow doesn't matter." If today's consumption is represented by "x" and tomorrow's consumption is represented by "y," then which of the following best represents Clifford's utility function?

In behavioral economics, the endowment effect refers to the fact that

A consumer's utility-maximizing bundle contains positive amounts of both goods. This implies

Which of the following might explain the evidence of an endowment effect in behavioral economics?

What is the intuition that an expansion of an individual's budget set represents a gain?

The assumption of completeness means that

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters