Question 1

If two bundles are on the same indifference curve, then

Accepted Answer

A) the consumer derives the same level of utility from each. 
B) the consumer derives the same level of ordinal utility from each but not the same level of cardinal utility. 
C) no comparison can be made between the two bundles since utility cannot really be measured. 
D) the MRS between the two bundles equals one. 
A) the consumer derives the same level of utility from each. 
B) the consumer derives the same level of ordinal utility from each but not the same level of cardinal utility. 
C) no comparison can be made between the two bundles since utility cannot really be measured. 
D) the MRS between the two bundles equals one.

Question 2

The principle that "More is better" results in indifference curves

Accepted Answer

A) sloping down. 
B) not intersecting. 
C) reflecting greater preferences the further they are from the origin. 
D) All of the above. 
A) sloping down. 
B) not intersecting. 
C) reflecting greater preferences the further they are from the origin. 
D) All of the above.

Question 3

Measuring "y" on the vertical axis and "x" on the horizontal axis, convexity of indifference curves implies that the MRS of "y" for "x"

Accepted Answer

A) is decreasing as "x" increases. 
B) is increasing as "x" increases. 
C) is constant as "x" increases. 
D) cannot be calculated for large levels of "x." 
A) is decreasing as "x" increases. 
B) is increasing as "x" increases. 
C) is constant as "x" increases. 
D) cannot be calculated for large levels of "x."

Question 4

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 marginal rate of transformation of food for shelter?

Accepted Answer

A) -5 
B) -50 
C) -.02 
D) None of the above. 
A) -5 
B) -50 
C) -.02 
D) None of the above.

Question 5

In behavioral economics, the term salience refers to

Accepted Answer

A) relevance to the problem being investigated. 
B) people only considering information when it is conveyed in a subtle manner. 
C) how an experiment is designed. 
D) people considering information when it is presented in an "eye grabbing" manner. 
A) relevance to the problem being investigated. 
B) people only considering information when it is conveyed in a subtle manner. 
C) how an experiment is designed. 
D) people considering information when it is presented in an "eye grabbing" manner.

Question 6

Behavioral economics extends traditional economic models by

Accepted Answer

A) including insights from psychology and human cognition models. 
B) modeling behavior rather than prices. 
C) admitting that individuals are irrational. 
D) admitting that incentives are very important. 
A) including insights from psychology and human cognition models. 
B) modeling behavior rather than prices. 
C) admitting that individuals are irrational. 
D) admitting that incentives are very important.

Question 7

If a company offers a "buy one, get one free" (BOGO)promotion

Accepted Answer

A) consumers will buy enough units of the good to get the free units. 
B) the consumer's budget constraint will not be a straight line. 
C) the company would be better off just reducing the price by 50%. 
D) All of the above. 
A) consumers will buy enough units of the good to get the free units. 
B) the consumer's budget constraint will not be a straight line. 
C) the company would be better off just reducing the price by 50%. 
D) All of the above.

Question 8

A consumer buys food (F)and shelter (S). If the consumer's income rises and there is no change in the prices of F or S, the marginal rate of transformation of F for S will

Accepted Answer

A) increase. 
B) decrease. 
C) stay the same. 
D) change, but there is not enough information to know how. 
A) increase. 
B) decrease. 
C) stay the same. 
D) change, but there is not enough information to know how.

Question 9

If the consumer's income decreases while the prices of both goods remain unchanged, what will happen to the budget line?

Accepted Answer

A) The budget line rotates inward from the intercept on the horizontal axis. 
B) The budget line rotates outward from the intercept on the vertical axis. 
C) The budget line shifts inward without a change in slope. 
D) The budget line shifts outward without a change in slope. 
A) The budget line rotates inward from the intercept on the horizontal axis. 
B) The budget line rotates outward from the intercept on the vertical axis. 
C) The budget line shifts inward without a change in slope. 
D) The budget line shifts outward without a change in slope.

Question 10

Joe's budget constraint equals 500 = 2F + 100S, where $500 is Joe's income, $2 is the price of food (F, y-axis)and $100 is the price of shelter (S, x-axis). How much food can Joe buy if he buys one unit of shelter?

Accepted Answer

A) 2 units 
B) 200 units 
C) 250 units 
D) 400 units 
A) 2 units 
B) 200 units 
C) 250 units 
D) 400 units

Question 11

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

Accepted Answer

A) a desire to consume a different bundle. 
B) an increase in utility. 
C) an upward or rightward movement on the indifference map. 
D) All of the above. 
A) a desire to consume a different bundle. 
B) an increase in utility. 
C) an upward or rightward movement on the indifference map. 
D) All of the above.

Question 12

By selecting a bundle where MRS = MRT, the consumer is

Accepted Answer

A) achieving a corner solution. 
B) reaching the highest possible indifference curve she can afford. 
C) not behaving in an optimal way. 
D) All of the above. 
A) achieving a corner solution. 
B) reaching the highest possible indifference curve she can afford. 
C) not behaving in an optimal way. 
D) All of the above.

Question 13

For which of the following pairs of goods would most people likely have convex indifference curves?

Accepted Answer

A) nickels and dimes 
B) left shoes and right shoes 
C) movie tickets and concert tickets 
D) None of the above. 
A) nickels and dimes 
B) left shoes and right shoes 
C) movie tickets and concert tickets 
D) None of the above.

Question 14

In Spain, people are considered organ donors unless they explicitly indicate they do not want to be. In the United States, people are only considered organ donors if they explicitly indicate they wish to be. Behavioral economics would suggest that everything else equal,

Accepted Answer

A) the opt-in system of Spain would generate more organ donors. as a percentage of the adult population. 
B) the opt-in system of the United States would generate more organ donors as a percentage of the adult population. 
C) the opt-out system of Spain would generate more organ donors. as a percentage of the adult population. 
D) the opt-out system of the United States would generate more organ donors as a percentage of the adult population. 
A) the opt-in system of Spain would generate more organ donors. as a percentage of the adult population. 
B) the opt-in system of the United States would generate more organ donors as a percentage of the adult population. 
C) the opt-out system of Spain would generate more organ donors. as a percentage of the adult population. 
D) the opt-out system of the United States would generate more organ donors as a percentage of the adult population.

Question 15

If the price of one good increases while the price of the other good and the consumer's income remain unchanged, what will happen to the budget line?

Accepted Answer

A) The budget line rotates inward from the intercept on the axis of the good that did not change in price. 
B) The budget line rotates outward from the intercept on the axis of the good that did not change in price. 
C) The budget line shifts inward without a change in slope. 
D) The budget line shifts outward without a change in slope. 
A) The budget line rotates inward from the intercept on the axis of the good that did not change in price. 
B) The budget line rotates outward from the intercept on the axis of the good that did not change in price. 
C) The budget line shifts inward without a change in slope. 
D) The budget line shifts outward without a change in slope.

Question 16

Bounded rationality suggests that

Accepted Answer

A) individuals might make "incorrect" decisions because they are unable to consider all possible options. 
B) individuals would rather have less choice to more choice. 
C) rational decisions can only be made when choices are restricted. 
D) individuals are happier when their choices are restricted or "bounded." 
A) individuals might make "incorrect" decisions because they are unable to consider all possible options. 
B) individuals would rather have less choice to more choice. 
C) rational decisions can only be made when choices are restricted. 
D) individuals are happier when their choices are restricted or "bounded."

Question 17

Indifference curves cannot intersect.

Accepted Answer

@#IMG-DLM& True. As seen in the above figure, poin

Question 18

If Toby buys two goods and the prices of both goods increase by 50%,

Accepted Answer

A) the budget constraint will be unchanged. 
B) the slope of the budget constraint stay the same. 
C) the slope of the budget constraint will decrease. 
D) the budget constraint will shift outward in a parallel fashion. 
A) the budget constraint will be unchanged. 
B) the slope of the budget constraint stay the same. 
C) the slope of the budget constraint will decrease. 
D) the budget constraint will shift outward in a parallel fashion.

Question 19

If the utility function (U)between food (F)and clothing (C)can be represented as U = , the marginal utility of food

Accepted Answer

A) is not positive. 
B) does not diminish as food increases. 
C) is not affected by the amount clothing. 
D) increases as one obtains more clothing. 
A) is not positive. 
B) does not diminish as food increases. 
C) is not affected by the amount clothing. 
D) increases as one obtains more clothing.

Question 20

With respect to consuming food and shelter, two consumers face the same prices and both claim to be in equilibrium. We therefore know that

Accepted Answer

A) they both have the same marginal utility for food. 
B) they both have the same marginal utility for shelter. 
C) they both have the same MRS of food for shelter. 
D) All of the above. 
A) they both have the same marginal utility for food. 
B) they both have the same marginal utility for shelter. 
C) they both have the same MRS of food for shelter. 
D) All of the above.

If two bundles are on the same indifference curve, then

The principle that "More is better" results in indifference curves

Measuring "y" on the vertical axis and "x" on the horizontal axis, convexity of indifference curves implies that the MRS of "y" for "x"

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 marginal rate of transformation of food for shelter?

In behavioral economics, the term salience refers to

Behavioral economics extends traditional economic models by

If a company offers a "buy one, get one free" (BOGO)promotion

A consumer buys food (F)and shelter (S). If the consumer's income rises and there is no change in the prices of F or S, the marginal rate of transformation of F for S will

If the consumer's income decreases while the prices of both goods remain unchanged, what will happen to the budget line?

Joe's budget constraint equals 500 = 2F + 100S, where $500 is Joe's income, $2 is the price of food (F, y-axis)and $100 is the price of shelter (S, x-axis). How much food can Joe buy if he buys one unit of shelter?

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

By selecting a bundle where MRS = MRT, the consumer is

For which of the following pairs of goods would most people likely have convex indifference curves?

In Spain, people are considered organ donors unless they explicitly indicate they do not want to be. In the United States, people are only considered organ donors if they explicitly indicate they wish to be. Behavioral economics would suggest that everything else equal,

If the price of one good increases while the price of the other good and the consumer's income remain unchanged, what will happen to the budget line?

Bounded rationality suggests that

Indifference curves cannot intersect.

If Toby buys two goods and the prices of both goods increase by 50%,

If the utility function (U)between food (F)and clothing (C)can be represented as U = , the marginal utility of food

With respect to consuming food and shelter, two consumers face the same prices and both claim to be in equilibrium. We therefore know 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

If two bundles are on the same indifference curve, then

The principle that "More is better" results in indifference curves

Measuring "y" on the vertical axis and "x" on the horizontal axis, convexity of indifference curves implies that the MRS of "y" for "x"

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 marginal rate of transformation of food for shelter?

In behavioral economics, the term salience refers to

Behavioral economics extends traditional economic models by

If a company offers a "buy one, get one free" (BOGO)promotion

A consumer buys food (F)and shelter (S). If the consumer's income rises and there is no change in the prices of F or S, the marginal rate of transformation of F for S will

If the consumer's income decreases while the prices of both goods remain unchanged, what will happen to the budget line?

Joe's budget constraint equals 500 = 2F + 100S, where $500 is Joe's income, $2 is the price of food (F, y-axis)and $100 is the price of shelter (S, x-axis). How much food can Joe buy if he buys one unit of shelter?

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

By selecting a bundle where MRS = MRT, the consumer is

For which of the following pairs of goods would most people likely have convex indifference curves?

In Spain, people are considered organ donors unless they explicitly indicate they do not want to be. In the United States, people are only considered organ donors if they explicitly indicate they wish to be. Behavioral economics would suggest that everything else equal,

If the price of one good increases while the price of the other good and the consumer's income remain unchanged, what will happen to the budget line?

Bounded rationality suggests that

Indifference curves cannot intersect.

If Toby buys two goods and the prices of both goods increase by 50%,

If the utility function (U)between food (F)and clothing (C)can be represented as U = , the marginal utility of food

With respect to consuming food and shelter, two consumers face the same prices and both claim to be in equilibrium. We therefore know 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