Question 1

If the graph shown represents Stella's budget constraint, and salads cost $8, how much does Stella have to spend on these two items?

Accepted Answer

A) $40 
B) $64 
C) $48 
D) This question cannot be answered without more information. 
A) $40 
B) $64 
C) $48 
D) This question cannot be answered without more information.

Question 2

"Do unto others as you would have done unto you" is an example of the economic concept of:

Accepted Answer

A) marginal utility. 
B) altruism. 
C) reciprocity. 
D) selfishness. 
A) marginal utility. 
B) altruism. 
C) reciprocity. 
D) selfishness.

Question 3

Assume Willow's weekly income is $56 and she wants to spend it on either salads or burritos. If her budget constraint is pictured in the graph shown, which of the following must be true?

Accepted Answer

A) Willow will buy more burritos than salads because they are less expensive. 
B) Willow will buy more salads than burritos because they are less expensive. 
C) Salads must cost $14, and burritos must cost $7. 
D) Salads must cost $8, and burritos must cost $4. 
A) Willow will buy more burritos than salads because they are less expensive. 
B) Willow will buy more salads than burritos because they are less expensive. 
C) Salads must cost $14, and burritos must cost $7. 
D) Salads must cost $8, and burritos must cost $4.

Question 4

Sadie has just eaten a donut that gave her a utility of 6. If she chooses to eat another donut, we can assume that:

Accepted Answer

A) she will receive an increase in utility of more than 6 from the additional donut. 
B) she will receive a decrease in utility from the additional donut. 
C) she will receive an increase in utility of less than 6 from the additional donut. 
D) her total utility will fall because of diminishing marginal utility. 
A) she will receive an increase in utility of more than 6 from the additional donut. 
B) she will receive a decrease in utility from the additional donut. 
C) she will receive an increase in utility of less than 6 from the additional donut. 
D) her total utility will fall because of diminishing marginal utility.

Question 5

Kaito has an hour to spend reading at the library. Spending that hour reading a graphic novel would give him a utility of 5, reading a biography would give him a utility of 4, and reading his economics textbook would give him a utility of 9. An economist would predict that Kaito will spend his hour reading:

Accepted Answer

A) a graphic novel. 
B) a biography. 
C) his economics textbook. 
D) It is impossible to predict how Kaito will spend his time. 
A) a graphic novel. 
B) a biography. 
C) his economics textbook. 
D) It is impossible to predict how Kaito will spend his time.

Question 6

Assume the graph shown represents Ayesha's budget constraint. If she has $48 to spend on these two items, what must a movie theater ticket cost?

Accepted Answer

A) $8 
B) $6 
C) $4 
D) $12 
A) $8 
B) $6 
C) $4 
D) $12

Question 7

Madison has set aside $24 for her snack budget this month. Her favorite snacks are ice cream and chips. The price of a pint of ice cream is $4 and the price of a bag of chips is $3. She currently consumes three pints of ice cream and four bags of chips each month. If the price of a pint of ice cream drops to $3, the income effect predicts that Madison will consume:

Accepted Answer

A) more ice cream and more chips. 
B) equal amounts of ice cream and chips. 
C) more ice cream and fewer chips. 
D) less ice cream and more chips. 
A) more ice cream and more chips. 
B) equal amounts of ice cream and chips. 
C) more ice cream and fewer chips. 
D) less ice cream and more chips.

Question 8

When an individual's income decreases, the slope of the budget constraint stays the same because:

Accepted Answer

A) everything is relatively more expensive now. 
B) everything is relatively less expensive now. 
C) the relative prices of the goods haven't changed. 
D) the prices of the goods change in the same proportion. 
A) everything is relatively more expensive now. 
B) everything is relatively less expensive now. 
C) the relative prices of the goods haven't changed. 
D) the prices of the goods change in the same proportion.

Question 9

Utility is:

Accepted Answer

A) a quantitative measure of consumers' preferences. 
B) an objective measure of a person's happiness. 
C) as difficult to measure as an individual's income level. 
D) a meaningful number measuring a consumer's precise level of satisfaction. 
A) a quantitative measure of consumers' preferences. 
B) an objective measure of a person's happiness. 
C) as difficult to measure as an individual's income level. 
D) a meaningful number measuring a consumer's precise level of satisfaction.

Question 10

What is the relative price of three gallons of milk for the budget constraint represented in the graph shown?

Accepted Answer

A) 2 cases of soda 
B) 4 cases of soda 
C) $12 
D) $9 
A) 2 cases of soda 
B) 4 cases of soda 
C) $12 
D) $9

Question 11

When successive units of a typical good are consumed, the marginal utility gained:

Accepted Answer

A) tends to decrease. 
B) tends to increase. 
C) may increase or decrease depending on the cost of the good. 
D) tends to stay the same. 
A) tends to decrease. 
B) tends to increase. 
C) may increase or decrease depending on the cost of the good. 
D) tends to stay the same.

Question 12

The table shown describes the different combinations of goods that Brianna can consume, given that she has $80 to spend on these two items.
 
Brianna's utility-maximizing bundle of goods is _____ concert tickets and _____ movie tickets.

Accepted Answer

A) 3; 2 
B) 2; 4 
C) 1; 6 
D) 0; 8 
A) 3; 2 
B) 2; 4 
C) 1; 6 
D) 0; 8

Question 13

What is a bundle in terms of utility?

Accepted Answer

A) A specific combination of goods and services an individual could consume. 
B) The number of people that choose a particular combination of goods. 
C) A curve describing different combinations of goods and services an individual could choose to consume. 
D) The sale of goods or services at a discounted price. 
A) A specific combination of goods and services an individual could consume. 
B) The number of people that choose a particular combination of goods. 
C) A curve describing different combinations of goods and services an individual could choose to consume. 
D) The sale of goods or services at a discounted price.

Question 14

If Bert's budget constraint is represented in the graph shown, his opportunity cost of three bags of chips is:

Accepted Answer

A) twelve pints of ice cream. 
B) eight pints of ice cream. 
C) four pints of ice cream. 
D) Cannot answer without knowing Bert's income. 
A) twelve pints of ice cream. 
B) eight pints of ice cream. 
C) four pints of ice cream. 
D) Cannot answer without knowing Bert's income.

Question 15

If the graph shown represents Stella's budget constraint, and she has an income of $60 to spend on these two items, Stella could choose which consumption bundle?

Accepted Answer

A) Six salads and eight burritos 
B) Four salads and four burritos 
C) Two salads and six burritos 
D) Three salads and four burritos 
A) Six salads and eight burritos 
B) Four salads and four burritos 
C) Two salads and six burritos 
D) Three salads and four burritos

Question 16

Assume Josiah's budget constraint is represented in the graph shown. If Josiah's income is $36, what are the prices of these two goods?

Accepted Answer

A) Soda costs $3 per case and milk costs $4 a gallon. 
B) Soda costs $4 per case and milk costs $3 a gallon. 
C) Soda costs $12 per case and milk costs $9 a gallon. 
D) Soda costs $6 per case and milk costs $3 a gallon. 
A) Soda costs $3 per case and milk costs $4 a gallon. 
B) Soda costs $4 per case and milk costs $3 a gallon. 
C) Soda costs $12 per case and milk costs $9 a gallon. 
D) Soda costs $6 per case and milk costs $3 a gallon.

Question 17

Dave and Diya play two games of tennis before deciding to stop for lunch. Using the concept of utility to explain their choices, we can conclude that:

Accepted Answer

A) the marginal utility of the second game must have been zero. 
B) the marginal utility they would receive from playing a third game must be negative. 
C) the marginal utility they would receive from playing a third game must be less than the marginal utility they would receive from eating lunch. 
D) All of these are correct. 
A) the marginal utility of the second game must have been zero. 
B) the marginal utility they would receive from playing a third game must be negative. 
C) the marginal utility they would receive from playing a third game must be less than the marginal utility they would receive from eating lunch. 
D) All of these are correct.

Question 18

After watching a movie, Alan chooses to go for a walk rather than watch a second movie. Economists would explain his choice using the concept of:

Accepted Answer

A) budget constraints. 
B) diminishing marginal utility. 
C) income effect. 
D) substitution effect. 
A) budget constraints. 
B) diminishing marginal utility. 
C) income effect. 
D) substitution effect.

Question 19

In general, a change in the price of a good:

Accepted Answer

A) causes a substitution effect only. 
B) causes an income effect only. 
C) causes both an income and substitution effect. 
D) has no effect on the budget constraint. 
A) causes a substitution effect only. 
B) causes an income effect only. 
C) causes both an income and substitution effect. 
D) has no effect on the budget constraint.

Question 20

Utility is:

Accepted Answer

A) maximized by rational individuals. 
B) revealed by observing choices an individual makes. 
C) the satisfaction individuals get from different bundles of goods. 
D) All of these are correct. 
A) maximized by rational individuals. 
B) revealed by observing choices an individual makes. 
C) the satisfaction individuals get from different bundles of goods. 
D) All of these are correct.

Exam 7: Consumer Behavior

If the graph shown represents Stella's budget constraint, and salads cost $8, how much does Stella have to spend on these two items?

"Do unto others as you would have done unto you" is an example of the economic concept of:

Assume Willow's weekly income is $56 and she wants to spend it on either salads or burritos. If her budget constraint is pictured in the graph shown, which of the following must be true?

Sadie has just eaten a donut that gave her a utility of 6. If she chooses to eat another donut, we can assume that:

Assume the graph shown represents Ayesha's budget constraint. If she has $48 to spend on these two items, what must a movie theater ticket cost?

When an individual's income decreases, the slope of the budget constraint stays the same because:

Utility is:

What is the relative price of three gallons of milk for the budget constraint represented in the graph shown?

When successive units of a typical good are consumed, the marginal utility gained:

The table shown describes the different combinations of goods that Brianna can consume, given that she has $80 to spend on these two items. Brianna's utility-maximizing bundle of goods is _____ concert tickets and _____ movie tickets.

What is a bundle in terms of utility?

If Bert's budget constraint is represented in the graph shown, his opportunity cost of three bags of chips is:

If the graph shown represents Stella's budget constraint, and she has an income of $60 to spend on these two items, Stella could choose which consumption bundle?

Assume Josiah's budget constraint is represented in the graph shown. If Josiah's income is $36, what are the prices of these two goods?

Dave and Diya play two games of tennis before deciding to stop for lunch. Using the concept of utility to explain their choices, we can conclude that:

After watching a movie, Alan chooses to go for a walk rather than watch a second movie. Economists would explain his choice using the concept of:

In general, a change in the price of a good:

Utility is:

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The table shown describes the different combinations of goods that Brianna can consume, given that she has $80 to spend on these two items. Brianna's utility-maximizing bundle of goods is _ concert tickets and _ movie tickets.