Question 1

Suppose the marginal rate of substitution of for is given by MRSx, $y = 5 x / 7 y$ , which of the following is correct?

Accepted Answer

A) The indifference curves will be bowed away from the origin. 
B) The indifference curves will be bowed in towards the origin. 
C) The indifference curves will be straight lines. 
D) It is not possible to tell the shape of the indifference curves with only this information. 
A) The indifference curves will be bowed away from the origin. 
B) The indifference curves will be bowed in towards the origin. 
C) The indifference curves will be straight lines. 
D) It is not possible to tell the shape of the indifference curves with only this information. A

Question 2

John tends to order pizza once or twice a week to his college dorm room. When his parents come to visit, he always asks them to take him to the local steakhouse. Bob is probably suffering from:

Accepted Answer

A) veganism 
B) transitivity. 
C) diminishing marginal utility from pizza consumption. 
D) completeness and transitivity. 
A) veganism 
B) transitivity. 
C) diminishing marginal utility from pizza consumption. 
D) completeness and transitivity. C

Question 3

Which of the following statements is false?

Accepted Answer

A) Marginal utility may be negative. 
B) Marginal utility is the slope of total utility. 
C) If the more is better assumption is satisfied, total utility will increase as consumption increases. 
D) If the more is better assumption is satisfied, the marginal utility from consuming the second unit must be greater than the marginal utility from consuming the first unit. 
A) Marginal utility may be negative. 
B) Marginal utility is the slope of total utility. 
C) If the more is better assumption is satisfied, total utility will increase as consumption increases. 
D) If the more is better assumption is satisfied, the marginal utility from consuming the second unit must be greater than the marginal utility from consuming the first unit. D

Question 4

The assumption that preferences are complete requires the consumer:

Accepted Answer

A) to rank any two baskets. 
B) to say that basket C is preferred to basket A if basket B is preferred to basket A and basket C is preferred to basket B. 
C) to rank a basket with more units of all goods higher than a basket with fewer units of all goods. 
D) to have a diminishing marginal rate of substitution. 
A) to rank any two baskets. 
B) to say that basket C is preferred to basket A if basket B is preferred to basket A and basket C is preferred to basket B. 
C) to rank a basket with more units of all goods higher than a basket with fewer units of all goods. 
D) to have a diminishing marginal rate of substitution.

Question 5

If two goods are perfect substitutes, then the marginal rate of substitution is constant.

Accepted Answer

A) True 
 B)False

Question 6

Marginal utility is the slope of total utility.

Accepted Answer

A) True 
 B)False

Question 7

Suppose that MRSx, $y = 10$ .

Accepted Answer

A) The consumer is willing to substitute 10 units of for 1 unit of to leave utility unchanged. 
B) The consumer is willing to substitute 10 units of for 1 unit of to leave utility unchanged 
C) Regardless of prices, the consumer will consume only y 
D) Regardless of prices, the consumer will consume only x 
A) The consumer is willing to substitute 10 units of for 1 unit of to leave utility unchanged. 
B) The consumer is willing to substitute 10 units of for 1 unit of to leave utility unchanged 
C) Regardless of prices, the consumer will consume only y 
D) Regardless of prices, the consumer will consume only x

Question 8

Cardinal utility gives us information about which basket the consumer prefers but not about the intensity of those preferences.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following utility functions is an example of preferences for perfect substitutes?

Accepted Answer

A)  $U ( x , y ) = y \sqrt { x }$ 
B)  $U ( x , y ) = \min \{ 2 x , y \}$ 
C)  $U ( x , y ) = 3 x + 5 y$ 
D)  $U ( x , y ) = 2 x ^ { 2 } + 4 y$ 
A)  $U ( x , y ) = y \sqrt { x }$ 
B)  $U ( x , y ) = \min \{ 2 x , y \}$ 
C)  $U ( x , y ) = 3 x + 5 y$ 
D)  $U ( x , y ) = 2 x ^ { 2 } + 4 y$

Question 10

Diminishing marginal utility and increasing total utility are incompatible with each other.

Accepted Answer

A) True 
 B)False

Question 11

If marginal utility is diminishing, then total utility is concave.

Accepted Answer

A) True 
 B)False

Question 12

Wendy is very indecisive. She can't decide whether she should go on a cruise or spend her vacation at her friend's home. Her preferences violate the assumption of:

Accepted Answer

A) completeness. 
B) transitivity. 
C) more is better. 
D) both completeness and transitivity. 
A) completeness. 
B) transitivity. 
C) more is better. 
D) both completeness and transitivity.

Question 13

The relationship between total and marginal functions holds for other measures in economics.

Accepted Answer

A) True 
 B)False

Question 14

Marginal utility is not the slope of total utility.

Accepted Answer

A) True 
 B)False

Question 15

Marginal utility can never decrease.

Accepted Answer

A) True 
 B)False

Question 16

Assume that two baskets and lie on the same indifference curve. Assume that basket contains more of good than basket but less of good than basket. As the consumer moves down and to the right (from basket to basket)along his indifference curve, total utilityL

Accepted Answer

A) increases. 
B) remains constant. 
C) decreases. 
D) is ambiguous. 
A) increases. 
B) remains constant. 
C) decreases. 
D) is ambiguous.

Question 17

Marginal utility is always increasing.

Accepted Answer

A) True 
 B)False

Question 18

A _____________________ measures the level of satisfaction that a consumer receives from any basket of goods.

Accepted Answer

A) production function 
B) transformation function 
C) utility function 
D) transitivity function 
A) production function 
B) transformation function 
C) utility function 
D) transitivity function

Question 19

Economists sometimes represent two goods as having right-angled indifference curves (perfect complements). In reality, this violates:

Accepted Answer

A) the assumption of transitivity. 
B) the assumption of completeness. 
C) the law of diminishing returns. 
D) the "more is better" assumption. 
A) the assumption of transitivity. 
B) the assumption of completeness. 
C) the law of diminishing returns. 
D) the "more is better" assumption.

Question 20

Consider the utility function $\mathrm { U } = 5 \mathrm { x } + 3 \mathrm { y } 2$, which has $\mathrm { MUx } = 5$ and $\mathrm { MUy } = 6 \mathrm { y }$. The indifference curves for this utility function:

Accepted Answer

A) will have a diminishing marginal rate of substitution of for as x increases. 
B) will have a constant marginal rate of substitution of for as x increases. 
C) will have an increasing marginal rate of substitution of for as x increases. 
D) will be straight lines. 
A) will have a diminishing marginal rate of substitution of for as x increases. 
B) will have a constant marginal rate of substitution of for as x increases. 
C) will have an increasing marginal rate of substitution of for as x increases. 
D) will be straight lines.

Suppose the marginal rate of substitution of for is given by MRSx, $y = 5 x / 7 y$ , which of the following is correct?

John tends to order pizza once or twice a week to his college dorm room. When his parents come to visit, he always asks them to take him to the local steakhouse. Bob is probably suffering from:

Which of the following statements is false?

The assumption that preferences are complete requires the consumer:

If two goods are perfect substitutes, then the marginal rate of substitution is constant.

Marginal utility is the slope of total utility.

Suppose that MRSx, $y = 10$ .

Cardinal utility gives us information about which basket the consumer prefers but not about the intensity of those preferences.

Which of the following utility functions is an example of preferences for perfect substitutes?

Diminishing marginal utility and increasing total utility are incompatible with each other.

If marginal utility is diminishing, then total utility is concave.

Wendy is very indecisive. She can't decide whether she should go on a cruise or spend her vacation at her friend's home. Her preferences violate the assumption of:

The relationship between total and marginal functions holds for other measures in economics.

Marginal utility is not the slope of total utility.

Marginal utility can never decrease.

Assume that two baskets and lie on the same indifference curve. Assume that basket contains more of good than basket but less of good than basket. As the consumer moves down and to the right (from basket to basket)along his indifference curve, total utilityL

Marginal utility is always increasing.

A _____________________ measures the level of satisfaction that a consumer receives from any basket of goods.

Economists sometimes represent two goods as having right-angled indifference curves (perfect complements). In reality, this violates:

Consider the utility function $\mathrm { U } = 5 \mathrm { x } + 3 \mathrm { y } 2$ , which has $\mathrm { MUx } = 5$ and $\mathrm { MUy } = 6 \mathrm { y }$ . The indifference curves for this utility function:

Analyzing Economic Problems

Demand and Supply Analysis

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Cost Curves

Perfectly Competitive Markets

Competitive Markets: Applications

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

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Exam 3: Consumer Preferences and the Concept of Utility

Suppose the marginal rate of substitution of for is given by MRSx, y=5x/7yy = 5 x / 7 yy=5x/7y , which of the following is correct?

John tends to order pizza once or twice a week to his college dorm room. When his parents come to visit, he always asks them to take him to the local steakhouse. Bob is probably suffering from:

Which of the following statements is false?

The assumption that preferences are complete requires the consumer:

If two goods are perfect substitutes, then the marginal rate of substitution is constant.

Marginal utility is the slope of total utility.

Suppose that MRSx, y=10y = 10y=10 .

Cardinal utility gives us information about which basket the consumer prefers but not about the intensity of those preferences.

Which of the following utility functions is an example of preferences for perfect substitutes?

Diminishing marginal utility and increasing total utility are incompatible with each other.

If marginal utility is diminishing, then total utility is concave.

Wendy is very indecisive. She can't decide whether she should go on a cruise or spend her vacation at her friend's home. Her preferences violate the assumption of:

The relationship between total and marginal functions holds for other measures in economics.

Marginal utility is not the slope of total utility.

Marginal utility can never decrease.

Assume that two baskets and lie on the same indifference curve. Assume that basket contains more of good than basket but less of good than basket. As the consumer moves down and to the right (from basket to basket)along his indifference curve, total utilityL

Marginal utility is always increasing.

A _____________________ measures the level of satisfaction that a consumer receives from any basket of goods.

Economists sometimes represent two goods as having right-angled indifference curves (perfect complements). In reality, this violates:

Consider the utility function U=5x+3y2\mathrm { U } = 5 \mathrm { x } + 3 \mathrm { y } 2U=5x+3y2 , which has MUx=5\mathrm { MUx } = 5MUx=5 and MUy=6y\mathrm { MUy } = 6 \mathrm { y }MUy=6y . The indifference curves for this utility function:

Analyzing Economic Problems

Demand and Supply Analysis

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Cost Curves

Perfectly Competitive Markets

Competitive Markets: Applications

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

Filters

Suppose the marginal rate of substitution of for is given by MRSx, $y = 5 x / 7 y$ , which of the following is correct?

Suppose that MRSx, $y = 10$ .

Consider the utility function $\mathrm { U } = 5 \mathrm { x } + 3 \mathrm { y } 2$ , which has $\mathrm { MUx } = 5$ and $\mathrm { MUy } = 6 \mathrm { y }$ . The indifference curves for this utility function: