Question 1

If an indifference curve is convex, the marginal rate of substitution varies along the curve.

Accepted Answer

A) True 
 B)False

Question 2

Indifference curves that intersect are said to be:

Accepted Answer

A) irrational. 
B) non-transitive. 
C) inconsistent with our basic assumptions about preferences. 
D) complete, but not consistent. 
A) irrational. 
B) non-transitive. 
C) inconsistent with our basic assumptions about preferences. 
D) complete, but not consistent.

Question 3

If the more is better assumption is satisfied, total utility will increase as consumption increases.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is false?

Accepted Answer

A) If marginal utility is diminishing, then total utility is increasing but at a decreasing rate. 
B) If marginal utility is diminishing, then total utility is concave. 
C) If marginal utility is negative, then total utility is downward-sloping. 
D) If marginal utility is decreasing, then total utility is decreasing. 
A) If marginal utility is diminishing, then total utility is increasing but at a decreasing rate. 
B) If marginal utility is diminishing, then total utility is concave. 
C) If marginal utility is negative, then total utility is downward-sloping. 
D) If marginal utility is decreasing, then total utility is decreasing.

Question 5

Marginal utility is maximized when total utility is infinity.

Accepted Answer

A) True 
 B)False

Question 6

The assumption that more is better requires the consumer:

Accepted Answer

A) to rank any two baskets. 
B) to say that basket is preferred to basket if basket is preferred to basket and basket is preferred to basket . 
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 is preferred to basket if basket is preferred to basket and basket is preferred to basket . 
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 7

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

Accepted Answer

A) will be straight lines. 
B) will have the same as increases holding constant. 
C) will have the same as increases holding constant 
D) will have a diminishing marginal rate of substitution as the consumer substitutes for 
A) will be straight lines. 
B) will have the same as increases holding constant. 
C) will have the same as increases holding constant 
D) will have a diminishing marginal rate of substitution as the consumer substitutes for

Question 8

The principle of diminishing marginal utility implies:

Accepted Answer

A) indifference curves are concave. 
B) indifference curves are convex. 
C) indifference curves are straight lines. 
D) as your consumption level increases, the marginal utility received from consumption of an additional unit increases. 
A) indifference curves are concave. 
B) indifference curves are convex. 
C) indifference curves are straight lines. 
D) as your consumption level increases, the marginal utility received from consumption of an additional unit increases.

Question 9

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

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

Assume that a consumer prefers watching Yu-Gi-Oh to watching Teen Titans Go, and that this same consumer prefers watching Teen Titans Go to watching Sponge Bob. Further assume that this same consumer states, "I would prefer to watch Sponge Bob to watching Yu-Gi-Oh." This consumer's preferences violate which of the following key assumptions?

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 11

Ordinal utility gives us information about which basket the consumer prefers and quantitative information about the intensity of the preference.

Accepted Answer

A) True 
 B)False

Question 12

If marginal utility is decreasing, then total utility is decreasing.

Accepted Answer

A) True 
 B)False

Question 13

If MRSx, y is constant at 5, then which of the following is false?

Accepted Answer

A) The slope of the indifference curve is positive. 
B) The goods are perfect substitutes. 
C) The indifference curves are linear. 
D) The slope of the indifference curve is negative. 
A) The slope of the indifference curve is positive. 
B) The goods are perfect substitutes. 
C) The indifference curves are linear. 
D) The slope of the indifference curve is negative.

Question 14

Suppose that a consumer has utility function $\mathrm { U } = \mathrm { Ax } 2 \mathrm { y } 2$ with $\mathrm { MUx } = 2 \mathrm { Ay } 2 \mathrm { x }$ and $\mathrm { MUy } = 2 \mathrm { Ax } 2 \mathrm { y }$. Which of the following statements is false?

Accepted Answer

A) The marginal utilities are positive. 
B) The marginal rate of substitution is diminishing. 
C) The indifference curves are bowed away from the origin. 
D) The indifference curves are downwards sloping. 
A) The marginal utilities are positive. 
B) The marginal rate of substitution is diminishing. 
C) The indifference curves are bowed away from the origin. 
D) The indifference curves are downwards sloping.

Question 15

When marginal utility is negative, total utility is decreasing.

Accepted Answer

A) True 
 B)False

Question 16

The assumption that preferences are transitive requires the consumer:

Accepted Answer

A) to rank any two baskets. 
B) to say that basket is preferred to basket if basket is preferred to basket and basket is preferred to basket . 
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 is preferred to basket if basket is preferred to basket and basket is preferred to basket . 
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 17

An illustration of an indifference curve has:

Accepted Answer

A) prices of the goods on the axes. 
B) quantities of the goods on the axes. 
C) price on the vertical axis, quantity on the horizontal axis. 
D) Price on the horizontal axis, quantity on the vertical axis. 
A) prices of the goods on the axes. 
B) quantities of the goods on the axes. 
C) price on the vertical axis, quantity on the horizontal axis. 
D) Price on the horizontal axis, quantity on the vertical axis.

Question 18

If indifference curves are upward sloping, this violates the assumption that preferences:

Accepted Answer

A) are complete 
B) are transitive. 
C) are such that more is better 
D) Upward sloping indifference curves do not violate any of the assumptions about preferences. 
A) are complete 
B) are transitive. 
C) are such that more is better 
D) Upward sloping indifference curves do not violate any of the assumptions about preferences.

Question 19

Marginal utility is

Accepted Answer

A) always increasing. 
B) maximized when total utility is zero. 
C) the slope of the total utility function. 
D) always decreasing. 
A) always increasing. 
B) maximized when total utility is zero. 
C) the slope of the total utility function. 
D) always decreasing.

Question 20

Total utility and marginal utility cannot be plotted on the same graph.

Accepted Answer

A) True 
 B)False

If an indifference curve is convex, the marginal rate of substitution varies along the curve.

Indifference curves that intersect are said to be:

If the more is better assumption is satisfied, total utility will increase as consumption increases.

Which of the following statements is false?

Marginal utility is maximized when total utility is infinity.

The assumption that more is better requires the consumer:

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

The principle of diminishing marginal utility implies:

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

Ordinal utility gives us information about which basket the consumer prefers and quantitative information about the intensity of the preference.

If marginal utility is decreasing, then total utility is decreasing.

If MRSx, y is constant at 5, then which of the following is false?

Suppose that a consumer has utility function $\mathrm { U } = \mathrm { Ax } 2 \mathrm { y } 2$ with $\mathrm { MUx } = 2 \mathrm { Ay } 2 \mathrm { x }$ and $\mathrm { MUy } = 2 \mathrm { Ax } 2 \mathrm { y }$ . Which of the following statements is false?

When marginal utility is negative, total utility is decreasing.

The assumption that preferences are transitive requires the consumer:

An illustration of an indifference curve has:

If indifference curves are upward sloping, this violates the assumption that preferences:

Marginal utility is

Total utility and marginal utility cannot be plotted on the same graph.

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

Exam 3: Consumer Preferences and the Concept of Utility

If an indifference curve is convex, the marginal rate of substitution varies along the curve.

Indifference curves that intersect are said to be:

If the more is better assumption is satisfied, total utility will increase as consumption increases.

Which of the following statements is false?

Marginal utility is maximized when total utility is infinity.

The assumption that more is better requires the consumer:

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

The principle of diminishing marginal utility implies:

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

Ordinal utility gives us information about which basket the consumer prefers and quantitative information about the intensity of the preference.

If marginal utility is decreasing, then total utility is decreasing.

If MRSx, y is constant at 5, then which of the following is false?

When marginal utility is negative, total utility is decreasing.

The assumption that preferences are transitive requires the consumer:

An illustration of an indifference curve has:

If indifference curves are upward sloping, this violates the assumption that preferences:

Marginal utility is

Total utility and marginal utility cannot be plotted on the same graph.

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

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