Question 1

The slope of an indifference curve measures the consumer's marginal rate of substitution.

Accepted Answer

A) True 
 B)False

Question 2

Suppose the marginal rate of substitution of x for y is constant for all levels of x and y. Goods x and y are:

Accepted Answer

A) perfect substitutes. 
B) perfect complements. 
C) normal goods. 
D) inferior goods. 
A) perfect substitutes. 
B) perfect complements. 
C) normal goods. 
D) inferior goods.

Question 3

Consider the following three market baskets. $$\begin{array} { c c c } 
\text { Basket } & \text { Good x } & \text { Good y } \
\text { A } & 2 & 8 \
\text { B } & 10 & 2 \
\text { C } & 6 & 5
\end{array}$$ If Basket A and Basket B are on the same indifference curve, preferences satisfy the usual assumptions, and the indifference curves have a diminishing marginal rate of substitution, which of the following is correct?

Accepted Answer

A) Basket C is preferred to Basket A 
B) Basket A is preferred to Basket C 
C) The consumer is indifferent between Basket A and Basket C 
D) There is not enough information to determine how the consumer would rank Basket A relative to Basket C. 
A) Basket C is preferred to Basket A 
B) Basket A is preferred to Basket C 
C) The consumer is indifferent between Basket A and Basket C 
D) There is not enough information to determine how the consumer would rank Basket A relative to Basket C.

Question 4

If one were to draw indifference curves representing preferences over two varieties of red apples, it is likely that one would draw them as:

Accepted Answer

A) almost straight lines. 
B) almost "L-shaped." 
C) positively sloped. 
D) crossing. 
A) almost straight lines. 
B) almost "L-shaped." 
C) positively sloped. 
D) crossing.

Question 5

When total utility, U(x)is maximized, marginal utility, MUx is:

Accepted Answer

A) constant. 
B) rising. 
C) maximized. 
D) zero. 
A) constant. 
B) rising. 
C) maximized. 
D) zero.

Question 6

Jacob's estimated utility from pizza is given by 3Z, where Z is the number of pizzas he consumes per month. We can say that:

Accepted Answer

A) Jacob likes pizza better than steak. 
B) Jacob is a vegetarian. 
C) Jacob's preferences are transitive. 
D) Jacob's marginal utility from pizza is constant. 
A) Jacob likes pizza better than steak. 
B) Jacob is a vegetarian. 
C) Jacob's preferences are transitive. 
D) Jacob's marginal utility from pizza is constant.

Question 7

Suppose for some utility function that $\mathrm { MUx } = 5 \mathrm { y } \text { and } \mathrm { MUy } = 7 \mathrm { x }$ . Which of the following is correct?

Accepted Answer

A) The assumption that more is better is satisfied for both goods. 
B) This utility function will violate the assumption that preferences are complete. 
C) The indifference curves for this utility function will be straight lines with a slope of -1. 
D) The indifference curves will have a diminishing marginal rate of substitution. 
A) The assumption that more is better is satisfied for both goods. 
B) This utility function will violate the assumption that preferences are complete. 
C) The indifference curves for this utility function will be straight lines with a slope of -1. 
D) The indifference curves will have a diminishing marginal rate of substitution.

Question 8

If marginal utility is negative, then total utility is downward-sloping.

Accepted Answer

A) True 
 B)False

Question 9

A consumer would not generally be represented as deriving utility from:

Accepted Answer

A) the brand name of a product. 
B) the characteristics of a product. 
C) the price of a product. 
D) the packaging of a product. 
A) the brand name of a product. 
B) the characteristics of a product. 
C) the price of a product. 
D) the packaging of a product.

Question 10

Which of the following utility functions is an example of Quasi-linear preferences?

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 11

Marginal utility is:

Accepted Answer

A) the slope of the total utility function. 
B) the slope of a ray from the origin to the total utility function. 
C) always less than average utility. 
D) always greater than average utility. 
A) the slope of the total utility function. 
B) the slope of a ray from the origin to the total utility function. 
C) always less than average utility. 
D) always greater than average utility.

Question 12

If two goods are perfect substitutes, then the indifference curves are straight lines.

Accepted Answer

A) True 
 B)False

Question 13

Marginal utility may be negative.

Accepted Answer

A) True 
 B)False

Question 14

Marginal utility is always decreasing.

Accepted Answer

A) True 
 B)False

Question 15

Marginal utility is maximized when total utility is zero.

Accepted Answer

A) True 
 B)False

Question 16

If a consumer's preferences are quasi-linear, then the consumer's indifference curves will be:

Accepted Answer

A) straight lines. 
B) "L-shaped." 
C) concave to the origin. 
D) parallel. 
A) straight lines. 
B) "L-shaped." 
C) concave to the origin. 
D) parallel.

Question 17

Two goods are perfect substitutes. The marginal rate of substitution for these two goods is:

Accepted Answer

A) parabolic. 
B) exponential. 
C) a constant. 
D) shows diminishing marginal utility. 
A) parabolic. 
B) exponential. 
C) a constant. 
D) shows diminishing marginal utility.

Question 18

If a consumer would rather eat three bars of chocolate than four bars of chocolate, 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 19

Which of the following statements is false?

Accepted Answer

A) Total utility and marginal utility cannot be plotted on the same graph. 
B) The marginal utility is the slope of the (total)utility function. 
C) Marginal utility is not the slope of total utility. 
D) The relationship between total and marginal functions holds for other measures in economics. 
A) Total utility and marginal utility cannot be plotted on the same graph. 
B) The marginal utility is the slope of the (total)utility function. 
C) Marginal utility is not the slope of total utility. 
D) The relationship between total and marginal functions holds for other measures in economics.

Question 20

If two goods are perfect complements, then the indifference curves are straight lines.

Accepted Answer

A) True 
 B)False

The slope of an indifference curve measures the consumer's marginal rate of substitution.

Suppose the marginal rate of substitution of x for y is constant for all levels of x and y. Goods x and y are:

If one were to draw indifference curves representing preferences over two varieties of red apples, it is likely that one would draw them as:

When total utility, U(x)is maximized, marginal utility, MUx is:

Jacob's estimated utility from pizza is given by 3Z, where Z is the number of pizzas he consumes per month. We can say that:

Suppose for some utility function that $\mathrm { MUx } = 5 \mathrm { y } \text { and } \mathrm { MUy } = 7 \mathrm { x }$ . Which of the following is correct?

If marginal utility is negative, then total utility is downward-sloping.

A consumer would not generally be represented as deriving utility from:

Which of the following utility functions is an example of Quasi-linear preferences?

Marginal utility is:

If two goods are perfect substitutes, then the indifference curves are straight lines.

Marginal utility may be negative.

Marginal utility is always decreasing.

Marginal utility is maximized when total utility is zero.

If a consumer's preferences are quasi-linear, then the consumer's indifference curves will be:

Two goods are perfect substitutes. The marginal rate of substitution for these two goods is:

If a consumer would rather eat three bars of chocolate than four bars of chocolate, this consumer's preferences violate which of the following key assumptions?

Which of the following statements is false?

If two goods are perfect complements, then the indifference curves are straight lines.

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

The slope of an indifference curve measures the consumer's marginal rate of substitution.

Suppose the marginal rate of substitution of x for y is constant for all levels of x and y. Goods x and y are:

If one were to draw indifference curves representing preferences over two varieties of red apples, it is likely that one would draw them as:

When total utility, U(x)is maximized, marginal utility, MUx is:

Jacob's estimated utility from pizza is given by 3Z, where Z is the number of pizzas he consumes per month. We can say that:

Suppose for some utility function that MUx=5y and MUy=7x\mathrm { MUx } = 5 \mathrm { y } \text { and } \mathrm { MUy } = 7 \mathrm { x }MUx=5y and MUy=7x . Which of the following is correct?

If marginal utility is negative, then total utility is downward-sloping.

A consumer would not generally be represented as deriving utility from:

Which of the following utility functions is an example of Quasi-linear preferences?

Marginal utility is:

If two goods are perfect substitutes, then the indifference curves are straight lines.

Marginal utility may be negative.

Marginal utility is always decreasing.

Marginal utility is maximized when total utility is zero.

If a consumer's preferences are quasi-linear, then the consumer's indifference curves will be:

Two goods are perfect substitutes. The marginal rate of substitution for these two goods is:

If a consumer would rather eat three bars of chocolate than four bars of chocolate, this consumer's preferences violate which of the following key assumptions?

Which of the following statements is false?

If two goods are perfect complements, then the indifference curves are straight lines.

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 for some utility function that $\mathrm { MUx } = 5 \mathrm { y } \text { and } \mathrm { MUy } = 7 \mathrm { x }$ . Which of the following is correct?