Question 1

The assumption that more is preferred to less:

Accepted Answer

A) is called transitivity. 
B) implies that if basket lies to the northeast of basket , then basket is preferred to basket . 
C) is called completeness. 
D) implies that indifference curves are "thick". 
A) is called transitivity. 
B) implies that if basket lies to the northeast of basket , then basket is preferred to basket . 
C) is called completeness. 
D) implies that indifference curves are "thick".

Question 2

If marginal utility is diminishing, then total utility is increasing but at a decreasing rate.

Accepted Answer

A) True 
 B)False

Question 3

Consumer preferences:

Accepted Answer

A) are fixed exogenously and unchanging in reality. 
B) indicate how a consumer would rank any two possible baskets of goods, taking into account her budget constraint. 
C) indicate how a consumer would rank any two possible baskets of goods, taking into account the current prices of those goods. 
D) indicate how a consumer would rank any two possible baskets of goods, assuming that the baskets were available to the consumer at no cost. 
A) are fixed exogenously and unchanging in reality. 
B) indicate how a consumer would rank any two possible baskets of goods, taking into account her budget constraint. 
C) indicate how a consumer would rank any two possible baskets of goods, taking into account the current prices of those goods. 
D) indicate how a consumer would rank any two possible baskets of goods, assuming that the baskets were available to the consumer at no cost.

Question 4

An indifference curve represents:

Accepted Answer

A) a two-dimensional "slice" of a three-dimensional total utility function. 
B) varying levels of a total utility function. 
C) constant marginal utility. 
D) the slope of marginal utility. 
A) a two-dimensional "slice" of a three-dimensional total utility function. 
B) varying levels of a total utility function. 
C) constant marginal utility. 
D) the slope of marginal utility.

Question 5

Indifference curves have a negative slope when:

Accepted Answer

A) the consumer likes good but dislikes good . 
B) the consumer likes good but dislikes good 
C) the consumer likes both good and good 
D) the consumer dislikes both goods 
A) the consumer likes good but dislikes good . 
B) the consumer likes good but dislikes good 
C) the consumer likes both good and good 
D) the consumer dislikes both goods

Question 6

If a consumer is unable to compare two baskets, then 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 7

Marginal utility is maximized when total utility is one.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Consider the utility function $\mathrm { U } = \min ( 5 \mathrm { x } , 7 \mathrm { y } )$ .The indifference curves for this utility function will be:

Accepted Answer

A) vertical 
B) horizontal 
C) upward sloping 
D) L-shaped 
A) vertical 
B) horizontal 
C) upward sloping 
D) L-shaped

Question 10

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.

Accepted Answer

A) True 
 B)False

Question 11

Because total utility is constant along an indifference curve, the marginal rate of substitution is also constant.

Accepted Answer

A) True 
 B)False

Question 12

Sally likes Jim twice as much as she likes Bob. This is an example of:

Accepted Answer

A) ordinal preferences. 
B) cardinal preferences. 
C) transitivity. 
D) diminishing marginal utility. 
A) ordinal preferences. 
B) cardinal preferences. 
C) transitivity. 
D) diminishing marginal utility.

Question 13

The marginal utility is the slope of the (total)utility function.

Accepted Answer

A) True 
 B)False

Question 14

One adhesive having twice the adhesive power of another is an example of:

Accepted Answer

A) ordinal ranking. 
B) Johnson's theory of adhesivity. 
C) cardinal ranking. 
D) transitivity. 
A) ordinal ranking. 
B) Johnson's theory of adhesivity. 
C) cardinal ranking. 
D) transitivity.

Question 15

Marginal utility is the slope of the total utility function.

Accepted Answer

A) True 
 B)False

Question 16

If two goods are perfect substitutes, then the indifference curves are "L-shaped."

Accepted Answer

A) True 
 B)False

Question 17

Suppose for a utility function that the marginal utility for good is given by $\mathrm { MUx } = 5 \mathrm { y } 2 / \mathrm { x }$ . Which of the following is correct?

Accepted Answer

A) The more is better assumption is not satisfied for in this utility function. 
B) The more is better assumption is satisfied for in this utility function. 
C) This shows a positive and increasing marginal utility of x. 
D) The marginal rate of substitution must be diminishing. 
A) The more is better assumption is not satisfied for in this utility function. 
B) The more is better assumption is satisfied for in this utility function. 
C) This shows a positive and increasing marginal utility of x. 
D) The marginal rate of substitution must be diminishing.

Question 18

Suppose that a consumer has the utility function $\mathrm { U } = 5 \mathrm { X } + 7 \mathrm { Y }$. The $\mathrm { MRSx } , \mathrm { y }$ is:

Accepted Answer

A)  $7 / 5$ 
B)  $5 / 7$ 
C)  $1.00$ since $\mathrm { X }$ and $\mathrm { Y }$ are perfect substitutes. 
D)  0 since $\mathrm { X }$ and $\mathrm { Y }$ are perfect complements. 
A)  $7 / 5$ 
B)  $5 / 7$ 
C)  $1.00$ since $\mathrm { X }$ and $\mathrm { Y }$ are perfect substitutes. 
D)  0 since $\mathrm { X }$ and $\mathrm { Y }$ are perfect complements.

Question 19

Imagine an indifference curve graph with units of clothing on the y-axis and visits to the neighborhood pizza joint for dinner on the x-axis. If the indifference curves for this individual are negatively sloped but close to horizontal, it means:

Accepted Answer

A) the marginal utility from another pizza dinner is high relative to the marginal utility of clothing. 
B) the marginal utility from another pizza dinner is low relative to the marginal utility of clothing 
C) this person doesn't like pizza at all. 
D) this person can spend a lot of money on clothes at times. 
A) the marginal utility from another pizza dinner is high relative to the marginal utility of clothing. 
B) the marginal utility from another pizza dinner is low relative to the marginal utility of clothing 
C) this person doesn't like pizza at all. 
D) this person can spend a lot of money on clothes at times.

Question 20

Consider the utility function $\mathrm { U } = \min ( 5 \mathrm { x } , 7 \mathrm { y } )$ .To increase satisfaction the consumer must consume

Accepted Answer

A) at least 5 units more of 
B) at least 7 units more of y 
C) more of both x and y 
D) more of either x or y 
A) at least 5 units more of 
B) at least 7 units more of y 
C) more of both x and y 
D) more of either x or y

The assumption that more is preferred to less:

If marginal utility is diminishing, then total utility is increasing but at a decreasing rate.

Consumer preferences:

An indifference curve represents:

Indifference curves have a negative slope when:

If a consumer is unable to compare two baskets, then this consumer's preferences violate which of the following key assumptions?

Marginal utility is maximized when total utility is one.

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

Consider the utility function $\mathrm { U } = \min ( 5 \mathrm { x } , 7 \mathrm { y } )$ .The indifference curves for this utility function will be:

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.

Because total utility is constant along an indifference curve, the marginal rate of substitution is also constant.

Sally likes Jim twice as much as she likes Bob. This is an example of:

The marginal utility is the slope of the (total)utility function.

One adhesive having twice the adhesive power of another is an example of:

Marginal utility is the slope of the total utility function.

If two goods are perfect substitutes, then the indifference curves are "L-shaped."

Suppose for a utility function that the marginal utility for good is given by $\mathrm { MUx } = 5 \mathrm { y } 2 / \mathrm { x }$ . Which of the following is correct?

Suppose that a consumer has the utility function $\mathrm { U } = 5 \mathrm { X } + 7 \mathrm { Y }$ . The $\mathrm { MRSx } , \mathrm { y }$ is:

Imagine an indifference curve graph with units of clothing on the y-axis and visits to the neighborhood pizza joint for dinner on the x-axis. If the indifference curves for this individual are negatively sloped but close to horizontal, it means:

Consider the utility function $\mathrm { U } = \min ( 5 \mathrm { x } , 7 \mathrm { y } )$ .To increase satisfaction the consumer must consume

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 assumption that more is preferred to less:

If marginal utility is diminishing, then total utility is increasing but at a decreasing rate.

Consumer preferences:

An indifference curve represents:

Indifference curves have a negative slope when:

If a consumer is unable to compare two baskets, then this consumer's preferences violate which of the following key assumptions?

Marginal utility is maximized when total utility is one.

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

Consider the utility function U=min⁡(5x,7y)\mathrm { U } = \min ( 5 \mathrm { x } , 7 \mathrm { y } )U=min(5x,7y) .The indifference curves for this utility function will be:

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.

Because total utility is constant along an indifference curve, the marginal rate of substitution is also constant.

Sally likes Jim twice as much as she likes Bob. This is an example of:

The marginal utility is the slope of the (total)utility function.

One adhesive having twice the adhesive power of another is an example of:

Marginal utility is the slope of the total utility function.

If two goods are perfect substitutes, then the indifference curves are "L-shaped."

Suppose for a utility function that the marginal utility for good is given by MUx=5y2/x\mathrm { MUx } = 5 \mathrm { y } 2 / \mathrm { x }MUx=5y2/x . Which of the following is correct?

Suppose that a consumer has the utility function U=5X+7Y\mathrm { U } = 5 \mathrm { X } + 7 \mathrm { Y }U=5X+7Y . The MRSx,y\mathrm { MRSx } , \mathrm { y }MRSx,y is:

Imagine an indifference curve graph with units of clothing on the y-axis and visits to the neighborhood pizza joint for dinner on the x-axis. If the indifference curves for this individual are negatively sloped but close to horizontal, it means:

Consider the utility function U=min⁡(5x,7y)\mathrm { U } = \min ( 5 \mathrm { x } , 7 \mathrm { y } )U=min(5x,7y) .To increase satisfaction the consumer must consume

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 $\mathrm { U } = \min ( 5 \mathrm { x } , 7 \mathrm { y } )$ .The indifference curves for this utility function will be:

Suppose for a utility function that the marginal utility for good is given by $\mathrm { MUx } = 5 \mathrm { y } 2 / \mathrm { x }$ . Which of the following is correct?

Suppose that a consumer has the utility function $\mathrm { U } = 5 \mathrm { X } + 7 \mathrm { Y }$ . The $\mathrm { MRSx } , \mathrm { y }$ is:

Consider the utility function $\mathrm { U } = \min ( 5 \mathrm { x } , 7 \mathrm { y } )$ .To increase satisfaction the consumer must consume