Question 1

Given a utility function $U = 3 A 2 B 3$, which of the following is true?

Accepted Answer

A)  $\mathrm { MUA } = 3 \mathrm {~A} 2$ 
B)  $M U B = 9 A 2 B 2$ 
C)  The marginal rate of substitution cannot be determined. 
D)  The marginal utility for each good is negative. 
A)  $\mathrm { MUA } = 3 \mathrm {~A} 2$ 
B)  $M U B = 9 A 2 B 2$ 
C)  The marginal rate of substitution cannot be determined. 
D)  The marginal utility for each good is negative.

Question 2

Which of the following utility functions is an example of Cobb-Douglas 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 3

Suppose that a consumer has utility function $\mathrm { U } ( \mathrm { x } , \mathrm { y } )$ with $\mathrm { MUx } = 5 \mathrm { y } 2 \mathrm { x }$ and $\mathrm { MUy } = 2 \mathrm { x } 2 \mathrm { y }$. What is the marginal rate of substitution?

Accepted Answer

A)  $10 \mathrm { y } 3 \mathrm { x } 3$ 
B)  $2 \mathrm { x } / 5 \mathrm { y }$ 
C)  $5 y / 2 x$ 
D)  $5 \mathrm { y } 2 \mathrm { x } 2$ 
A)  $10 \mathrm { y } 3 \mathrm { x } 3$ 
B)  $2 \mathrm { x } / 5 \mathrm { y }$ 
C)  $5 y / 2 x$ 
D)  $5 \mathrm { y } 2 \mathrm { x } 2$

Question 4

If I prefer steak to burritos, burritos to pasta and pasta to steak:

Accepted Answer

A) My preferences are irrational. 
B) My preferences violate the transitivity assumption. 
C) My preferences violate the "more is better assumption. 
D) I must have been exhibiting diminishing marginal utility. 
A) My preferences are irrational. 
B) My preferences violate the transitivity assumption. 
C) My preferences violate the "more is better assumption. 
D) I must have been exhibiting diminishing marginal utility.

Question 5

Marginal utility:

Accepted Answer

A) is the ratio of total utility to total consumption. 
B) is the rate at which total utility changes as the level of consumption rises. 
C) will always be equal to the product's price. 
D) tells us nothing; we're only concerned with total utility. 
A) is the ratio of total utility to total consumption. 
B) is the rate at which total utility changes as the level of consumption rises. 
C) will always be equal to the product's price. 
D) tells us nothing; we're only concerned with total utility.

Question 6

Suppose that a consumer has the utility function $\mathrm { U } = 5 \mathrm {~A} + 7 \mathrm {~B}$. If is measured on the horizontal axis, which of the following is correct?

Accepted Answer

A)  The indifference curves will be L-shaped. 
B)  The indifference curves will be horizontal. 
C)  The indifference curves will be straight lines with slope $- 5 / 7$. 
D)  The indifference curves will be straight lines with slope $- 7 / 5$. 
A)  The indifference curves will be L-shaped. 
B)  The indifference curves will be horizontal. 
C)  The indifference curves will be straight lines with slope $- 5 / 7$. 
D)  The indifference curves will be straight lines with slope $- 7 / 5$.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements best explains the concept of diminishing marginal utility?

Accepted Answer

A) As I consume additional ice cream cones, each ice cream cone adds more to my total happiness than the previous one. 
B) I must consume ice cream cones until I have a stomach ache. 
C) As I consume additional ice cream cones, each ice cream cone adds less to my total happiness than the previous one. 
D) I must maximize my consumption of ice cream cones. 
A) As I consume additional ice cream cones, each ice cream cone adds more to my total happiness than the previous one. 
B) I must consume ice cream cones until I have a stomach ache. 
C) As I consume additional ice cream cones, each ice cream cone adds less to my total happiness than the previous one. 
D) I must maximize my consumption of ice cream cones.

Given a utility function $U = 3 A 2 B 3$ , which of the following is true?

Which of the following utility functions is an example of Cobb-Douglas preferences?

Suppose that a consumer has utility function $\mathrm { U } ( \mathrm { x } , \mathrm { y } )$ with $\mathrm { MUx } = 5 \mathrm { y } 2 \mathrm { x }$ and $\mathrm { MUy } = 2 \mathrm { x } 2 \mathrm { y }$ . What is the marginal rate of substitution?

If I prefer steak to burritos, burritos to pasta and pasta to steak:

Marginal utility:

Suppose that a consumer has the utility function $\mathrm { U } = 5 \mathrm {~A} + 7 \mathrm {~B}$ . If is measured on the horizontal axis, which of the following is correct?

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

Which of the following statements best explains the concept of diminishing marginal utility?

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

Given a utility function U=3A2B3U = 3 A 2 B 3U=3A2B3 , which of the following is true?

Which of the following utility functions is an example of Cobb-Douglas preferences?

Suppose that a consumer has utility function U(x,y)\mathrm { U } ( \mathrm { x } , \mathrm { y } )U(x,y) with MUx=5y2x\mathrm { MUx } = 5 \mathrm { y } 2 \mathrm { x }MUx=5y2x and MUy=2x2y\mathrm { MUy } = 2 \mathrm { x } 2 \mathrm { y }MUy=2x2y . What is the marginal rate of substitution?

If I prefer steak to burritos, burritos to pasta and pasta to steak:

Marginal utility:

Suppose that a consumer has the utility function U=5 A+7 B\mathrm { U } = 5 \mathrm {~A} + 7 \mathrm {~B}U=5 A+7 B . If is measured on the horizontal axis, which of the following is correct?

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

Which of the following statements best explains the concept of diminishing marginal utility?

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

Given a utility function $U = 3 A 2 B 3$ , which of the following is true?

Suppose that a consumer has utility function $\mathrm { U } ( \mathrm { x } , \mathrm { y } )$ with $\mathrm { MUx } = 5 \mathrm { y } 2 \mathrm { x }$ and $\mathrm { MUy } = 2 \mathrm { x } 2 \mathrm { y }$ . What is the marginal rate of substitution?

Suppose that a consumer has the utility function $\mathrm { U } = 5 \mathrm {~A} + 7 \mathrm {~B}$ . If is measured on the horizontal axis, which of the following is correct?