Question 1

Other things equal, an increase in the price of product A will

Accepted Answer

A) increase the marginal utility per dollar spent on A. 
B) decrease the marginal utility per dollar spent on A. 
C) not affect the marginal utility per dollar spent on A. 
D) cause utility-maximizing consumers to buy more of A. 
A) increase the marginal utility per dollar spent on A. 
B) decrease the marginal utility per dollar spent on A. 
C) not affect the marginal utility per dollar spent on A. 
D) cause utility-maximizing consumers to buy more of A.

Question 2

In 2015 the federal government began requiring restaurants to print the number of calories for each menu item. Discuss the desired outcome and the actual outcome that occurred.

Accepted Answer

The regulation was intended to help cons

Question 3

Refer to the diagram. The total utility yielded by 4 units of X is

Accepted Answer

A) 4. 
B) 15. 
C) 17. 
D) 18. 
A) 4. 
B) 15. 
C) 17. 
D) 18.

Question 4

Graph I above shows E.T.'s equilibrium combinations of beer and candy for three different prices of beer. (I₁, I₂, and I₃ are indifference curves. The price of a package of candy is constant at $1.00.)Letting Pc represent the price of beer, which demand curve (d)above is consistent with graph I?

Accepted Answer

A) graph A 
B) graph B 
C) graph C 
D) graph D 
A) graph A 
B) graph B 
C) graph C 
D) graph D

Question 5

Which of the graphs shows a change in the price of X, but no changes in the price of Y and in the buyer's budget?

Accepted Answer

A) graph A 
B) graph B 
C) graph C 
D) graph D 
A) graph A 
B) graph B 
C) graph C 
D) graph D

Question 6

What are two related effects that combine to make a consumer able and willing to buy more of a specific product at a lower price than at a higher price? Explain.

Accepted Answer

The two effects are the income effect an

Question 7

The budget line shows

Accepted Answer

A) the amount of product A that a consumer is willing to give up to obtain one more unit of product B. 
B) all possible combinations of two goods that can be purchased, given money income and the prices of the goods. 
C) all equilibrium points on an indifference map. 
D) all possible combinations of two goods that yield the same level of utility to the consumer. 
A) the amount of product A that a consumer is willing to give up to obtain one more unit of product B. 
B) all possible combinations of two goods that can be purchased, given money income and the prices of the goods. 
C) all equilibrium points on an indifference map. 
D) all possible combinations of two goods that yield the same level of utility to the consumer.

Question 8

When the price of a product falls for a good, the

Accepted Answer

A) income and substitution effects will encourage consumers to purchase more of the product. 
B) income and substitution effects will encourage consumers to purchase less of the product. 
C) substitution effect will encourage consumers to purchase less of the product, and the income effect will encourage them to purchase more. 
D) substitution effect will encourage consumers to purchase more of the product, and the income effect will encourage them to purchase less. 
A) income and substitution effects will encourage consumers to purchase more of the product. 
B) income and substitution effects will encourage consumers to purchase less of the product. 
C) substitution effect will encourage consumers to purchase less of the product, and the income effect will encourage them to purchase more. 
D) substitution effect will encourage consumers to purchase more of the product, and the income effect will encourage them to purchase less.

Question 9

Refer to the budget line shown in the diagram. Given the same money income, reductions in the prices of both products C and D will

Accepted Answer

A) shift the budget line outward on the horizontal axis but leave it anchored at "10" on the vertical axis. 
B) shift the budget line to the left. 
C) shift the budget line to the right. 
D) have no effect on the budget line. 
A) shift the budget line outward on the horizontal axis but leave it anchored at "10" on the vertical axis. 
B) shift the budget line to the left. 
C) shift the budget line to the right. 
D) have no effect on the budget line.

Question 10

When the federal government started requiring restaurants to print calorie counts next to menu items, some people increased their consumption of higher-calorie items. Which of the following best explains this phenomenon?

Accepted Answer

A) Consumers at restaurants are systematically irrational. 
B) Consumers are more interested in maximizing calories per dollar than health per dollar. 
C) Restaurants lowered the prices of healthier items, signaling to consumers that they are less appealing. 
D) Restaurants cut portion sizes on all items to reduce calorie counts. 
A) Consumers at restaurants are systematically irrational. 
B) Consumers are more interested in maximizing calories per dollar than health per dollar. 
C) Restaurants lowered the prices of healthier items, signaling to consumers that they are less appealing. 
D) Restaurants cut portion sizes on all items to reduce calorie counts.

Question 11

Mary says, "You would have to pay me $50 to attend that pro wrestling event." For Mary, the marginal utility of the event is

Accepted Answer

A) zero. 
B) positive, but declines rapidly. 
C) negative. 
D) positive, but less than the ticket price. 
A) zero. 
B) positive, but declines rapidly. 
C) negative. 
D) positive, but less than the ticket price.

Question 12

Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2, respectively, and that the consumer's income is $18.   Which of the following represents the demand schedule for X?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 13

In 2015, the federal government started requiring restaurants to print calorie counts next to menu items. The intent was to persuade consumers to

Accepted Answer

A) control and reduce their total calorie intake. 
B) minimize total utility out of their spending. 
C) maximize the calories per dollar spent. 
D) compare marginal utility against calorie counts. 
A) control and reduce their total calorie intake. 
B) minimize total utility out of their spending. 
C) maximize the calories per dollar spent. 
D) compare marginal utility against calorie counts.

Question 14

Assume you are spending your full budget and purchasing such amounts of X and Y that the marginal utility from the last units consumed is 40 and 20 utils, respectively. Assume (a)the prices of X and Y are $8 and $4 respectively; (b)it takes 3 hours to consume a unit of X and 1 hour to consume a unit of Y; and (c)your time is worth $2 per hour. You

Accepted Answer

A) should substitute X for Y until the marginal utility per hour is the same for both products. 
B) are consuming X and Y in the optimal amounts. 
C) should consume less of Y and more of X. 
D) should consume less of X and more of Y. 
A) should substitute X for Y until the marginal utility per hour is the same for both products. 
B) are consuming X and Y in the optimal amounts. 
C) should consume less of Y and more of X. 
D) should consume less of X and more of Y.

Question 15

Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2, respectively, and that the consumer's income is $18.   What quantities of X and Y should be purchased to maximize utility?

Accepted Answer

A) 2 of X and 1 of Y 
B) 4 of X and 5 of Y 
C) 2 of X and 5 of Y 
D) 2 of X and 6 of Y 
A) 2 of X and 1 of Y 
B) 4 of X and 5 of Y 
C) 2 of X and 5 of Y 
D) 2 of X and 6 of Y

Question 16

A consumer's demand curve for a product is downsloping because

Accepted Answer

A) total utility falls below marginal utility as more of a product is consumed. 
B) marginal utility diminishes as more of a product is consumed. 
C) time becomes less valuable as more of a product is consumed. 
D) the income and substitution effects precisely offset each other. 
A) total utility falls below marginal utility as more of a product is consumed. 
B) marginal utility diminishes as more of a product is consumed. 
C) time becomes less valuable as more of a product is consumed. 
D) the income and substitution effects precisely offset each other.

Question 17

Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility)that a consumer would get from successive quantities of products J and K.   What level of total utility is realized from the equilibrium combination of J and K, if the consumer has a money income of $52 and the prices of J and K are $8 and $4, respectively?

Accepted Answer

A) 156 utils 
B) 124 utils 
C) 276 utils 
D) 36 utils 
A) 156 utils 
B) 124 utils 
C) 276 utils 
D) 36 utils

Question 18

A decrease in the prices of two products that a consumer buys out of a constant budget would cause the consumer's

Accepted Answer

A) indifference curves to shift outward from the origin. 
B) indifference curves to shift inward to the origin. 
C) budget line to shift outward from the origin. 
D) budget line to shift inward to the origin. 
A) indifference curves to shift outward from the origin. 
B) indifference curves to shift inward to the origin. 
C) budget line to shift outward from the origin. 
D) budget line to shift inward to the origin.

Question 19

Answer the question based on the table below showing the marginal utility schedules for product X and product Y for a hypothetical consumer. The price of product X is $4, and the price of product Y is $2. The income of the consumer is $30.   If the consumer buys both product X and product Y, how much will the consumer buy of each in order to maximize utility?

Accepted Answer

A) 3X and 3Y 
B) 4X and 4Y 
C) 5X and 4Y 
D) 5X and 5Y 
A) 3X and 3Y 
B) 4X and 4Y 
C) 5X and 4Y 
D) 5X and 5Y

Question 20

A topographical map shows successively higher equal-elevation lines, whereas an indifference map shows successively higher levels of total

Accepted Answer

A) utility. 
B) revenue. 
C) profit. 
D) cost. 
A) utility. 
B) revenue. 
C) profit. 
D) cost.

Exam 7: Utility Maximization

Other things equal, an increase in the price of product A will

In 2015 the federal government began requiring restaurants to print the number of calories for each menu item. Discuss the desired outcome and the actual outcome that occurred.

Refer to the diagram. The total utility yielded by 4 units of X is

Which of the graphs shows a change in the price of X, but no changes in the price of Y and in the buyer's budget?

What are two related effects that combine to make a consumer able and willing to buy more of a specific product at a lower price than at a higher price? Explain.

The budget line shows

When the price of a product falls for a good, the

Refer to the budget line shown in the diagram. Given the same money income, reductions in the prices of both products C and D will

When the federal government started requiring restaurants to print calorie counts next to menu items, some people increased their consumption of higher-calorie items. Which of the following best explains this phenomenon?

Mary says, "You would have to pay me $50 to attend that pro wrestling event." For Mary, the marginal utility of the event is

Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2, respectively, and that the consumer's income is $18. Which of the following represents the demand schedule for X?

In 2015, the federal government started requiring restaurants to print calorie counts next to menu items. The intent was to persuade consumers to

Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2, respectively, and that the consumer's income is $18. What quantities of X and Y should be purchased to maximize utility?

A consumer's demand curve for a product is downsloping because

A decrease in the prices of two products that a consumer buys out of a constant budget would cause the consumer's

A topographical map shows successively higher equal-elevation lines, whereas an indifference map shows successively higher levels of total

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