Question 1

The data illustrate the

Accepted Answer

A) law of comparative advantage. 
B) utility-maximizing rule. 
C) law of diminishing marginal utility. 
D) law of increasing opportunity costs. 
A) law of comparative advantage. 
B) utility-maximizing rule. 
C) law of diminishing marginal utility. 
D) law of increasing opportunity costs.

Question 2

The theory of consumer behavior assumes that consumers attempt to maximize

Accepted Answer

A) the difference between total and marginal utility. 
B) total utility. 
C) average utility. 
D) marginal utility. 
A) the difference between total and marginal utility. 
B) total utility. 
C) average utility. 
D) marginal utility.

Question 3

Which of the graphs shows an increase in the price of X and a decrease in the price of Y?

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 4

The fact that an ounce of gold is priced higher than an ounce of chocolate suggests that

Accepted Answer

A) the marginal utility of the last unit of gold consumed or purchased is greater than the marginal utility of the last unit of chocolate consumed. 
B) the total utility of gold purchased is greater than the total utility of chocolate consumed. 
C) gold is a normal good, while chocolate is an inferior good. 
D) there are many substitutes for chocolate but few for gold. 
A) the marginal utility of the last unit of gold consumed or purchased is greater than the marginal utility of the last unit of chocolate consumed. 
B) the total utility of gold purchased is greater than the total utility of chocolate consumed. 
C) gold is a normal good, while chocolate is an inferior good. 
D) there are many substitutes for chocolate but few for gold.

Question 5

Children who dislike brussels sprouts exemplify the notion that the marginal utility of brussels sprouts is

Accepted Answer

A) zero. 
B) negative. 
C) positive, but decreasing. 
D) less than the total utility. 
A) zero. 
B) negative. 
C) positive, but decreasing. 
D) less than the total utility.

Question 6

Refer to the data. The value for Y is

Accepted Answer

A) 25. 
B) 30. 
C) 40. 
D) 45. 
A) 25. 
B) 30. 
C) 40. 
D) 45.

Question 7

Theft and burglary

Accepted Answer

A) can be viewed as attempts to maximize utility, given certain marginal costs and marginal benefits. 
B) are examples of irrational behavior. 
C) are applications of the law of increasing opportunity cost. 
D) are less economically rational than crimes of passion and violence. 
A) can be viewed as attempts to maximize utility, given certain marginal costs and marginal benefits. 
B) are examples of irrational behavior. 
C) are applications of the law of increasing opportunity cost. 
D) are less economically rational than crimes of passion and violence.

Question 8

What do the income effect, the substitution effect, and diminishing marginal utility have in common?

Accepted Answer

A) All are required to explain the utility-maximizing position of a consumer. 
B) They are all empirically measurable. 
C) They all help explain the upsloping supply curve. 
D) They all help explain the downsloping demand curve. 
A) All are required to explain the utility-maximizing position of a consumer. 
B) They are all empirically measurable. 
C) They all help explain the upsloping supply curve. 
D) They all help explain the downsloping demand curve.

Question 9

Discuss the basic determinants for an individual's demand for a specific good or service.

Accepted Answer

The basic determinants of an i

Question 10

Why would an ounce of gold be priced higher than an ounce of coffee beans, even though coffee is generally considered more essential than gold?

Accepted Answer

Coffee beans are in great supply relativ

Question 11

When the price of a product falls, the income effect induces the consumer to purchase more of it, while the substitution effect prompts her to buy less.

Accepted Answer

A) True 
 B)False

Question 12

The table shows an indifference schedule for several combinations of X and Y.   Approximately how much of Y is the consumer willing to give up to obtain the twentieth unit of X?

Accepted Answer

A) 4 
B) 1/4 
C) 2 
D) 1/2 
A) 4 
B) 1/4 
C) 2 
D) 1/2

Question 13

Answer the question on the basis of the following total utility data for products L and M. Assume that the prices of L and M are $3 and $4, respectively, and that the consumer's income is $18   How many units of the two products will the rational consumer purchase?

Accepted Answer

A) 3 of L and none of M 
B) 4 of L and 2 of M 
C) 3 of L and 5 of M 
D) 2 of L and 3 of M 
A) 3 of L and none of M 
B) 4 of L and 2 of M 
C) 3 of L and 5 of M 
D) 2 of L and 3 of M

Question 14

When a consumer shifts purchases from X to Y, the marginal utility of X falls and the marginal utility of Y rises.

Accepted Answer

A) True 
 B)False

Question 15

The law of diminishing marginal utility explains why

Accepted Answer

A) supply curves slope upward. 
B) demand curves slope downward. 
C) addicts can never get enough. 
D) people will only consume their favorite goods and not try new things. 
A) supply curves slope upward. 
B) demand curves slope downward. 
C) addicts can never get enough. 
D) people will only consume their favorite goods and not try new things.

Question 16

To maximize utility, a consumer should allocate money income so that the

Accepted Answer

A) elasticity of demand on all products purchased is the same. 
B) marginal utility obtained from the last dollar spent on each product is the same. 
C) total utility derived from each product consumed is the same. 
D) marginal utility of the last unit of each product consumed is the same. 
A) elasticity of demand on all products purchased is the same. 
B) marginal utility obtained from the last dollar spent on each product is the same. 
C) total utility derived from each product consumed is the same. 
D) marginal utility of the last unit of each product consumed is the same.

Question 17

List two important characteristics of indifference curves for two goods.

Accepted Answer

The two important characterist

Question 18

The fact that most medical care purchases are financed through insurance

Accepted Answer

A) has no effect on health care consumption because aggregate costs are the same regardless of payment method. 
B) reduces the amount of health care consumed by raising the price of additional units of care. 
C) has decreased health care costs and therefore reduced aggregate health care expenditures. 
D) increases the amount of health care consumed by reducing the price of additional units of care. 
A) has no effect on health care consumption because aggregate costs are the same regardless of payment method. 
B) reduces the amount of health care consumed by raising the price of additional units of care. 
C) has decreased health care costs and therefore reduced aggregate health care expenditures. 
D) increases the amount of health care consumed by reducing the price of additional units of care.

Question 19

Assume MU c and MU d represent the marginal utility that a consumer gets from products C and D, the respective prices of which are Pc and Pd. The consumer will increase his total utility from a specific money outlay by spending more on C and less on D if initially

Accepted Answer

A) MU dMU dP d. D) MU d>MU c. A) MU dMU dP d. D) MU d>MU c.

Question 20

If a consumer has an income of $100, the price of X is $2, and the price of Y is $4, what is the maximum quantity of Y the consumer is able to purchase?

Accepted Answer

A) 400 
B) 100 
C) 50 
D) 25 
A) 400 
B) 100 
C) 50 
D) 25

Exam 7: Utility Maximization

The data illustrate the

The theory of consumer behavior assumes that consumers attempt to maximize

Which of the graphs shows an increase in the price of X and a decrease in the price of Y?

The fact that an ounce of gold is priced higher than an ounce of chocolate suggests that

Children who dislike brussels sprouts exemplify the notion that the marginal utility of brussels sprouts is

Refer to the data. The value for Y is

Theft and burglary

What do the income effect, the substitution effect, and diminishing marginal utility have in common?

Discuss the basic determinants for an individual's demand for a specific good or service.

Why would an ounce of gold be priced higher than an ounce of coffee beans, even though coffee is generally considered more essential than gold?

When the price of a product falls, the income effect induces the consumer to purchase more of it, while the substitution effect prompts her to buy less.

The table shows an indifference schedule for several combinations of X and Y. Approximately how much of Y is the consumer willing to give up to obtain the twentieth unit of X?

Answer the question on the basis of the following total utility data for products L and M. Assume that the prices of L and M are $3 and $4, respectively, and that the consumer's income is $18 How many units of the two products will the rational consumer purchase?

When a consumer shifts purchases from X to Y, the marginal utility of X falls and the marginal utility of Y rises.

The law of diminishing marginal utility explains why

To maximize utility, a consumer should allocate money income so that the

List two important characteristics of indifference curves for two goods.

The fact that most medical care purchases are financed through insurance

Assume MU c and MU d represent the marginal utility that a consumer gets from products C and D, the respective prices of which are Pc and Pd. The consumer will increase his total utility from a specific money outlay by spending more on C and less on D if initially

If a consumer has an income of $100, the price of X is $2, and the price of Y is $4, what is the maximum quantity of Y the consumer is able to purchase?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Elasticity

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters

Assume MU c and MU d represent the marginal utility that a consumer gets from products C and D, the respective prices of which are P_c and P_d. The consumer will increase his total utility from a specific money outlay by spending more on C and less on D if initially