Question 1

According to information provided in the textbook, the results of the "ultimatum game" reveal that people

Accepted Answer

A) always behave irrationally. 
B) tend to be more concerned with their relative income position in a group than with their absolute position in the group. 
C) tend to be more concerned with their absolute position in a group than with their relative position in the group. 
D) always behave rationally. 
A) always behave irrationally. 
B) tend to be more concerned with their relative income position in a group than with their absolute position in the group. 
C) tend to be more concerned with their absolute position in a group than with their relative position in the group. 
D) always behave rationally.

Question 2

For economists, framing refers to the

Accepted Answer

A) manner in which a problem is presented. 
B) degree of competition present in a given market. 
C) total satisfaction a consumer derives from consuming a good. 
D) level of total utility derived from consuming a good. 
A) manner in which a problem is presented. 
B) degree of competition present in a given market. 
C) total satisfaction a consumer derives from consuming a good. 
D) level of total utility derived from consuming a good.

Question 3

Which of the following statements does not invoke interpersonal utility comparisons?

Accepted Answer

A) The total utility a millionaire derives from $100 is less than the total utility a poor person derives from $100. 
B) The marginal utility a millionaire derives from the one-millionth dollar is less than the marginal utility a poor person derives from the one-hundredth dollar. 
C) For both the millionaire and the pauper, the marginal utility they derive from the one-thousandth dollar is less than the marginal utility they derive from the five-hundredth dollar. 
D) The total utility a millionaire derives from $10,000 is more than the total utility a poor person derives from $10,000. 
A) The total utility a millionaire derives from $100 is less than the total utility a poor person derives from $100. 
B) The marginal utility a millionaire derives from the one-millionth dollar is less than the marginal utility a poor person derives from the one-hundredth dollar. 
C) For both the millionaire and the pauper, the marginal utility they derive from the one-thousandth dollar is less than the marginal utility they derive from the five-hundredth dollar. 
D) The total utility a millionaire derives from $10,000 is more than the total utility a poor person derives from $10,000.

Question 4

Diamonds are more expensive than water because

Accepted Answer

A) markets do not always reflect value. 
B) they have fewer uses. 
C) they are relatively scarce and they yield higher marginal utility. 
D) they yield higher total utility. 
A) markets do not always reflect value. 
B) they have fewer uses. 
C) they are relatively scarce and they yield higher marginal utility. 
D) they yield higher total utility.

Question 5

If the marginal utility of X is negative, then the last unit of X is

Accepted Answer

A) a bad 
B) a normal good 
C) an inferior good 
D) not subject to the law of diminishing marginal utility 
A) a bad 
B) a normal good 
C) an inferior good 
D) not subject to the law of diminishing marginal utility

Question 6

The point where the slope of the budget constraint equals the slope of the indifference curve is termed consumer equilibrium .

Accepted Answer

A) True 
 B)False

Question 7

Exhibit 20-4   Refer to Exhibit 20-4.  What value goes in blank (D)?

Accepted Answer

A) 172 
B) 182 
C) 158 
D) 250 
E) There is not enough information to answer this question. 
A) 172 
B) 182 
C) 158 
D) 250 
E) There is not enough information to answer this question.

Question 8

Brain researchers think that the best reason the brain might weight the present high and the future low when faced with a present-future tradeoff is that:

Accepted Answer

A) responding quickly and definitively to present rewards might have come with an evolutionary advantage. 
B) people are naturally short-run thinkers. 
C) the future is harder to visualize than the present. 
D) people naturally think they may die in the future. 
A) responding quickly and definitively to present rewards might have come with an evolutionary advantage. 
B) people are naturally short-run thinkers. 
C) the future is harder to visualize than the present. 
D) people naturally think they may die in the future.

Question 9

Research presented in the textbook shows that people are more concerned with their absolute income position in a group than their relative income position in the group.

Accepted Answer

A) True 
 B)False

Question 10

Consumer equilibrium exists when an individual

Accepted Answer

A) can be made better off by buying more of a normal good and less of an inferior good. 
B) is receiving the same total utility from each of the goods he or she purchases. 
C) is receiving the same marginal utility from each of the goods he or she purchases. 
D) has the same MU\P ratio for each of the goods he or she purchases. 
A) can be made better off by buying more of a normal good and less of an inferior good. 
B) is receiving the same total utility from each of the goods he or she purchases. 
C) is receiving the same marginal utility from each of the goods he or she purchases. 
D) has the same MU\P ratio for each of the goods he or she purchases.

Question 11

Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 30, 50, 65, 72, respectively. In this situation we have __________ marginal utility, which is generally __________ in the analysis of consumer choice.

Accepted Answer

A) increasing; assumed 
B) increasing; not assumed 
C) diminishing; assumed 
D) diminishing; not assumed 
A) increasing; assumed 
B) increasing; not assumed 
C) diminishing; assumed 
D) diminishing; not assumed

Question 12

Exhibit 20-8 ​
 
Refer to Exhibit 20-8. If the price of good X falls, the budget constraint moves from budget constraint

Accepted Answer

A) 1 to 2. 
B) 3 to 2. 
C) 3 to 1. 
D) 1 to 3. 
A) 1 to 2. 
B) 3 to 2. 
C) 3 to 1. 
D) 1 to 3.

Question 13

Because there are so few diamonds in the world, the consumption of diamonds

Accepted Answer

A) takes priority over the consumption of water. 
B) takes place at relatively high marginal utility. 
C) takes place at relatively low marginal utility. 
D) is more important than the consumption of water. 
A) takes priority over the consumption of water. 
B) takes place at relatively high marginal utility. 
C) takes place at relatively low marginal utility. 
D) is more important than the consumption of water.

Question 14

An indifference curve shows all

Accepted Answer

A) possible equilibrium positions on an indifference map. 
B) equilibrium combinations of two products that are obtainable with a given money income. 
C) combinations of two products that will yield the same utility to a consumer. 
D) possible combinations of two products that a consumer can purchase, given her income and the prices of the products. 
A) possible equilibrium positions on an indifference map. 
B) equilibrium combinations of two products that are obtainable with a given money income. 
C) combinations of two products that will yield the same utility to a consumer. 
D) possible combinations of two products that a consumer can purchase, given her income and the prices of the products.

Question 15

Economists assume that the goal of consumers is to maximize total utility.

Accepted Answer

A) True 
 B)False

Question 16

Marginal utility is defined as the

Accepted Answer

A) change in marginal utility a person derives from the consumption of a good. 
B) change in total utility a person derives from the consumption of a good divided by the price of that good. 
C) change in total utility a person derives from the consumption of a good divided by the change in the quantity of the good consumed. 
D) sum of the amounts of satisfaction a person receives from consuming a good. 
E) change in total utility a person derives from the consumption of a good divided by the value in use of that good. 
A) change in marginal utility a person derives from the consumption of a good. 
B) change in total utility a person derives from the consumption of a good divided by the price of that good. 
C) change in total utility a person derives from the consumption of a good divided by the change in the quantity of the good consumed. 
D) sum of the amounts of satisfaction a person receives from consuming a good. 
E) change in total utility a person derives from the consumption of a good divided by the value in use of that good.

Question 17

Implicit in the solution to the diamond-water paradox is the idea that prices reflect __________ utility instead of __________ utility.

Accepted Answer

A) marginal; total 
B) total; marginal 
C) average; total 
D) total; average 
A) marginal; total 
B) total; marginal 
C) average; total 
D) total; average

Question 18

Given that MUX\PX

Accepted Answer

A) can never maximize total utility. 
B) have maximized total utility. 
C) can increase total utility by buying more of X and less of Y. 
D) can increase total utility by buying more of Y and less of X. 
A) can never maximize total utility. 
B) have maximized total utility. 
C) can increase total utility by buying more of X and less of Y. 
D) can increase total utility by buying more of Y and less of X.

Question 19

Exhibit 20-7 ​
 
Refer to Exhibit 20-7. For graph (2), if the price of X is $60, what is the consumer's income?

Accepted Answer

A) $1,000 
B) $2,000 
C) $3,000 
D) $6,000 
E) This cannot be determined from the information provided. 
A) $1,000 
B) $2,000 
C) $3,000 
D) $6,000 
E) This cannot be determined from the information provided.

Question 20

There are two goods, X and Y, and the absolute price of good Y falls. It follows that

Accepted Answer

A) a person can now buy less of good Y. 
B) a person cannot buy more of good Y. 
C) the slope of the budget constraint changes. 
D) the indifference curve between goods X and Y changes. 
A) a person can now buy less of good Y. 
B) a person cannot buy more of good Y. 
C) the slope of the budget constraint changes. 
D) the indifference curve between goods X and Y changes.

Exam 7: Consumer Choice: Maximizing Utility and Behavioral Economics

According to information provided in the textbook, the results of the "ultimatum game" reveal that people

For economists, framing refers to the

Which of the following statements does not invoke interpersonal utility comparisons?

Diamonds are more expensive than water because

If the marginal utility of X is negative, then the last unit of X is

The point where the slope of the budget constraint equals the slope of the indifference curve is termed consumer equilibrium .

Exhibit 20-4 Refer to Exhibit 20-4. What value goes in blank (D)?

Brain researchers think that the best reason the brain might weight the present high and the future low when faced with a present-future tradeoff is that:

Research presented in the textbook shows that people are more concerned with their absolute income position in a group than their relative income position in the group.

Consumer equilibrium exists when an individual

Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 30, 50, 65, 72, respectively. In this situation we have __________ marginal utility, which is generally __________ in the analysis of consumer choice.

Exhibit 20-8 ​ Refer to Exhibit 20-8. If the price of good X falls, the budget constraint moves from budget constraint

Because there are so few diamonds in the world, the consumption of diamonds

An indifference curve shows all

Economists assume that the goal of consumers is to maximize total utility.

Marginal utility is defined as the

Implicit in the solution to the diamond-water paradox is the idea that prices reflect __________ utility instead of __________ utility.

Given that MUX\PX

Exhibit 20-7 ​ Refer to Exhibit 20-7. For graph (2), if the price of X is $60, what is the consumer's income?

There are two goods, X and Y, and the absolute price of good Y falls. It follows that

What Economics Is About

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Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 30, 50, 65, 72, respectively. In this situation we have marginal utility, which is generally in the analysis of consumer choice.

Exhibit 20-8 Refer to Exhibit 20-8. If the price of good X falls, the budget constraint moves from budget constraint

Implicit in the solution to the diamond-water paradox is the idea that prices reflect utility instead of utility.

Given that MU_X\P_X

Exhibit 20-7 Refer to Exhibit 20-7. For graph (2), if the price of X is $60, what is the consumer's income?