Question 1

. Use the figure Aimee's Budget Constraint. If each magazine costs $5, how much does Aimee have to spend?
​
Figure: Aimee's Budget Constraint

Accepted Answer

A)  $120 
B)  $20 
C)  $100 
D)  $50 
A)  $120 
B)  $20 
C)  $100 
D)  $50

Question 2

An ice-cream shop expanded its offerings from 10 flavors to 45 flavors and noticed that its sales fell. Which of the following ideas from behavioral economics explains why this happened?

Accepted Answer

A)  Consumers like balance. 
B)  Consumers like choices but not too many. 
C)  Consumers want fairness. 
D)  Consumers make mistakes. 
A)  Consumers like balance. 
B)  Consumers like choices but not too many. 
C)  Consumers want fairness. 
D)  Consumers make mistakes.

Question 3

Podrick enjoys consuming sandwiches (S) and juice boxes (J). Suppose that Podrick has $20 in his budget, the price of a sandwich is $4, and the price of a juice box is $2. If Podrick spends all of his $20 budget and has maximized his utility, which of the following must be true?

Accepted Answer

A)  The marginal utility of a sandwich is equal to the marginal utility of a juice box. 
B)  The marginal utility of a sandwich is twice the marginal utility of a juice box. 
C)  The marginal utility of a sandwich is four times the marginal utility of a juice box. 
D)  The marginal utility of a sandwich is half of the marginal utility of a juice box. 
A)  The marginal utility of a sandwich is equal to the marginal utility of a juice box. 
B)  The marginal utility of a sandwich is twice the marginal utility of a juice box. 
C)  The marginal utility of a sandwich is four times the marginal utility of a juice box. 
D)  The marginal utility of a sandwich is half of the marginal utility of a juice box.

Question 4

Steven's marginal utility from his tenth movie rental is 1 util, and his marginal utility from his tenth cup of coffee is 4. If the price of a movie rental is $1 and the price of a cup of coffee is $2, what should Steven do?

Accepted Answer

A)  increase the quantity of coffee that he consumes 
B)  increase the quantity of movie rentals that he consumes 
C)  nothing because his utility is as high as possible 
D)  decrease the quantity that he consumes of both goods 
A)  increase the quantity of coffee that he consumes 
B)  increase the quantity of movie rentals that he consumes 
C)  nothing because his utility is as high as possible 
D)  decrease the quantity that he consumes of both goods

Question 5

If a good is a normal good and its price increases, the income effect:

Accepted Answer

A)  and the substitution effect cancel each other out, and there is no change in quantity demanded. 
B)  and the substitution effect work in the same direction to decrease quantity demanded. 
C)  has a stronger and positive effect on quantity demanded than the substitution effect. 
D)  has a negative effect on quantity demanded, but the substitution effect dominates, and the quantity demanded increases. 
A)  and the substitution effect cancel each other out, and there is no change in quantity demanded. 
B)  and the substitution effect work in the same direction to decrease quantity demanded. 
C)  has a stronger and positive effect on quantity demanded than the substitution effect. 
D)  has a negative effect on quantity demanded, but the substitution effect dominates, and the quantity demanded increases.

Question 6

Podrick enjoys consuming sandwiches (S) and juice boxes (J). Suppose that Podrick has $20 in his budget, the price of a sandwich is $4, and the price of a juice box is $2. Which of the following combinations uses more than his $20 budget?

Accepted Answer

A)  0 S and 5 J 
B)  1 S and 8 J 
C)  2 S and 2 J 
D)  3 S and 5 J 
A)  0 S and 5 J 
B)  1 S and 8 J 
C)  2 S and 2 J 
D)  3 S and 5 J

Question 7

The substitution effect discourages the consumption of:

Accepted Answer

A)  both goods when the price of one good increases. 
B)  the good for which price increases. 
C)  the good whose price hasn't changed when the price of one good increases. 
D)  both goods when the price of one good decreases. 
A)  both goods when the price of one good increases. 
B)  the good for which price increases. 
C)  the good whose price hasn't changed when the price of one good increases. 
D)  both goods when the price of one good decreases.

Question 8

Use the table Jackson's Total Utility for Cupcakes. What is the marginal utility of Jackson's second cupcake?
​

Accepted Answer

A)  25 
B)  20 
C)  45 
D)  10 
A)  25 
B)  20 
C)  45 
D)  10

Question 9

When total utility _____ at a decreasing rate, marginal utility:

Accepted Answer

A)  increases; increases. 
B)  increases; decreases. 
C)  decreases; stays the same. 
D)  decreases; increases. 
A)  increases; increases. 
B)  increases; decreases. 
C)  decreases; stays the same. 
D)  decreases; increases.

Question 10

Suppose that you are opening a business that makes artisanal jams. According to behavioral economics, what should your product variety be like? Explain.

Accepted Answer

According to behavioral economics, you s

Question 11

Every point on a budget constraint represents a point that:

Accepted Answer

A)  gives you the highest marginal utility. 
B)  is an option that a consumer can choose. 
C)  is an option that is unattainable. 
D)  minimizes diminishing marginal utility. 
A)  gives you the highest marginal utility. 
B)  is an option that a consumer can choose. 
C)  is an option that is unattainable. 
D)  minimizes diminishing marginal utility.

Question 12

Which of the following statements about the income effect and substitution effect is NOT true?

Accepted Answer

A)  The effect of a price decrease on the quantity demanded of an inferior good is theoretically ambiguous. 
B)  The effect of a price decrease on the quantity demanded of a normal good is theoretically ambiguous. 
C)  The income effect and substitution effect act in opposite directions on the quantity demanded of an inferior good. 
D)  The income effect and substitution effect act in the same direction on the quantity demanded of a normal good. 
A)  The effect of a price decrease on the quantity demanded of an inferior good is theoretically ambiguous. 
B)  The effect of a price decrease on the quantity demanded of a normal good is theoretically ambiguous. 
C)  The income effect and substitution effect act in opposite directions on the quantity demanded of an inferior good. 
D)  The income effect and substitution effect act in the same direction on the quantity demanded of a normal good.

Question 13

Utility maximization is about:

Accepted Answer

A)  making sure that you have money left over from spending. 
B)  getting the most bang for your buck. 
C)  making sure that marginal utility is as small as possible. 
D)  minimizing total utility. 
A)  making sure that you have money left over from spending. 
B)  getting the most bang for your buck. 
C)  making sure that marginal utility is as small as possible. 
D)  minimizing total utility.

Question 14

All else equal, when the price of gasoline falls, Brian purchases more gasoline and more candy. For Brian, we can definitely say that candy:

Accepted Answer

A)  is a normal good and gasoline is an inferior good. 
B)  is a normal good but gasoline could be normal or inferior. 
C)  is a normal good and gasoline is a normal good. 
D)  could be normal or inferior good and gasoline is a normal good. 
A)  is a normal good and gasoline is an inferior good. 
B)  is a normal good but gasoline could be normal or inferior. 
C)  is a normal good and gasoline is a normal good. 
D)  could be normal or inferior good and gasoline is a normal good.

Question 15

If a good is an inferior good and its price increases, the income effect:

Accepted Answer

A)  and the substitution effect work in the same direction to decrease quantity demanded. 
B)  and the substitution effect cancel each other out, and there is no change in quantity demanded. 
C)  has a positive effect on quantity demanded, but typically the substitution effect tends to dominate the income effect, resulting in a decrease in the quantity demanded. 
D)  has a stronger and negative effect on quantity demanded than the substitution effect. 
A)  and the substitution effect work in the same direction to decrease quantity demanded. 
B)  and the substitution effect cancel each other out, and there is no change in quantity demanded. 
C)  has a positive effect on quantity demanded, but typically the substitution effect tends to dominate the income effect, resulting in a decrease in the quantity demanded. 
D)  has a stronger and negative effect on quantity demanded than the substitution effect.

Question 16

The concept from behavioral economics that is most closely tied to diminishing marginal utility is that consumers:

Accepted Answer

A)  want fairness. 
B)  want some choices but not too many. 
C)  make inaccurate risk assessments. 
D)  want balance. 
A)  want fairness. 
B)  want some choices but not too many. 
C)  make inaccurate risk assessments. 
D)  want balance.

Question 17

Use the table Polly's Marginal Utility from Cheese and Sausage. Polly has a budget of $56. If the current price of cheese is $10, the current price of sausage is $8, and she is currently consuming two units of cheese and four units of sausage, how should she change her consumption to increase her total utility?
​

Accepted Answer

A)  increase her consumption of both goods 
B)  decrease her consumption of both goods 
C)  increase her consumption of cheese and decrease her consumption of sausage 
D)  decrease her consumption of cheese and increase her consumption of sausage 
A)  increase her consumption of both goods 
B)  decrease her consumption of both goods 
C)  increase her consumption of cheese and decrease her consumption of sausage 
D)  decrease her consumption of cheese and increase her consumption of sausage

Question 18

A consumer maximizes utility when:

Accepted Answer

A)  some of the budget is left unspent. 
B)  he or she equalizes the marginal utility per dollar spent on each good. 
C)  the marginal utility per dollar spent on one good is higher than the marginal utility per dollar spent on another good. 
D)  the consumer spends all of his or her money on the good that is the cheapest. 
A)  some of the budget is left unspent. 
B)  he or she equalizes the marginal utility per dollar spent on each good. 
C)  the marginal utility per dollar spent on one good is higher than the marginal utility per dollar spent on another good. 
D)  the consumer spends all of his or her money on the good that is the cheapest.

Question 19

All else equal, when the price of gasoline falls, Brian purchases more gasoline and less candy. For Brian, we can definitely say that candy:

Accepted Answer

A)  is an inferior good but gasoline could be normal or inferior. 
B)  is a normal good but gasoline could be normal or inferior. 
C)  is a normal good and gasoline is a normal good. 
D)  could be normal or inferior good and gasoline is a normal good. 
A)  is an inferior good but gasoline could be normal or inferior. 
B)  is a normal good but gasoline could be normal or inferior. 
C)  is a normal good and gasoline is a normal good. 
D)  could be normal or inferior good and gasoline is a normal good.

Question 20

Use the table Sorenson's Utility from Eating Lunches at a Restaurant. What happens to Sorenson's total utility if he changes from eating eight lunches to eating nine lunches?
​

Accepted Answer

A)  It increases by nine utils. 
B)  It stays the same. 
C)  It increases by 10 utils. 
D)  It decreases by 10 utils. 
A)  It increases by nine utils. 
B)  It stays the same. 
C)  It increases by 10 utils. 
D)  It decreases by 10 utils.

. Use the figure Aimee's Budget Constraint. If each magazine costs $5, how much does Aimee have to spend? Figure: Aimee's Budget Constraint

An ice-cream shop expanded its offerings from 10 flavors to 45 flavors and noticed that its sales fell. Which of the following ideas from behavioral economics explains why this happened?

Podrick enjoys consuming sandwiches (S) and juice boxes (J). Suppose that Podrick has $20 in his budget, the price of a sandwich is $4, and the price of a juice box is $2. If Podrick spends all of his $20 budget and has maximized his utility, which of the following must be true?

Steven's marginal utility from his tenth movie rental is 1 util, and his marginal utility from his tenth cup of coffee is 4. If the price of a movie rental is $1 and the price of a cup of coffee is $2, what should Steven do?

If a good is a normal good and its price increases, the income effect:

Podrick enjoys consuming sandwiches (S) and juice boxes (J). Suppose that Podrick has $20 in his budget, the price of a sandwich is $4, and the price of a juice box is $2. Which of the following combinations uses more than his $20 budget?

The substitution effect discourages the consumption of:

Use the table Jackson's Total Utility for Cupcakes. What is the marginal utility of Jackson's second cupcake?

When total utility _____ at a decreasing rate, marginal utility:

Suppose that you are opening a business that makes artisanal jams. According to behavioral economics, what should your product variety be like? Explain.

Every point on a budget constraint represents a point that:

Which of the following statements about the income effect and substitution effect is NOT true?

Utility maximization is about:

All else equal, when the price of gasoline falls, Brian purchases more gasoline and more candy. For Brian, we can definitely say that candy:

If a good is an inferior good and its price increases, the income effect:

The concept from behavioral economics that is most closely tied to diminishing marginal utility is that consumers:

A consumer maximizes utility when:

All else equal, when the price of gasoline falls, Brian purchases more gasoline and less candy. For Brian, we can definitely say that candy:

Use the table Sorenson's Utility from Eating Lunches at a Restaurant. What happens to Sorenson's total utility if he changes from eating eight lunches to eating nine lunches?

Foundations of Economics

Extension: Understanding Graphs

Markets and Economies

Demand

Supply

Market Equilibrium

Elasticity

Production Costs

Perfect Competition

Market Power

Factor Markets

Market Failure and Government Failure

Measuring an Economys Performance

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and Banking

Monetary Policy

Economic Growth and Development

International Trade and Finance

Filters

Exam 7: Consumer Behavior

. Use the figure Aimee's Budget Constraint. If each magazine costs $5, how much does Aimee have to spend? ​ Figure: Aimee's Budget Constraint

An ice-cream shop expanded its offerings from 10 flavors to 45 flavors and noticed that its sales fell. Which of the following ideas from behavioral economics explains why this happened?

Podrick enjoys consuming sandwiches (S) and juice boxes (J). Suppose that Podrick has $20 in his budget, the price of a sandwich is $4, and the price of a juice box is $2. If Podrick spends all of his $20 budget and has maximized his utility, which of the following must be true?

Steven's marginal utility from his tenth movie rental is 1 util, and his marginal utility from his tenth cup of coffee is 4. If the price of a movie rental is $1 and the price of a cup of coffee is $2, what should Steven do?

If a good is a normal good and its price increases, the income effect:

Podrick enjoys consuming sandwiches (S) and juice boxes (J). Suppose that Podrick has $20 in his budget, the price of a sandwich is $4, and the price of a juice box is $2. Which of the following combinations uses more than his $20 budget?

The substitution effect discourages the consumption of:

Use the table Jackson's Total Utility for Cupcakes. What is the marginal utility of Jackson's second cupcake? ​

When total utility _____ at a decreasing rate, marginal utility:

Suppose that you are opening a business that makes artisanal jams. According to behavioral economics, what should your product variety be like? Explain.

Every point on a budget constraint represents a point that:

Which of the following statements about the income effect and substitution effect is NOT true?

Utility maximization is about:

All else equal, when the price of gasoline falls, Brian purchases more gasoline and more candy. For Brian, we can definitely say that candy:

If a good is an inferior good and its price increases, the income effect:

The concept from behavioral economics that is most closely tied to diminishing marginal utility is that consumers:

A consumer maximizes utility when:

All else equal, when the price of gasoline falls, Brian purchases more gasoline and less candy. For Brian, we can definitely say that candy:

Use the table Sorenson's Utility from Eating Lunches at a Restaurant. What happens to Sorenson's total utility if he changes from eating eight lunches to eating nine lunches? ​

Foundations of Economics

Extension: Understanding Graphs

Markets and Economies

Demand

Supply

Market Equilibrium

Elasticity

Production Costs

Perfect Competition

Market Power

Factor Markets

Market Failure and Government Failure

Measuring an Economys Performance

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and Banking

Monetary Policy

Economic Growth and Development

International Trade and Finance

Filters

. Use the figure Aimee's Budget Constraint. If each magazine costs $5, how much does Aimee have to spend? Figure: Aimee's Budget Constraint

Use the table Jackson's Total Utility for Cupcakes. What is the marginal utility of Jackson's second cupcake?

Use the table Sorenson's Utility from Eating Lunches at a Restaurant. What happens to Sorenson's total utility if he changes from eating eight lunches to eating nine lunches?