Question 1

When the price of one good decreases, a consumer's purchasing power for all goods increases, which results in:

Accepted Answer

A)  the substitution effect. 
B)  a susceptibility to framing. 
C)  bounded willpower. 
D)  the income effect. 
A)  the substitution effect. 
B)  a susceptibility to framing. 
C)  bounded willpower. 
D)  the income effect.

Question 2

Even though there is a nonzero probability that Fullington will have a serious and expensive medical issue requiring treatment in the next few years, he refuses to buy insurance. Which lesson from behavioral economics explains why he makes that choice?

Accepted Answer

A)  bounded rationality 
B)  Consumers like choices but not too many. 
C)  People like fairness. 
D)  susceptibility to framing 
A)  bounded rationality 
B)  Consumers like choices but not too many. 
C)  People like fairness. 
D)  susceptibility to framing

Question 3

If Han and Gocan both get 25 utils from a pumpkin spice latte, what can be concluded from this information?

Accepted Answer

A)  A pumpkin spice latte gives both Han and Gocan the same amount of happiness. 
B)  Both Han and Gocan will get the same amount of happiness from one additional pumpkin spice latte. 
C)  Han would be better off if he consumes something else that gives him 20 utils instead. 
D)  Gocan would be better off if he consumes something else that gives him 26 utils instead (assuming that the price of the substitute item is the same or less). 
A)  A pumpkin spice latte gives both Han and Gocan the same amount of happiness. 
B)  Both Han and Gocan will get the same amount of happiness from one additional pumpkin spice latte. 
C)  Han would be better off if he consumes something else that gives him 20 utils instead. 
D)  Gocan would be better off if he consumes something else that gives him 26 utils instead (assuming that the price of the substitute item is the same or less).

Question 4

Use the table Dolly's Total Utility from Product Z to respond to the questions below.
​
   A. Is Dolly's total utility increasing at a constant rate, a decreasing rate, or an increasing rate? Explain.
B. A friend tells you that Dolly will certainly consume six units of product Z because that is where total utility is greatest. Do you agree or disagree? Explain.
C. A different friend tells you that it's entirely possible that Dolly will not consume any units of product Z. Do you agree or disagree? Explain.

Accepted Answer

In part A, total utility is increasing a

Question 5

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

Question 6

According to the findings of behavioral economics, why do some stores price items to end with 99 cents?

Accepted Answer

According to behavioral economics, consu

Question 7

. Use the figure Aimee's Budget Constraint. The price of a magazine is $5, and the price of a baseball ticket is $25. What is true if Aimee's income increases by $25?
​
Figure: Aimee's Budget Constraint

Accepted Answer

A)  Point S is no longer an option that she can choose from. 
B)  Option L will maximize her utility. 
C)  Point P will be an option that she can choose from. 
D)  Point N will be unattainable. 
A)  Point S is no longer an option that she can choose from. 
B)  Option L will maximize her utility. 
C)  Point P will be an option that she can choose from. 
D)  Point N will be unattainable.

Question 8

When the price of good X decreases, a consumer is able to consume more of good X, more of good Y, or both. This is called the:

Accepted Answer

A)  precautionary principle. 
B)  substitution effect. 
C)  income effect. 
D)  marginal utility principle. 
A)  precautionary principle. 
B)  substitution effect. 
C)  income effect. 
D)  marginal utility principle.

Question 9

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

Accepted Answer

A)  70 
B)  20 
C)  10 
D)  15 
A)  70 
B)  20 
C)  10 
D)  15

Question 10

Use the table Utility from Roller Coaster Rides II. What quantity has a negative marginal utility?
​

Accepted Answer

A)  two rides 
B)  three rides 
C)  four rides 
D)  five rides 
A)  two rides 
B)  three rides 
C)  four rides 
D)  five rides

Question 11

Which of the following is NOT an example of a mistake caused by bounded rationality?

Accepted Answer

A)  excessive optimism 
B)  inaccurate risk assessments 
C)  framing 
D)  punishing a low-ball offer 
A)  excessive optimism 
B)  inaccurate risk assessments 
C)  framing 
D)  punishing a low-ball offer

Question 12

Which of the following is NOT necessary for a consumer to maximize his or her utility?

Accepted Answer

A)  All income is spent. 
B)  The marginal utility per dollar spent on all goods is equal. 
C)  The most money is spent on the cheapest good. 
D)  The bang per buck is the same on all goods. 
A)  All income is spent. 
B)  The marginal utility per dollar spent on all goods is equal. 
C)  The most money is spent on the cheapest good. 
D)  The bang per buck is the same on all goods.

Question 13

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

Accepted Answer

A)  75 
B)  -5 
C)  70 
D)  5 
A)  75 
B)  -5 
C)  70 
D)  5

Question 14

Eric likes to use the treadmill at the gym, but occasionally he likes to use the elliptical machine instead. Eric's choice to use the elliptical machine occasionally rather than regularly reflects the idea that consumers:

Accepted Answer

A)  want choices but not too many. 
B)  are fooled sometimes. 
C)  can be excessively optimistic. 
D)  want balance. 
A)  want choices but not too many. 
B)  are fooled sometimes. 
C)  can be excessively optimistic. 
D)  want balance.

Question 15

Janet is currently purchasing five donuts and six crepes per week. Her marginal utility from the fifth donut is 72, and her marginal utility from the fifth crepe is 40. If donuts cost $8 and crepes cost $5, what should she do assuming that she still has some of her budget to spend?

Accepted Answer

A)  buy more crepes 
B)  buy more donuts 
C)  buy less of both goods 
D)  nothing because she is maximizing her utility 
A)  buy more crepes 
B)  buy more donuts 
C)  buy less of both goods 
D)  nothing because she is maximizing her utility

Question 16

What is diminishing marginal utility?

Accepted Answer

A)  the decrease in additional benefit that you receive from an additional unit of a good or service as you consume more of it 
B)  the decrease in total benefit that you receive from an additional unit of a good or service as you consume more of it 
C)  the change in the average amount of happiness that you receive from each additional unit of consumption 
D)  the change in the average amount of happiness that you receive from one less unit of consumption 
A)  the decrease in additional benefit that you receive from an additional unit of a good or service as you consume more of it 
B)  the decrease in total benefit that you receive from an additional unit of a good or service as you consume more of it 
C)  the change in the average amount of happiness that you receive from each additional unit of consumption 
D)  the change in the average amount of happiness that you receive from one less unit of consumption

Question 17

Use the table Jackson's Total Utility for Cupcakes. How many cupcakes will Jackson choose to consume if cupcakes are free?
​

Accepted Answer

A)  75 cupcakes 
B)  one cupcake 
C)  five cupcakes 
D)  six cupcakes 
A)  75 cupcakes 
B)  one cupcake 
C)  five cupcakes 
D)  six cupcakes

Question 18

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 less than his $20 budget?

Accepted Answer

A)  0 S and 10 J 
B)  4 S and 0 J 
C)  3 S and 5 J 
D)  2 S and 6 J 
A)  0 S and 10 J 
B)  4 S and 0 J 
C)  3 S and 5 J 
D)  2 S and 6 J

Question 19

Use the table Sorenson's Utility from Eating Lunches at a Restaurant. Which of the following quantities of lunches will NOT increase Sorenson's total utility?
​

Accepted Answer

A)  one lunch 
B)  five lunches 
C)  six lunches 
D)  nine lunches 
A)  one lunch 
B)  five lunches 
C)  six lunches 
D)  nine lunches

Question 20

. Use the figure Aimee's Budget Constraint. Which point represents a point where Aimee does NOT spend her entire budget?
​
Figure: Aimee's Budget Constraint

Accepted Answer

A)  N 
B)  P 
C)  Q 
D)  R 
A)  N 
B)  P 
C)  Q 
D)  R

When the price of one good decreases, a consumer's purchasing power for all goods increases, which results in:

Even though there is a nonzero probability that Fullington will have a serious and expensive medical issue requiring treatment in the next few years, he refuses to buy insurance. Which lesson from behavioral economics explains why he makes that choice?

If Han and Gocan both get 25 utils from a pumpkin spice latte, what can be concluded from this information?

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?

According to the findings of behavioral economics, why do some stores price items to end with 99 cents?

. Use the figure Aimee's Budget Constraint. The price of a magazine is $5, and the price of a baseball ticket is $25. What is true if Aimee's income increases by $25? Figure: Aimee's Budget Constraint

When the price of good X decreases, a consumer is able to consume more of good X, more of good Y, or both. This is called the:

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

Use the table Utility from Roller Coaster Rides II. What quantity has a negative marginal utility?

Which of the following is NOT an example of a mistake caused by bounded rationality?

Which of the following is NOT necessary for a consumer to maximize his or her utility?

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

Eric likes to use the treadmill at the gym, but occasionally he likes to use the elliptical machine instead. Eric's choice to use the elliptical machine occasionally rather than regularly reflects the idea that consumers:

Janet is currently purchasing five donuts and six crepes per week. Her marginal utility from the fifth donut is 72, and her marginal utility from the fifth crepe is 40. If donuts cost $8 and crepes cost $5, what should she do assuming that she still has some of her budget to spend?

What is diminishing marginal utility?

Use the table Jackson's Total Utility for Cupcakes. How many cupcakes will Jackson choose to consume if cupcakes are free?

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 less than his $20 budget?

Use the table Sorenson's Utility from Eating Lunches at a Restaurant. Which of the following quantities of lunches will NOT increase Sorenson's total utility?

. Use the figure Aimee's Budget Constraint. Which point represents a point where Aimee does NOT spend her entire budget? Figure: Aimee's Budget Constraint

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

When the price of one good decreases, a consumer's purchasing power for all goods increases, which results in:

Even though there is a nonzero probability that Fullington will have a serious and expensive medical issue requiring treatment in the next few years, he refuses to buy insurance. Which lesson from behavioral economics explains why he makes that choice?

If Han and Gocan both get 25 utils from a pumpkin spice latte, what can be concluded from this information?

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?

According to the findings of behavioral economics, why do some stores price items to end with 99 cents?

. Use the figure Aimee's Budget Constraint. The price of a magazine is $5, and the price of a baseball ticket is $25. What is true if Aimee's income increases by $25? ​ Figure: Aimee's Budget Constraint

When the price of good X decreases, a consumer is able to consume more of good X, more of good Y, or both. This is called the:

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

Use the table Utility from Roller Coaster Rides II. What quantity has a negative marginal utility? ​

Which of the following is NOT an example of a mistake caused by bounded rationality?

Which of the following is NOT necessary for a consumer to maximize his or her utility?

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

Eric likes to use the treadmill at the gym, but occasionally he likes to use the elliptical machine instead. Eric's choice to use the elliptical machine occasionally rather than regularly reflects the idea that consumers:

Janet is currently purchasing five donuts and six crepes per week. Her marginal utility from the fifth donut is 72, and her marginal utility from the fifth crepe is 40. If donuts cost $8 and crepes cost $5, what should she do assuming that she still has some of her budget to spend?

What is diminishing marginal utility?

Use the table Jackson's Total Utility for Cupcakes. How many cupcakes will Jackson choose to consume if cupcakes are free? ​

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 less than his $20 budget?

Use the table Sorenson's Utility from Eating Lunches at a Restaurant. Which of the following quantities of lunches will NOT increase Sorenson's total utility? ​

. Use the figure Aimee's Budget Constraint. Which point represents a point where Aimee does NOT spend her entire budget? ​ Figure: Aimee's Budget Constraint

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. The price of a magazine is $5, and the price of a baseball ticket is $25. What is true if Aimee's income increases by $25? Figure: Aimee's Budget Constraint

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

Use the table Utility from Roller Coaster Rides II. What quantity has a negative marginal utility?

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

Use the table Jackson's Total Utility for Cupcakes. How many cupcakes will Jackson choose to consume if cupcakes are free?

Use the table Sorenson's Utility from Eating Lunches at a Restaurant. Which of the following quantities of lunches will NOT increase Sorenson's total utility?

. Use the figure Aimee's Budget Constraint. Which point represents a point where Aimee does NOT spend her entire budget? Figure: Aimee's Budget Constraint