Question 1

"Every point on a budget line has an indifference curve passing through it." Explain if the previous statement is correct or not.

Accepted Answer

The statement is correct.The consumer has a preference map that consists of an infinite number of indifference curves, one through every possible consumption combination.

Question 2

In the indifference curve/budget line diagram, consumers reach higher indifference curves when

Accepted Answer

A) their budget decreases. 
B) the price of only the good measured along the y-axis increases. 
C) the price of only the good measured along the x-axis increases. 
D) the price of either good falls. 
E) the price of either good rises. 
A) their budget decreases. 
B) the price of only the good measured along the y-axis increases. 
C) the price of only the good measured along the x-axis increases. 
D) the price of either good falls. 
E) the price of either good rises. D

Question 3

-Suppose that you consume only pizza, which costs $4 per slice, and Diet Pepsi, which costs $2 each.The table above gives your utility from consuming these two goods.If your income is $14, which of the following consumption combinations will you choose?

Accepted Answer

A) 3 slices of pizza and 1 Diet Pepsi 
B) 2 slices of pizza and 3 Diet Pepsis 
C) 1 slice of pizza and 5 Diet Pepsis 
D) 0 slices of pizza and 7 Diet Pepsis 
E) None of the above answers are correct. 
A) 3 slices of pizza and 1 Diet Pepsi 
B) 2 slices of pizza and 3 Diet Pepsis 
C) 1 slice of pizza and 5 Diet Pepsis 
D) 0 slices of pizza and 7 Diet Pepsis 
E) None of the above answers are correct. B

Question 4

"The marginal rate of substitution of the good measured along the x-axis increases as a consumer moves downward along an indifference curve." Is the previous statement correct or not?

Accepted Answer

The statement is incorrect bec

Question 5

When the price of a good a consumer buys rises, the consumer's budget line

Accepted Answer

A) shifts inward and its slope does not change. 
B) shifts outward and its slope does not change. 
C) rotates inward and its slope changes. 
D) rotates outward and its slope changes. 
E) does not change. 
A) shifts inward and its slope does not change. 
B) shifts outward and its slope does not change. 
C) rotates inward and its slope changes. 
D) rotates outward and its slope changes. 
E) does not change.

Question 6

An indifference curve is a line that shows

Accepted Answer

A) combinations of goods among which a consumer is indifferent. 
B) different combinations of goods a consumer is able to buy. 
C) the indifference of consumers for the budget constraint. 
D) Both answers B and C are correct. 
E) Both answers A and C are correct. 
A) combinations of goods among which a consumer is indifferent. 
B) different combinations of goods a consumer is able to buy. 
C) the indifference of consumers for the budget constraint. 
D) Both answers B and C are correct. 
E) Both answers A and C are correct.

Question 7

Moving along an indifference curve, if a consumer requires a small amount of the good measured along the y-axis to make up for one unit less of the good measured on the x-axis, then

Accepted Answer

A) total utility is increasing. 
B) the marginal rate of substitution is low and the indifference curve is flat. 
C) the marginal rate of substitution is low and the indifference curve is steep. 
D) the marginal rate of substitution is high and the indifference curve is steep. 
E) the marginal rate of substitution is high and the indifference curve is flat. 
A) total utility is increasing. 
B) the marginal rate of substitution is low and the indifference curve is flat. 
C) the marginal rate of substitution is low and the indifference curve is steep. 
D) the marginal rate of substitution is high and the indifference curve is steep. 
E) the marginal rate of substitution is high and the indifference curve is flat.

Question 8

In a preference map, consumption combinations on higher indifference curves

Accepted Answer

A) always cost more than any combination on a lower indifference curve. 
B) always are preferred to combinations on lower indifference curves. 
C) always cost less than any combination on a lower indifference curve. 
D) always are less preferred than combinations on lower indifference curves. 
E) are sometimes more preferred, sometimes less preferred, and sometimes equally preferred than any combination on a lower indifference curve. 
A) always cost more than any combination on a lower indifference curve. 
B) always are preferred to combinations on lower indifference curves. 
C) always cost less than any combination on a lower indifference curve. 
D) always are less preferred than combinations on lower indifference curves. 
E) are sometimes more preferred, sometimes less preferred, and sometimes equally preferred than any combination on a lower indifference curve.

Question 9

As a consumer moves away from the origin onto higher indifference curves, what happens?

Accepted Answer

A) Nothing 
B) The consumer reaches more preferred combinations of goods. 
C) The consumer reaches less preferred combinations of goods. 
D) The consumer reaches more affordable combinations of goods. 
E) None of the above because it is impossible to move from one indifference curve to another. 
A) Nothing 
B) The consumer reaches more preferred combinations of goods. 
C) The consumer reaches less preferred combinations of goods. 
D) The consumer reaches more affordable combinations of goods. 
E) None of the above because it is impossible to move from one indifference curve to another.

Question 10

-Sam's total utility for bananas is in the table above.Sam's marginal utility from the fourth banana is

Accepted Answer

A) 100 
B) 25 
C) 20 
D) 15 
E) cannot be determined from the given information. 
A) 100 
B) 25 
C) 20 
D) 15 
E) cannot be determined from the given information.

Question 11

-Liz consumes two goods, candy bars and potato chips.Her budget is $4 per day.The price of a candy bar is $1.00 and the price of a bag of chips is 50 cents.Her utility is in the table above.How much marginal utility per dollar does the 3rd bag of potato chips give Liz?

Accepted Answer

A) 18 
B) 4 
C) 8 
D) 36 
E) We need more information to be able to answer the question. 
A) 18 
B) 4 
C) 8 
D) 36 
E) We need more information to be able to answer the question.

Question 12

A budget line will shift outward and not change its slope if

Accepted Answer

A) there is an increase in the consumer's budget. 
B) the consumer's preferences change. 
C) the price of one good changes. 
D) the price of both goods increase by the same percentage. 
E) None of the above shift the budget line outward. 
A) there is an increase in the consumer's budget. 
B) the consumer's preferences change. 
C) the price of one good changes. 
D) the price of both goods increase by the same percentage. 
E) None of the above shift the budget line outward.

Question 13

-Give the data in the above table, what is the marginal utility of the third quart of ice cream?

Accepted Answer

A) 80 
B) 70 
C) 60 
D) 230 
E) 210 
A) 80 
B) 70 
C) 60 
D) 230 
E) 210

Question 14

Along an indifference curve, if the marginal rate of substitution is 3, then the consumer is willing to

Accepted Answer

A) give up 1 unit of the good measured along the y-axis for 3 units of the good measured along the x-axis. 
B) give up 3 units of the good measured along the y-axis for 1 unit of the good measured along the x-axis. 
C) pay $3 for one unit of the good measured along the y-axis. 
D) pay $3 for one unit of the good measured along the x-axis. 
E) give up 3 units of the good measured along the y-axis for 1 unit of income, that is, $1 of income. 
A) give up 1 unit of the good measured along the y-axis for 3 units of the good measured along the x-axis. 
B) give up 3 units of the good measured along the y-axis for 1 unit of the good measured along the x-axis. 
C) pay $3 for one unit of the good measured along the y-axis. 
D) pay $3 for one unit of the good measured along the x-axis. 
E) give up 3 units of the good measured along the y-axis for 1 unit of income, that is, $1 of income.

Question 15

If a consumer's total utility increases when another unit of a good is consumed, which of the following is true? Marginal utility must be

Accepted Answer

A) negative. 
B) equal to one. 
C) positive. 
D) increasing. 
E) some amount, but more information is needed to determine if marginal utility is positive, negative, or equal to zero. 
A) negative. 
B) equal to one. 
C) positive. 
D) increasing. 
E) some amount, but more information is needed to determine if marginal utility is positive, negative, or equal to zero.

Question 16

Katie has $15.She likes M&M candies and Hershey's white chocolate bars.M&M candies are $1.50 a pack and (the large)Hershey bars are $3.00 each.Katie can choose to buy

Accepted Answer

A) 4 Hershey bars and 2 packs of M&Ms. 
B) 2 Hershey bars and 6 packs of M&Ms. 
C) 5 Hershey bars and 10 packs of M&Ms. 
D) Both answer A and answer B are correct. 
E) Answer A, answer B, and answer C are correct. 
A) 4 Hershey bars and 2 packs of M&Ms. 
B) 2 Hershey bars and 6 packs of M&Ms. 
C) 5 Hershey bars and 10 packs of M&Ms. 
D) Both answer A and answer B are correct. 
E) Answer A, answer B, and answer C are correct.

Question 17

For a consumer to maximize utility, in part the consumer must

Accepted Answer

A) allocate the entire available budget. 
B) make the marginal utility per dollar from each good as much different as possible for all goods. 
C) make the marginal utility per dollar from each good as small as possible for all goods. 
D) spend as little of the budget as possible. 
E) Answers A and B are both correct. 
A) allocate the entire available budget. 
B) make the marginal utility per dollar from each good as much different as possible for all goods. 
C) make the marginal utility per dollar from each good as small as possible for all goods. 
D) spend as little of the budget as possible. 
E) Answers A and B are both correct.

Question 18

Suppose the consumer has allocated his or her entire budget.Which of the following conditions is also required for total utility to be maximized?

Accepted Answer

A) Marginal utility has decreased to zero for all goods. 
B) The least inexpensive combination of goods has been purchased. 
C) The marginal utility for each good is equal. 
D) The marginal utility divided by price for each good is equal. 
E) The number of units of each good consumed must be the same. 
A) Marginal utility has decreased to zero for all goods. 
B) The least inexpensive combination of goods has been purchased. 
C) The marginal utility for each good is equal. 
D) The marginal utility divided by price for each good is equal. 
E) The number of units of each good consumed must be the same.

Question 19

Why does the paradox of value between diamonds and water arise?

Accepted Answer

A) because water has a low price and a low total utility, while diamonds have a high price and a high total utility 
B) because water has a low price and a low marginal utility, while diamonds have a high price and a high marginal utility 
C) because necessities like water are higher priced than luxuries like diamonds 
D) because diamonds have a higher value to people even though water is essential to life 
E) because water has a low price and a low total utility, while diamonds have a high price but also a low total utility 
A) because water has a low price and a low total utility, while diamonds have a high price and a high total utility 
B) because water has a low price and a low marginal utility, while diamonds have a high price and a high marginal utility 
C) because necessities like water are higher priced than luxuries like diamonds 
D) because diamonds have a higher value to people even though water is essential to life 
E) because water has a low price and a low total utility, while diamonds have a high price but also a low total utility

Question 20

At the best affordable point,

Accepted Answer

A) the marginal rate of substitution reaches its minimum value. 
B) relative prices reach their minimum value. 
C) the marginal rate of substitution equals the relative price. 
D) the marginal rate of substitution equals real income. 
E) the marginal rate of substitution reaches its maximum value. 
A) the marginal rate of substitution reaches its minimum value. 
B) relative prices reach their minimum value. 
C) the marginal rate of substitution equals the relative price. 
D) the marginal rate of substitution equals real income. 
E) the marginal rate of substitution reaches its maximum value.

"Every point on a budget line has an indifference curve passing through it." Explain if the previous statement is correct or not.

In the indifference curve/budget line diagram, consumers reach higher indifference curves when

-Suppose that you consume only pizza, which costs $4 per slice, and Diet Pepsi, which costs $2 each.The table above gives your utility from consuming these two goods.If your income is $14, which of the following consumption combinations will you choose?

"The marginal rate of substitution of the good measured along the x-axis increases as a consumer moves downward along an indifference curve." Is the previous statement correct or not?

When the price of a good a consumer buys rises, the consumer's budget line

An indifference curve is a line that shows

Moving along an indifference curve, if a consumer requires a small amount of the good measured along the y-axis to make up for one unit less of the good measured on the x-axis, then

In a preference map, consumption combinations on higher indifference curves

As a consumer moves away from the origin onto higher indifference curves, what happens?

-Sam's total utility for bananas is in the table above.Sam's marginal utility from the fourth banana is

-Liz consumes two goods, candy bars and potato chips.Her budget is $4 per day.The price of a candy bar is $1.00 and the price of a bag of chips is 50 cents.Her utility is in the table above.How much marginal utility per dollar does the 3rd bag of potato chips give Liz?

A budget line will shift outward and not change its slope if

-Give the data in the above table, what is the marginal utility of the third quart of ice cream?

Along an indifference curve, if the marginal rate of substitution is 3, then the consumer is willing to

If a consumer's total utility increases when another unit of a good is consumed, which of the following is true? Marginal utility must be

Katie has $15.She likes M&M candies and Hershey's white chocolate bars.M&M candies are $1.50 a pack and (the large)Hershey bars are $3.00 each.Katie can choose to buy

For a consumer to maximize utility, in part the consumer must

Suppose the consumer has allocated his or her entire budget.Which of the following conditions is also required for total utility to be maximized?

Why does the paradox of value between diamonds and water arise?

At the best affordable point,

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

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Exam 13: Consumer Choice and Demand

"Every point on a budget line has an indifference curve passing through it." Explain if the previous statement is correct or not.

In the indifference curve/budget line diagram, consumers reach higher indifference curves when

-Suppose that you consume only pizza, which costs $4 per slice, and Diet Pepsi, which costs $2 each.The table above gives your utility from consuming these two goods.If your income is $14, which of the following consumption combinations will you choose?

"The marginal rate of substitution of the good measured along the x-axis increases as a consumer moves downward along an indifference curve." Is the previous statement correct or not?

When the price of a good a consumer buys rises, the consumer's budget line

An indifference curve is a line that shows

Moving along an indifference curve, if a consumer requires a small amount of the good measured along the y-axis to make up for one unit less of the good measured on the x-axis, then

In a preference map, consumption combinations on higher indifference curves

As a consumer moves away from the origin onto higher indifference curves, what happens?

-Sam's total utility for bananas is in the table above.Sam's marginal utility from the fourth banana is

-Liz consumes two goods, candy bars and potato chips.Her budget is $4 per day.The price of a candy bar is $1.00 and the price of a bag of chips is 50 cents.Her utility is in the table above.How much marginal utility per dollar does the 3rd bag of potato chips give Liz?

A budget line will shift outward and not change its slope if

-Give the data in the above table, what is the marginal utility of the third quart of ice cream?

Along an indifference curve, if the marginal rate of substitution is 3, then the consumer is willing to

If a consumer's total utility increases when another unit of a good is consumed, which of the following is true? Marginal utility must be

Katie has $15.She likes M&M candies and Hershey's white chocolate bars.M&M candies are $1.50 a pack and (the large)Hershey bars are $3.00 each.Katie can choose to buy

For a consumer to maximize utility, in part the consumer must

Suppose the consumer has allocated his or her entire budget.Which of the following conditions is also required for total utility to be maximized?

Why does the paradox of value between diamonds and water arise?

At the best affordable point,

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters