Question 1

Joe's income is $500,the price of food (F)is $2,and the price of shelter (S)is $100.Which of the following bundles is in Joe's opportunity set?

Accepted Answer

A)  50 units of food, 5 units of shelter 
B)  200 units of food, 2 units of shelter 
C)  100 units of food, 1 unit of shelter 
D)  150 units of food, 3 units of shelter 
A)  50 units of food, 5 units of shelter 
B)  200 units of food, 2 units of shelter 
C)  100 units of food, 1 unit of shelter 
D)  150 units of food, 3 units of shelter C

Question 2

If income increases due to a decrease in taxes,then

Accepted Answer

A)  utility will increase because consumers can afford a larger bundle of goods. 
B)  utility will fall because consumers will be forced to buy a smaller bundle of goods. 
C)  utility will remain constant. 
D)  utility will increase because consumers will be forced to buy a smaller bundle of goods. 
A)  utility will increase because consumers can afford a larger bundle of goods. 
B)  utility will fall because consumers will be forced to buy a smaller bundle of goods. 
C)  utility will remain constant. 
D)  utility will increase because consumers will be forced to buy a smaller bundle of goods. A

Question 3

Lisa consumes only pizzas and burritos.In equilibrium,her marginal utility of pizza is 20 and her marginal utility of a burrito is 10.The price of a pizza is $4.What is the price of a burrito?

Accepted Answer

In equilibrium,the ratio of the marginal utility of a pizza divided by the price of a pizza must equal the marginal utility of a burrito divided by the price of a burrito.Thus,the price of a burrito must be $2.

Question 4

Behavioral economists have discovered that

Accepted Answer

A)  experimental design is important. 
B)  experimental design doesn't matter for most questions. 
C)  experimental design only matters when people have bounded rationality. 
D)  experimental design doesn't matter when people have bounded rationality. 
A)  experimental design is important. 
B)  experimental design doesn't matter for most questions. 
C)  experimental design only matters when people have bounded rationality. 
D)  experimental design doesn't matter when people have bounded rationality.

Question 5

Assume the price of beer is $4,the price of pizza is $10 and the consumer's income is $250.Which consumption bundle will NOT be the consumer's choice?

Accepted Answer

A)  5 Beer, 5 Pizza 
B)  0 Beer, 25 Pizza 
C)  25 Beer, 15 Pizza 
D)  None of the bundle will be chosen. 
A)  5 Beer, 5 Pizza 
B)  0 Beer, 25 Pizza 
C)  25 Beer, 15 Pizza 
D)  None of the bundle will be chosen.

Question 6

Economists assume consumers select a bundle of goods that maximizes their well-being subject to

Accepted Answer

A)  their budget constraint. 
B)  their income. 
C)  relative prices. 
D)  their marginal rate of substitution. 
A)  their budget constraint. 
B)  their income. 
C)  relative prices. 
D)  their marginal rate of substitution.

Question 7

Diminishing marginal rate of substitution can be seen when indifference curves

Accepted Answer

A)  cross. 
B)  are convex. 
C)  are downward sloping. 
D)  become flatter as we move down and to the right. 
A)  cross. 
B)  are convex. 
C)  are downward sloping. 
D)  become flatter as we move down and to the right.

Question 8

What is the difference between ordinal and cardinal measurement?

Accepted Answer

Prices are measured in money,which is a

Question 9

If the utility function (U)between bananas (B)and jam (J)can be represented as U(B,J)= 3ln(B)+4ln(J),what is the marginal rate of substitution (MRS)between bananas and jam?

Accepted Answer

A)  4B. 
B)  -3J/(4
B) . 
C)  4/(3J). 
D)  3B/J. 
A)  4B. 
B)  -3J/(4
B) . 
C)  4/(3J). 
D)  3B/J.

Question 10

If two goods are perfect substitutes,then the indifference curves for those two goods would be

Accepted Answer

A)  upward sloping and concave to the origin. 
B)  downward sloping and convex to the origin. 
C)  downward sloping and straight. 
D)  L-shaped. 
A)  upward sloping and concave to the origin. 
B)  downward sloping and convex to the origin. 
C)  downward sloping and straight. 
D)  L-shaped.

Question 11

Some people view cosmetic surgery (c)and facials (f)as perfect substitutes as measured by the utility function U(c,f)= 5c + 10f.What is the marginal utility of cosmetic surgery?

Accepted Answer

A)  MU = 5. 
B)  MU = 10. 
C)  MU = 15. 
D)  None of the above. 
A)  MU = 5. 
B)  MU = 10. 
C)  MU = 15. 
D)  None of the above.

Question 12

The statement "There is no accounting for taste" implies

Accepted Answer

A)  individuals all have the same preferences. 
B)  individuals all have different cardinal preferences but the same ordinal preferences. 
C)  individuals all have different ordinal preferences but the same cardinal preferences. 
D)  individuals all have different ordinal and cardinal preferences. 
A)  individuals all have the same preferences. 
B)  individuals all have different cardinal preferences but the same ordinal preferences. 
C)  individuals all have different ordinal preferences but the same cardinal preferences. 
D)  individuals all have different ordinal and cardinal preferences.

Question 13

-Keith is indifferent between canned soup and fresh soup.In the figure above,Keith's indifference curves are represented by I1,I2,I3,and I4 curves.What is the marginal rate of transformation (MRT)of Keith's budget constraint?

Accepted Answer

A)  MRT = -2 
B)  MRT = -1 
C)  MRT = -4 
D)  MRT = -0.5 
A)  MRT = -2 
B)  MRT = -1 
C)  MRT = -4 
D)  MRT = -0.5

Question 14

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.Which bundle will Max choose?

Accepted Answer

A)  a 
B)  b 
C)  c 
D)  d 
A)  a 
B)  b 
C)  c 
D)  d

Question 15

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.Which of the following best describes Max's preferences?

Accepted Answer

A)  d > b > e 
B)  d = b = e 
C)  a = b > c 
D)  a = b > e 
A)  d > b > e 
B)  d = b = e 
C)  a = b > c 
D)  a = b > e

Question 16

In behavioral economics,the term salience refers to

Accepted Answer

A)  relevance to the problem being investigated. 
B)  people only consider information when it is conveyed in a subtle manner. 
C)  how an experiment is designed. 
D)  people consider information when it is presented in an "eye grabbing" manner. 
A)  relevance to the problem being investigated. 
B)  people only consider information when it is conveyed in a subtle manner. 
C)  how an experiment is designed. 
D)  people consider information when it is presented in an "eye grabbing" manner.

Question 17

If Johnny likes homework (H)but hates exercise (E),which of the following might best represent his utility function for homework and exercise?

Accepted Answer

A)  U = H + E 
B)  U = H/E 
C)  U =   +   
D)  U =   ×   
A)  U = H + E 
B)  U = H/E 
C)  U =   +   
D)  U =   ×

Question 18

The principle that "More is better" results in indifference curves

Accepted Answer

A)  sloping down. 
B)  not intersecting. 
C)  reflecting greater preferences the further they are from the origin. 
D)  All of the above. 
A)  sloping down. 
B)  not intersecting. 
C)  reflecting greater preferences the further they are from the origin. 
D)  All of the above.

Question 19

Indifference curves that are upward-sloping violate

Accepted Answer

A)  the assumption of transitivity. 
B)  the assumption of completeness. 
C)  the assumption that more is better. 
D)  none of the assumptions. 
A)  the assumption of transitivity. 
B)  the assumption of completeness. 
C)  the assumption that more is better. 
D)  none of the assumptions.

Question 20

If the utility function (U)between food (F)and clothing (C)can be represented as U =   ,the marginal utility of food equals

Accepted Answer

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

Joe's income is $500,the price of food (F)is $2,and the price of shelter (S)is $100.Which of the following bundles is in Joe's opportunity set?

If income increases due to a decrease in taxes,then

Lisa consumes only pizzas and burritos.In equilibrium,her marginal utility of pizza is 20 and her marginal utility of a burrito is 10.The price of a pizza is $4.What is the price of a burrito?

Behavioral economists have discovered that

Assume the price of beer is $4,the price of pizza is $10 and the consumer's income is $250.Which consumption bundle will NOT be the consumer's choice?

Economists assume consumers select a bundle of goods that maximizes their well-being subject to

Diminishing marginal rate of substitution can be seen when indifference curves

What is the difference between ordinal and cardinal measurement?

If the utility function (U)between bananas (B)and jam (J)can be represented as U(B,J)= 3ln(B)+4ln(J),what is the marginal rate of substitution (MRS)between bananas and jam?

If two goods are perfect substitutes,then the indifference curves for those two goods would be

Some people view cosmetic surgery (c)and facials (f)as perfect substitutes as measured by the utility function U(c,f)= 5c + 10f.What is the marginal utility of cosmetic surgery?

The statement "There is no accounting for taste" implies

-Keith is indifferent between canned soup and fresh soup.In the figure above,Keith's indifference curves are represented by I1,I2,I3,and I4 curves.What is the marginal rate of transformation (MRT)of Keith's budget constraint?

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.Which bundle will Max choose?

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.Which of the following best describes Max's preferences?

In behavioral economics,the term salience refers to

If Johnny likes homework (H)but hates exercise (E),which of the following might best represent his utility function for homework and exercise?

The principle that "More is better" results in indifference curves

Indifference curves that are upward-sloping violate

If the utility function (U)between food (F)and clothing (C)can be represented as U = ,the marginal utility of food equals

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 4: Consumer Choice

Joe's income is $500,the price of food (F)is $2,and the price of shelter (S)is $100.Which of the following bundles is in Joe's opportunity set?

If income increases due to a decrease in taxes,then

Lisa consumes only pizzas and burritos.In equilibrium,her marginal utility of pizza is 20 and her marginal utility of a burrito is 10.The price of a pizza is $4.What is the price of a burrito?

Behavioral economists have discovered that

Assume the price of beer is $4,the price of pizza is $10 and the consumer's income is $250.Which consumption bundle will NOT be the consumer's choice?

Economists assume consumers select a bundle of goods that maximizes their well-being subject to

Diminishing marginal rate of substitution can be seen when indifference curves

What is the difference between ordinal and cardinal measurement?

If the utility function (U)between bananas (B)and jam (J)can be represented as U(B,J)= 3ln(B)+4ln(J),what is the marginal rate of substitution (MRS)between bananas and jam?

If two goods are perfect substitutes,then the indifference curves for those two goods would be

Some people view cosmetic surgery (c)and facials (f)as perfect substitutes as measured by the utility function U(c,f)= 5c + 10f.What is the marginal utility of cosmetic surgery?

The statement "There is no accounting for taste" implies

-Keith is indifferent between canned soup and fresh soup.In the figure above,Keith's indifference curves are represented by I1,I2,I3,and I4 curves.What is the marginal rate of transformation (MRT)of Keith's budget constraint?

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.Which bundle will Max choose?

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.Which of the following best describes Max's preferences?

In behavioral economics,the term salience refers to

If Johnny likes homework (H)but hates exercise (E),which of the following might best represent his utility function for homework and exercise?

The principle that "More is better" results in indifference curves

Indifference curves that are upward-sloping violate

If the utility function (U)between food (F)and clothing (C)can be represented as U = ,the marginal utility of food equals

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters