Question 1

The term _____ refers to the idea that the value people place on money depends on where that money comes from.

Accepted Answer

A) decision making 
B) psychological pricing 
C) mental accounting 
D) marketing mix 
E) anchoring 
A) decision making 
B) psychological pricing 
C) mental accounting 
D) marketing mix 
E) anchoring

Question 2

The below indifference map shows the various combinations of hours of music and apples that yield different levels of utility. Figure 6.1  
- According to Figure 6.1,which of the following is incorrect?

Accepted Answer

A) The consumer prefers B to A 
B) The consumer is not indifferent between A and B 
C) The consumer is indifferent between D and E 
D) Indifference curve I2 should cross indifference curve I1 as shown 
E) The consumer is indifferent between B and C 
A) The consumer prefers B to A 
B) The consumer is not indifferent between A and B 
C) The consumer is indifferent between D and E 
D) Indifference curve I2 should cross indifference curve I1 as shown 
E) The consumer is indifferent between B and C

Question 3

Suppose two out for coffee and donuts at the local donut store.The first donut you eat tastes incredibly good.The second one also tastes pretty good.The third donut seems just okay.With the fourth donut you are turning somewhat green.The fifth donut makes you sick.Your friend,an economist,describes your experience as the principle of:

Accepted Answer

A) utility maximization. 
B) irrationality in consumer behavior. 
C) instant gratification. 
D) differing tastes and preferences. 
E) diminishing marginal utility. 
A) utility maximization. 
B) irrationality in consumer behavior. 
C) instant gratification. 
D) differing tastes and preferences. 
E) diminishing marginal utility.

Question 4

The _____ effect indicates that an individual's income can buy more of all goods when the price of one good declines,everything else held constant.

Accepted Answer

A) scale 
B) endowment 
C) substitution 
D) price 
E) income 
A) scale 
B) endowment 
C) substitution 
D) price 
E) income

Question 5

The law of diminishing marginal utility states that as additional units are consumed,satisfaction per unit will decline.

Accepted Answer

A) True 
 B)False

Question 6

The table below shows the total utility associated with various units of goods X and Y. Table 6.5
 
- Refer to Table 6.5.Given that the price of good X is $2 per unit,the price of good Y is $5 per unit,and that the consumer spends a total of $14 on both goods,what is the total utility associated with the utility-maximizing combination?

Accepted Answer

A) 84 
B) 154 
C) 172 
D) Indeterminate 
E) 215 
A) 84 
B) 154 
C) 172 
D) Indeterminate 
E) 215

Question 7

It is often observed that,over the same period of time and for the same good,marginal utility declines rapidly for some consumers and very little for others.This observation illustrates:

Accepted Answer

A) that economic theory is of little value in explaining consumer behavior. 
B) that consumers are not identical. 
C) tastes and preferences should not be included in any discussion of consumer choice. 
D) tastes and preferences among consumers are quite similar. 
E) that if consumers weren't identical,economic theory would not be able to provide insight into consumer behavior. 
A) that economic theory is of little value in explaining consumer behavior. 
B) that consumers are not identical. 
C) tastes and preferences should not be included in any discussion of consumer choice. 
D) tastes and preferences among consumers are quite similar. 
E) that if consumers weren't identical,economic theory would not be able to provide insight into consumer behavior.

Question 8

The below figure shows the various combinations of the goods X and Y that yield different levels of utility. Figure 6.3   
-In Figure 6.3,the consumer is in equilibrium at point:

Accepted Answer

A) A 
B) B 
C) C 
D) D 
E) E 
A) A 
B) B 
C) C 
D) D 
E) E

Question 9

The figure given below represents two indifference curves IS1U1B11S1U1B0 and IS1U1B12S1U1B0 of an individual. Figure 6.2  
- Refer to Figure 6.2.Which of the following statements is true?

Accepted Answer

A) Point B yields a greater level of satisfaction than point D. 
B) Points A and E yield the same level of satisfaction. 
C) Point B yields a greater level of satisfaction than point C. 
D) I2 represents a greater level of satisfaction than I1. 
E) Point C yields a lower level of satisfaction than point D. 
A) Point B yields a greater level of satisfaction than point D. 
B) Points A and E yield the same level of satisfaction. 
C) Point B yields a greater level of satisfaction than point C. 
D) I2 represents a greater level of satisfaction than I1. 
E) Point C yields a lower level of satisfaction than point D.

Question 10

Marginal utility is _____.

Accepted Answer

A) always greater than total utility 
B) utility that is not as good as normal utility 
C) the extra utility derived from consuming one additional unit of a good or service 
D) always positive 
E) not related to total utility 
A) always greater than total utility 
B) utility that is not as good as normal utility 
C) the extra utility derived from consuming one additional unit of a good or service 
D) always positive 
E) not related to total utility

Question 11

The below figure shows the various combinations of the goods X and Y that yield different levels of utility. Figure 6.3  
- Refer to Figure 6.3.What combinations of X and Y are attainable by the consumer?

Accepted Answer

A) All combinations that lie on or above I2 
B) All combinations that lie above I1 
C) All combinations that lie below I3 
D) All combinations that lie on or below the budget line. 
E) Only the combination of 10 units of good X and 15 units of good Y 
A) All combinations that lie on or above I2 
B) All combinations that lie above I1 
C) All combinations that lie below I3 
D) All combinations that lie on or below the budget line. 
E) Only the combination of 10 units of good X and 15 units of good Y

Question 12

_____ is the lack of satisfaction yielded after consuming too much of the same product.

Accepted Answer

A) Diminishing marginal utility 
B) Disutility 
C) Total utility 
D) Marginal utility 
E) Cardinal utility 
A) Diminishing marginal utility 
B) Disutility 
C) Total utility 
D) Marginal utility 
E) Cardinal utility

Question 13

The prices that people are willing to pay for goods and services mostly depend on:

Accepted Answer

A) the total utility derived from the goods. 
B) the marginal utility derived from the goods. 
C) the availability of the goods. 
D) the cost of producing the goods. 
E) whether the goods are legal since the laws affect the position of both supply and demand curves. 
A) the total utility derived from the goods. 
B) the marginal utility derived from the goods. 
C) the availability of the goods. 
D) the cost of producing the goods. 
E) whether the goods are legal since the laws affect the position of both supply and demand curves.

Question 14

Utility is most closely defined as _____.

Accepted Answer

A) the purchasing power of individuals 
B) welfare maximization 
C) a medium of exchange 
D) satisfaction 
E) an opportunity cost 
A) the purchasing power of individuals 
B) welfare maximization 
C) a medium of exchange 
D) satisfaction 
E) an opportunity cost

Question 15

A utility-maximizing consumer always purchases a good that yields the greatest average utility per dollar of expenditure.

Accepted Answer

A) True 
 B)False

Question 16

Utility is easy to measure in the real world with recent advances in psychometric technology.

Accepted Answer

A) True 
 B)False

Question 17

The below table shows the average utility (in utils) obtained from the consumption of goods A andB. Table 6.3
  
-Refer to Table 6.3.Which of the following statements is false?

Accepted Answer

A) The consumer prefers the first unit of B to the first unit of A 
B) The consumer prefers the sixth unit of A to the sixth unit of B 
C) The marginal utility from the consumption of the fourth unit of A is 3 
D) The marginal utility from the consumption of the second unit of B is 7 
E) The marginal utility from the consumption of the second unit of A is 9 
A) The consumer prefers the first unit of B to the first unit of A 
B) The consumer prefers the sixth unit of A to the sixth unit of B 
C) The marginal utility from the consumption of the fourth unit of A is 3 
D) The marginal utility from the consumption of the second unit of B is 7 
E) The marginal utility from the consumption of the second unit of A is 9

Question 18

If MUx / Px = MUY / PY then _____.

Accepted Answer

A) the consumer should purchase same quantity of X and Y. 
B) the consumer should purchase less X 
C) the consumer is maximizing utility 
D) the consumer should purchase more Y 
E) the consumer is minimizing utility 
A) the consumer should purchase same quantity of X and Y. 
B) the consumer should purchase less X 
C) the consumer is maximizing utility 
D) the consumer should purchase more Y 
E) the consumer is minimizing utility

Question 19

One explanation for the status quo bias is an aversion to loss.

Accepted Answer

A) True 
 B)False

Question 20

The demand curve for a product can be derived from consumer equilibrium by:

Accepted Answer

A) altering the prices of all other products. 
B) altering consumer incomes. 
C) shifting consumer preferences. 
D) altering the price of the good itself. 
E) knowing the demand curves for all other products. 
A) altering the prices of all other products. 
B) altering consumer incomes. 
C) shifting consumer preferences. 
D) altering the price of the good itself. 
E) knowing the demand curves for all other products.

The term _____ refers to the idea that the value people place on money depends on where that money comes from.

The below indifference map shows the various combinations of hours of music and apples that yield different levels of utility. Figure 6.1 - According to Figure 6.1,which of the following is incorrect?

The _____ effect indicates that an individual's income can buy more of all goods when the price of one good declines,everything else held constant.

The law of diminishing marginal utility states that as additional units are consumed,satisfaction per unit will decline.

It is often observed that,over the same period of time and for the same good,marginal utility declines rapidly for some consumers and very little for others.This observation illustrates:

The below figure shows the various combinations of the goods X and Y that yield different levels of utility. Figure 6.3 -In Figure 6.3,the consumer is in equilibrium at point:

The figure given below represents two indifference curves I₁ and I₂ of an individual. Figure 6.2 - Refer to Figure 6.2.Which of the following statements is true?

Marginal utility is _____.

The below figure shows the various combinations of the goods X and Y that yield different levels of utility. Figure 6.3 - Refer to Figure 6.3.What combinations of X and Y are attainable by the consumer?

_____ is the lack of satisfaction yielded after consuming too much of the same product.

The prices that people are willing to pay for goods and services mostly depend on:

Utility is most closely defined as _____.

A utility-maximizing consumer always purchases a good that yields the greatest average utility per dollar of expenditure.

Utility is easy to measure in the real world with recent advances in psychometric technology.

The below table shows the average utility (in utils) obtained from the consumption of goods A andB. Table 6.3 -Refer to Table 6.3.Which of the following statements is false?

If MU_x/ P_x = MU_Y/ P_Y then _____.

One explanation for the status quo bias is an aversion to loss.

The demand curve for a product can be derived from consumer equilibrium by:

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Exam 6: Consumer Choice

The term _____ refers to the idea that the value people place on money depends on where that money comes from.

The below indifference map shows the various combinations of hours of music and apples that yield different levels of utility. Figure 6.1 - According to Figure 6.1,which of the following is incorrect?

The _____ effect indicates that an individual's income can buy more of all goods when the price of one good declines,everything else held constant.

The law of diminishing marginal utility states that as additional units are consumed,satisfaction per unit will decline.

It is often observed that,over the same period of time and for the same good,marginal utility declines rapidly for some consumers and very little for others.This observation illustrates:

The below figure shows the various combinations of the goods X and Y that yield different levels of utility. Figure 6.3 -In Figure 6.3,the consumer is in equilibrium at point:

The figure given below represents two indifference curves I1 and I2 of an individual. Figure 6.2 - Refer to Figure 6.2.Which of the following statements is true?

Marginal utility is _____.

The below figure shows the various combinations of the goods X and Y that yield different levels of utility. Figure 6.3 - Refer to Figure 6.3.What combinations of X and Y are attainable by the consumer?

_____ is the lack of satisfaction yielded after consuming too much of the same product.

The prices that people are willing to pay for goods and services mostly depend on:

Utility is most closely defined as _____.

A utility-maximizing consumer always purchases a good that yields the greatest average utility per dollar of expenditure.

Utility is easy to measure in the real world with recent advances in psychometric technology.

The below table shows the average utility (in utils) obtained from the consumption of goods A andB. Table 6.3 -Refer to Table 6.3.Which of the following statements is false?

If MUx / Px = MUY / PY then _____.

One explanation for the status quo bias is an aversion to loss.

The demand curve for a product can be derived from consumer equilibrium by:

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

The figure given below represents two indifference curves I₁ and I₂ of an individual. Figure 6.2 - Refer to Figure 6.2.Which of the following statements is true?

If MU_x/ P_x = MU_Y/ P_Y then _____.