Question 1

The different combinations of any two goods that an individual can afford to purchase,given his income and prices,is shown by:

Accepted Answer

A) an indifference curve. 
B) an indifference map. 
C) a budget line. 
D) a demand curve. 
E) a supply curve. 
A) an indifference curve. 
B) an indifference map. 
C) a budget line. 
D) a demand curve. 
E) a supply curve.

Question 2

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 3

The equimarginal principle illustrates:

Accepted Answer

A) that consumers are essentially robots. 
B) that people behave irrationally. 
C) that people behave in rather consistent ways in order to maximize happiness. 
D) that people behave in rather inconsistent ways. 
E) that people will spend all their incomes. 
A) that consumers are essentially robots. 
B) that people behave irrationally. 
C) that people behave in rather consistent ways in order to maximize happiness. 
D) that people behave in rather inconsistent ways. 
E) that people will spend all their incomes.

Question 4

According to utility theory,a consumer is in equilibrium when:

Accepted Answer

A) total income is spent. 
B) marginal utility per dollar spent for a good is maximized. 
C) total utility per unit of a good is maximized. 
D) total utility per dollar spent is equal for all goods. 
E) marginal utility per dollar spent is equal for all goods. 
A) total income is spent. 
B) marginal utility per dollar spent for a good is maximized. 
C) total utility per unit of a good is maximized. 
D) total utility per dollar spent is equal for all goods. 
E) marginal utility per dollar spent is equal for all goods.

Question 5

Buyers who are persuaded to take a product home to try it out,_____.

Accepted Answer

A) are likely to return the product later 
B) are lucky the seller is not concerned about the buyers' credit ratings 
C) like to try the product out 
D) have no money to pay at the time 
E) will be reluctant to return the product when payment is due 
A) are likely to return the product later 
B) are lucky the seller is not concerned about the buyers' credit ratings 
C) like to try the product out 
D) have no money to pay at the time 
E) will be reluctant to return the product when payment is due

Question 6

The table given below depicts the total utility derived from the consumption of a good. Table 6.1
 
-According to Table 6.1,marginal utility _____.

Accepted Answer

A) increases from the first unit to the third unit and then declines 
B) decreases from the third unit to the fifth unit only 
C) increases from the first unit to the third unit and decreases from the third unit to the fifth unit 
D) decreases from the first unit to the fifth unit 
E) increases from the fourth unit 
A) increases from the first unit to the third unit and then declines 
B) decreases from the third unit to the fifth unit only 
C) increases from the first unit to the third unit and decreases from the third unit to the fifth unit 
D) decreases from the first unit to the fifth unit 
E) increases from the fourth unit

Question 7

The income and substitution effects of a price change occur because:

Accepted Answer

A) consumer incomes are not constant. 
B) consumer substitution rates are not constant. 
C) income and substitution effects never occur simultaneously. 
D) of diminishing marginal utility and the equimarginal principle. 
E) of increasing marginal utility and the equimarginal principle. 
A) consumer incomes are not constant. 
B) consumer substitution rates are not constant. 
C) income and substitution effects never occur simultaneously. 
D) of diminishing marginal utility and the equimarginal principle. 
E) of increasing marginal utility and the equimarginal principle.

Question 8

Suppose the prices of goods X,Y,and Z are $4,$1,and $5,respectively,and the last unit purchased of good X has a marginal utility MUx = 16 utils.At the point of equilibrium,the marginal utility of the last unit purchased of goods Y and Z will be:

Accepted Answer

A) MUy = 16 utils and MUz = 16 utils,respectively. 
B) MUy = 8 utils and MUz = 2 utils,respectively. 
C) MUy = 4 utils and MUz = 20 utils,respectively. 
D) MUy = 2 utils and MUz = 4 utils,respectively. 
E) MUy = 12 utils and MUz = 20 utils,respectively. 
A) MUy = 16 utils and MUz = 16 utils,respectively. 
B) MUy = 8 utils and MUz = 2 utils,respectively. 
C) MUy = 4 utils and MUz = 20 utils,respectively. 
D) MUy = 2 utils and MUz = 4 utils,respectively. 
E) MUy = 12 utils and MUz = 20 utils,respectively.

Question 9

"Throwing good money after bad" is also known as the _____ effect.

Accepted Answer

A) anchoring 
B) sunk cost 
C) status quo 
D) familiarity 
E) overconfidence 
A) anchoring 
B) sunk cost 
C) status quo 
D) familiarity 
E) overconfidence

Question 10

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.Marginal utility diminishes for good A from the _____ unit.

Accepted Answer

A) 6th 
B) 4th 
C) 3rd 
D) 2nd 
E) 1nd 
A) 6th 
B) 4th 
C) 3rd 
D) 2nd 
E) 1nd

Question 11

An indifference curve shows _____.

Accepted Answer

A) the relationship between total and marginal utility 
B) the relationship between the quantity of a good and the maximum attainable satisfaction 
C) the various combinations of two goods that give the consumer the same amount of satisfaction 
D) the relationship between the price and quantity of a good that a consumer is able to purchase 
E) that the quantities of a good that give the consumer maximum satisfaction are directly related to price 
A) the relationship between total and marginal utility 
B) the relationship between the quantity of a good and the maximum attainable satisfaction 
C) the various combinations of two goods that give the consumer the same amount of satisfaction 
D) the relationship between the price and quantity of a good that a consumer is able to purchase 
E) that the quantities of a good that give the consumer maximum satisfaction are directly related to price

Question 12

The law of diminishing marginal utility states that:

Accepted Answer

A) the marginal utility of the last unit consumed of any good is less than the marginal utility of all other products consumed. 
B) as more of a good or service is consumed,ceteris paribus,its marginal utility relative to the marginal utility of other products increases. 
C) as more of a good or service is consumed,its marginal utility decreases. 
D) as more of a good or service is consumed,its marginal utility relative to other products remains the same. 
E) the marginal utility of all products consumed must be equal. 
A) the marginal utility of the last unit consumed of any good is less than the marginal utility of all other products consumed. 
B) as more of a good or service is consumed,ceteris paribus,its marginal utility relative to the marginal utility of other products increases. 
C) as more of a good or service is consumed,its marginal utility decreases. 
D) as more of a good or service is consumed,its marginal utility relative to other products remains the same. 
E) the marginal utility of all products consumed must be equal.

Question 13

If a good is free,a rational consumer will continue to consume that good,irrespective of its marginal utility.

Accepted Answer

A) True 
 B)False

Question 14

If the consumer purchases only two goods,X and Y,and if (MUx / Px) = (MUy / Py) then the consumer cannot reallocate her expenditures on X and Y to increase her utility,unless she has more money to spend.

Accepted Answer

A) True 
 B)False

Question 15

The table given below depicts the total utility derived from the consumption of a good. Table 6.1
 
- According to Table 6.1,the total utility from consuming all 5 units is _____.

Accepted Answer

A) 13 
B) 55 
C) 64 
D) 188 
E) 303 
A) 13 
B) 55 
C) 64 
D) 188 
E) 303

Question 16

The table given below records the total utility derived from the consumption of avocados. Table 6.2
 
- According to Table 6.2,the marginal utility of the third avocado is _____.

Accepted Answer

A) 12 
B) 8 
C) 48 
D) 18 
E) 4 
A) 12 
B) 8 
C) 48 
D) 18 
E) 4

Question 17

According to neuroeconomists,our logical brain knows we should spend as much as possible when we have money.

Accepted Answer

A) True 
 B)False

Question 18

_____ is a measure of the total satisfaction derived from consuming a quantity of some good or service.

Accepted Answer

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

Question 19

The substitution effect occurs because when the price of one good increases,consumers will buy fewer substitute goods.

Accepted Answer

A) True 
 B)False

Question 20

The table given below reports the total utility derived by an individual from the consumption of different units of goods A,B,andC. Table 6.4
 
- Refer to Table 6.4.What is the highest possible total utility a consumer can attain given an income of $10?

Accepted Answer

A) 554 
B) 705 
C) 706 
D) 717 
E) 899 
A) 554 
B) 705 
C) 706 
D) 717 
E) 899

Exam 6: Consumer Choice

The different combinations of any two goods that an individual can afford to purchase,given his income and prices,is shown by:

The equimarginal principle illustrates:

According to utility theory,a consumer is in equilibrium when:

Buyers who are persuaded to take a product home to try it out,_____.

The table given below depicts the total utility derived from the consumption of a good. Table 6.1 -According to Table 6.1,marginal utility _____.

The income and substitution effects of a price change occur because:

Suppose the prices of goods X,Y,and Z are $4,$1,and $5,respectively,and the last unit purchased of good X has a marginal utility MUx = 16 utils.At the point of equilibrium,the marginal utility of the last unit purchased of goods Y and Z will be:

"Throwing good money after bad" is also known as the _____ effect.

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.Marginal utility diminishes for good A from the _____ unit.

An indifference curve shows _____.

The law of diminishing marginal utility states that:

If a good is free,a rational consumer will continue to consume that good,irrespective of its marginal utility.

If the consumer purchases only two goods,X and Y,and if (MUx / Px) = (MUy / Py) then the consumer cannot reallocate her expenditures on X and Y to increase her utility,unless she has more money to spend.

The table given below depicts the total utility derived from the consumption of a good. Table 6.1 - According to Table 6.1,the total utility from consuming all 5 units is _____.

The table given below records the total utility derived from the consumption of avocados. Table 6.2 - According to Table 6.2,the marginal utility of the third avocado is _____.

According to neuroeconomists,our logical brain knows we should spend as much as possible when we have money.

_____ is a measure of the total satisfaction derived from consuming a quantity of some good or service.

The substitution effect occurs because when the price of one good increases,consumers will buy fewer substitute goods.

The table given below reports the total utility derived by an individual from the consumption of different units of goods A,B,andC. Table 6.4 - Refer to Table 6.4.What is the highest possible total utility a consumer can attain given an income of $10?

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

Suppose the prices of goods X,Y,and Z are $4,$1,and $5,respectively,and the last unit purchased of good X has a marginal utility MU_x = 16 utils.At the point of equilibrium,the marginal utility of the last unit purchased of goods Y and Z will be:

If the consumer purchases only two goods,X and Y,and if (MU_x / P_x) = (MU_y / P_y) then the consumer cannot reallocate her expenditures on X and Y to increase her utility,unless she has more money to spend.