Question 1

People view alcohol and marijuana as perfect substitutes.This means that

Accepted Answer

A)  individuals will consume either alcohol or marijuana, but not both, regardless of price. 
B)  as the price of alcohol decreases, marijuana use decreases. 
C)  the marginal utility for alcohol and marijuana is constant. 
D)  Both B and C. 
A)  individuals will consume either alcohol or marijuana, but not both, regardless of price. 
B)  as the price of alcohol decreases, marijuana use decreases. 
C)  the marginal utility for alcohol and marijuana is constant. 
D)  Both B and C.

Question 2

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 3

A consumer's willingness to trade one good for another can be expressed by the consumer's

Accepted Answer

A)  indifference curve. 
B)  marginal rate of substitution. 
C)  Both A and B above. 
D)  None of the above. 
A)  indifference curve. 
B)  marginal rate of substitution. 
C)  Both A and B above. 
D)  None of the above.

Question 4

-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 5

Assuming that good "x" is measured on the x-axis and good "y" is measured on the y-axis,if the utility for the two goods "x" and "y" can be measured as U = x,then it can be concluded that

Accepted Answer

A)  "x" and "y" are perfect complements. 
B)  "y" is a "bad". 
C)  the indifference curves on the x,y graph are upward sloping. 
D)  the indifference curves on the x,y graph are vertical. 
A)  "x" and "y" are perfect complements. 
B)  "y" is a "bad". 
C)  the indifference curves on the x,y graph are upward sloping. 
D)  the indifference curves on the x,y graph are vertical.

Question 6

One reason more sport utility vehicles (SUVs)are driven in the United States than in Europe is

Accepted Answer

A)  different marginal rates of substitution. 
B)  different marginal rates of transformation. 
C)  the United States hasn't had a recession since 2000-2001. 
D)  Either A or B 
A)  different marginal rates of substitution. 
B)  different marginal rates of transformation. 
C)  the United States hasn't had a recession since 2000-2001. 
D)  Either A or B

Question 7

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 8

The slope of the budget line represents the rate at which the consumer is willing to trade one good for another at any given bundle.

Accepted Answer

A) True 
 B)False

Question 9

One reason a gift card might be less desirable than cash?

Accepted Answer

A)  A gift card requires an individual to purchase from a particular store, which restricts the choice set. 
B)  Cash requires an individual to purchase from a particular country, which restricts the choice set. 
C)  Cash and the gift card are equally desirable, there is no problem here. 
D)  Gift cards are easier to steal or lose relative to cash. 
A)  A gift card requires an individual to purchase from a particular store, which restricts the choice set. 
B)  Cash requires an individual to purchase from a particular country, which restricts the choice set. 
C)  Cash and the gift card are equally desirable, there is no problem here. 
D)  Gift cards are easier to steal or lose relative to cash.

Question 10

Lisa consumes only pizzas (P)and burritos (B).Her utility function is U = P0.5 B0.5.The price of per pizza is $10 and the price per burrito is $5.In equilibrium,Lisa consumes 4 pizzas.Using Lisa's utility function,calculate how many burritos she consumes.

Accepted Answer

The marginal utility of pizza equals B^0.5/2

Question 11

If Fred's marginal utility of pizza equals 10 and his marginal utility of salad equals 2,then

Accepted Answer

A)  he would give up 5 pizzas to get the next salad. 
B)  he would give up 5 salads to get the next pizza. 
C)  he will eat five times as much pizza as salad. 
D)  he will eat five times as much salad as pizza. 
A)  he would give up 5 pizzas to get the next salad. 
B)  he would give up 5 salads to get the next pizza. 
C)  he will eat five times as much pizza as salad. 
D)  he will eat five times as much salad as pizza.

Question 12

Utility is the set of numerical values that

Accepted Answer

A)  yields an absolute level of pleasure from a bundle of goods. 
B)  reflects the relative ranking of various bundles of goods. 
C)  describes how much more a consumer prefers one bundle to another. 
D)  yields a cardinal ranking of bundles. 
A)  yields an absolute level of pleasure from a bundle of goods. 
B)  reflects the relative ranking of various bundles of goods. 
C)  describes how much more a consumer prefers one bundle to another. 
D)  yields a cardinal ranking of bundles.

Question 13

People derive utility in their lives from consuming goods (all other goods),g,and clean air (measured as the number of particulates removed per m3),a,as measured with the utility function U(g,a)= g0.6a0.4.The price index of consumer goods equals $20 per day.Income equals $1000.What is likely to happen to the number of asthma cases as the price of clean air (abatement cost)increases from $10 to $20?

Accepted Answer

A)  Asthma cases decrease because the particulants per m3 increases by 2 units. 
B)  Asthma cases increase because the particulant per m3 decreases by 2 units. 
C)  Asthma cases increase because the particulants per m3 increase by 2 units. 
D)  There is not enough information to answer this question. 
A)  Asthma cases decrease because the particulants per m3 increases by 2 units. 
B)  Asthma cases increase because the particulant per m3 decreases by 2 units. 
C)  Asthma cases increase because the particulants per m3 increase by 2 units. 
D)  There is not enough information to answer this question.

Question 14

By selecting a bundle where MRS = MRT,the consumer is

Accepted Answer

A)  achieving a corner solution. 
B)  reaching the highest possible indifference curve she can afford. 
C)  not behaving in an optimal way. 
D)  All of the above. 
A)  achieving a corner solution. 
B)  reaching the highest possible indifference curve she can afford. 
C)  not behaving in an optimal way. 
D)  All of the above.

Question 15

Those who criticize individuals who choose to drive a relatively inefficient sport utility vehicle (SUV)might mistakenly

Accepted Answer

A)  assume everyone faces the same relative prices. 
B)  assume everyone has the same preference set. 
C)  assume everyone has the same budget constraint. 
D)  All of the above. 
A)  assume everyone faces the same relative prices. 
B)  assume everyone has the same preference set. 
C)  assume everyone has the same budget constraint. 
D)  All of the above.

Question 16

Bounded rationality suggests that

Accepted Answer

A)  individuals might make "incorrect" decisions because they are unable to consider all possible options. 
B)  individuals would rather have less choice to more choice. 
C)  rational decisions can only be made when choices are restricted. 
D)  individuals are happier when their choices are restricted or "bounded." 
A)  individuals might make "incorrect" decisions because they are unable to consider all possible options. 
B)  individuals would rather have less choice to more choice. 
C)  rational decisions can only be made when choices are restricted. 
D)  individuals are happier when their choices are restricted or "bounded."

Question 17

Which is a behavioral economics justification for limiting advertising directed towards children?

Accepted Answer

A)  Children have no money. 
B)  Children pester their parents too much. 
C)  Children have no memory. 
D)  Children do not always have transitive preferences. 
A)  Children have no money. 
B)  Children pester their parents too much. 
C)  Children have no memory. 
D)  Children do not always have transitive preferences.

Question 18

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What is the price of chicken?

Accepted Answer

A)  $0.80/lb 
B)  $1.25/lb 
C)  $4/lb 
D)  $5/lb 
A)  $0.80/lb 
B)  $1.25/lb 
C)  $4/lb 
D)  $5/lb

Question 19

Lisa has an income of $100.She spends all of her income on pizza and burritos.A pizza costs $10 and a burrito costs $5.However,the store where Lisa buys her burritos has a special deal.After you've bought 6 burritos,then you can buy each burrito for $2.50.Draw Lisa's opportunity set.

Accepted Answer

@#IMG-DLM& See the a

Question 20

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.

People view alcohol and marijuana as perfect substitutes.This means that

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

A consumer's willingness to trade one good for another can be expressed by the consumer's

-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?

Assuming that good "x" is measured on the x-axis and good "y" is measured on the y-axis,if the utility for the two goods "x" and "y" can be measured as U = x,then it can be concluded that

One reason more sport utility vehicles (SUVs)are driven in the United States than in Europe is

Behavioral economists have discovered that

The slope of the budget line represents the rate at which the consumer is willing to trade one good for another at any given bundle.

One reason a gift card might be less desirable than cash?

Lisa consumes only pizzas (P)and burritos (B).Her utility function is U = P^0.5B^0.5.The price of per pizza is $10 and the price per burrito is $5.In equilibrium,Lisa consumes 4 pizzas.Using Lisa's utility function,calculate how many burritos she consumes.

If Fred's marginal utility of pizza equals 10 and his marginal utility of salad equals 2,then

Utility is the set of numerical values that

By selecting a bundle where MRS = MRT,the consumer is

Those who criticize individuals who choose to drive a relatively inefficient sport utility vehicle (SUV)might mistakenly

Bounded rationality suggests that

Which is a behavioral economics justification for limiting advertising directed towards children?

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What is the price of chicken?

Lisa has an income of $100.She spends all of her income on pizza and burritos.A pizza costs $10 and a burrito costs $5.However,the store where Lisa buys her burritos has a special deal.After you've bought 6 burritos,then you can buy each burrito for $2.50.Draw Lisa's opportunity set.

Diminishing marginal rate of substitution can be seen when indifference curves

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

People view alcohol and marijuana as perfect substitutes.This means that

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

A consumer's willingness to trade one good for another can be expressed by the consumer's

-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?

Assuming that good "x" is measured on the x-axis and good "y" is measured on the y-axis,if the utility for the two goods "x" and "y" can be measured as U = x,then it can be concluded that

One reason more sport utility vehicles (SUVs)are driven in the United States than in Europe is

Behavioral economists have discovered that

The slope of the budget line represents the rate at which the consumer is willing to trade one good for another at any given bundle.

One reason a gift card might be less desirable than cash?

Lisa consumes only pizzas (P)and burritos (B).Her utility function is U = P0.5 B0.5.The price of per pizza is $10 and the price per burrito is $5.In equilibrium,Lisa consumes 4 pizzas.Using Lisa's utility function,calculate how many burritos she consumes.

If Fred's marginal utility of pizza equals 10 and his marginal utility of salad equals 2,then

Utility is the set of numerical values that

By selecting a bundle where MRS = MRT,the consumer is

Those who criticize individuals who choose to drive a relatively inefficient sport utility vehicle (SUV)might mistakenly

Bounded rationality suggests that

Which is a behavioral economics justification for limiting advertising directed towards children?

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What is the price of chicken?

Lisa has an income of $100.She spends all of her income on pizza and burritos.A pizza costs $10 and a burrito costs $5.However,the store where Lisa buys her burritos has a special deal.After you've bought 6 burritos,then you can buy each burrito for $2.50.Draw Lisa's opportunity set.

Diminishing marginal rate of substitution can be seen when indifference curves

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

Lisa consumes only pizzas (P)and burritos (B).Her utility function is U = P^0.5B^0.5.The price of per pizza is $10 and the price per burrito is $5.In equilibrium,Lisa consumes 4 pizzas.Using Lisa's utility function,calculate how many burritos she consumes.