Question 1

Two products are perfect substitutes if:

Accepted Answer

A)  a consumer is willing to swap one for another at a fixed rate. 
B)  they are valuable only when used together in fixed proportions. 
C)  their indifference curves are L-shaped. 
D)  an increase in the price of one good causes a decrease in the demand for the other good. 
A)  a consumer is willing to swap one for another at a fixed rate. 
B)  they are valuable only when used together in fixed proportions. 
C)  their indifference curves are L-shaped. 
D)  an increase in the price of one good causes a decrease in the demand for the other good. A

Question 2

Refer to Figure 4.3.Which diagram most likely represents the indifference map for left shoes and right shoes?

Accepted Answer

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

Question 3

When comparing two alternatives X and Y,a consumer either prefers X to Y,prefers Y to X,or is indifferent between them.This property is called:

Accepted Answer

A)  transitivity. 
B)  completeness. 
C)  the ranking principle. 
D)  the choice principle. 
A)  transitivity. 
B)  completeness. 
C)  the ranking principle. 
D)  the choice principle. B

Question 4

Refer to Table 4.1.If Mike starts with 4 CDs and 1 economics book,would he be willing to trade one CD for two economics books?

Accepted Answer

A)  Yes, because the bundle with 3 CDs and 3 economics books is ranked higher than the bundle with 4 CDs and 1 economics book 
B)  No, because the bundle with 3 CDs and 3 economics books is ranked higher than the bundle with 4 CDs and 1 economics book 
C)  Yes, because the bundle with 4 CDs and 1 economics book is ranked higher than the bundle with 3 CDs and 3 economics books 
D)  No, because the bundle with 4 CDs and 1 economics book is ranked higher than the bundle with 3 CDs and 3 economics books 
A)  Yes, because the bundle with 3 CDs and 3 economics books is ranked higher than the bundle with 4 CDs and 1 economics book 
B)  No, because the bundle with 3 CDs and 3 economics books is ranked higher than the bundle with 4 CDs and 1 economics book 
C)  Yes, because the bundle with 4 CDs and 1 economics book is ranked higher than the bundle with 3 CDs and 3 economics books 
D)  No, because the bundle with 4 CDs and 1 economics book is ranked higher than the bundle with 3 CDs and 3 economics books

Question 5

Owen and Simon both like playing with balls and cars.Suppose B represents the number of balls,and C represents the number of cars.If Owen's utility function can be given by U(B,C)= 10B + 5C,and Simon's utility function can be given by U(B,C)= 6B + 6C,which of the following trades would benefit Simon but not Owen?

Accepted Answer

A)  Owen gives Simon 3 cars in exchange for 2 balls 
B)  Owen gives Simon 2 cars in exchange for 3 balls 
C)  Owen gives Simon 3 balls in exchange for 2 cars 
D)  Owen gives Simon 2 balls in exchange for 3 cars 
A)  Owen gives Simon 3 cars in exchange for 2 balls 
B)  Owen gives Simon 2 cars in exchange for 3 balls 
C)  Owen gives Simon 3 balls in exchange for 2 cars 
D)  Owen gives Simon 2 balls in exchange for 3 cars

Question 6

Teresa consumes both steak and lobster.Suppose the formula for her indifference curves is S = U - 1.5L,where S stands for the number of steaks,L stands for the number of lobsters,and U represents utility.Which of the following bundles would Teresa prefer?

Accepted Answer

A)  10 steaks and 4 lobsters 
B)  9 steaks and 5 lobsters 
C)  12 steaks and 2 lobsters 
D)  There is not enough information to answer the question. 
A)  10 steaks and 4 lobsters 
B)  9 steaks and 5 lobsters 
C)  12 steaks and 2 lobsters 
D)  There is not enough information to answer the question.

Question 7

The idea that all potentially available alternatives can be ordered according to a consumer's preferences is called:

Accepted Answer

A)  the consumption principle. 
B)  the ranking principle. 
C)  the choice principle. 
D)  the more-is-better principle. 
A)  the consumption principle. 
B)  the ranking principle. 
C)  the choice principle. 
D)  the more-is-better principle.

Question 8

Stewie enjoys watching DVDs and listening to his iPod.Suppose his utility function is given by U(D,I)= 3D + 4(D × I),where D is the number of hours he spends watching DVDs and I is the number of hours he spends listening to his iPod.Which of the following combinations will provide Stewie with the greatest amount of satisfaction?

Accepted Answer

A)  4 hours of watching DVDs and 8 hours of listening to his iPod 
B)  6 hours of watching DVDs and 6 hours of listening to his iPod 
C)  2 hours of watching DVDs and 10 hours of listening to his iPod 
D)  8 hours of watching DVDs and 6 hours of listening to his iPod 
A)  4 hours of watching DVDs and 8 hours of listening to his iPod 
B)  6 hours of watching DVDs and 6 hours of listening to his iPod 
C)  2 hours of watching DVDs and 10 hours of listening to his iPod 
D)  8 hours of watching DVDs and 6 hours of listening to his iPod

Question 9

Frieda enjoys cooking and baking.Her utility function is U(C,B)= 6C + 3B,where C is the number of hours she spends cooking and B is the hours she spends baking.What is Frieda's MRS of cooking with baking?

Accepted Answer

A)  1/6 
B)  2 
C)  6 
D)  It cannot be determined from the given information. 
A)  1/6 
B)  2 
C)  6 
D)  It cannot be determined from the given information.

Question 10

For any given family of indifference curves,a consumer would prefer to be at a point:

Accepted Answer

A)  on the indifference curve that is closest to the origin. 
B)  that is far to the right on an indifference curve. 
C)  that is far to the left on an indifference curve. 
D)  on the indifference curve that is farthest from the origin. 
A)  on the indifference curve that is closest to the origin. 
B)  that is far to the right on an indifference curve. 
C)  that is far to the left on an indifference curve. 
D)  on the indifference curve that is farthest from the origin.

Question 11

A "bad" would be associated with:

Accepted Answer

A)  zero marginal utility. 
B)  a very small amount of marginal utility. 
C)  negative marginal utility. 
D)  positive marginal utility. 
A)  zero marginal utility. 
B)  a very small amount of marginal utility. 
C)  negative marginal utility. 
D)  positive marginal utility.

Question 12

When the more-is-better principle holds,we assign higher utility values to indifference curves:

Accepted Answer

A)  that are closer to the origin. 
B)  that are farther from the origin. 
C)  that are concave. 
D)  that are L-shaped. 
A)  that are closer to the origin. 
B)  that are farther from the origin. 
C)  that are concave. 
D)  that are L-shaped.

Question 13

Owen and Simon both like playing with balls and cars.Suppose B represents the number of balls,and C represents the number of cars.If Owen's utility function can be given by U(B,C)= 10B + 5C,and Simon's utility function can be given by U(B,C)= 6B + 6C,which of the following trades would be mutually beneficial?

Accepted Answer

A)  Owen gives Simon 3 cars in exchange for 2 balls 
B)  Owen gives Simon 2 cars in exchange for 3 balls 
C)  Owen gives Simon 3 balls in exchange for 2 cars 
D)  Owen gives Simon 2 balls in exchange for 3 cars 
A)  Owen gives Simon 3 cars in exchange for 2 balls 
B)  Owen gives Simon 2 cars in exchange for 3 balls 
C)  Owen gives Simon 3 balls in exchange for 2 cars 
D)  Owen gives Simon 2 balls in exchange for 3 cars

Question 14

Refer to Figure 4.3.Which diagram most likely represents the indifference map for a good and a "bad"?

Accepted Answer

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

Question 15

According to Figure 4.1,which of the following statements is true?

Accepted Answer

A) Bundle A would be preferred to bundle C. 
B) Bundle A would be preferred to bundle B. 
C) Bundle C would be preferred to bundle D. 
D) Bundle B would be preferred to bundle A. 
A) Bundle A would be preferred to bundle C. 
B) Bundle A would be preferred to bundle B. 
C) Bundle C would be preferred to bundle D. 
D) Bundle B would be preferred to bundle A.

Question 16

Compare and contrast cardinal utility and ordinal utility.Which concept is sufficient for ranking consumers' preferences? Why?

Accepted Answer

Both cardinal and ordinal utility are me

Question 17

Higher rates of substitution are indicated by _______ values of the marginal rate of substitution.

Accepted Answer

A)  small negative 
B)  large negative 
C)  small positive 
D)  large positive 
A)  small negative 
B)  large negative 
C)  small positive 
D)  large positive

Question 18

If the more-is-better principle holds,then indifference curves must:

Accepted Answer

A)  be positively-sloped. 
B)  be negatively-sloped. 
C)  be thin. 
D)  be concave. 
A)  be positively-sloped. 
B)  be negatively-sloped. 
C)  be thin. 
D)  be concave.

Question 19

The marginal rate of substitution between two goods is given by:

Accepted Answer

A)  the inverse of the slope of an indifference curve. 
B)  the slope of a line tangent to an indifference curve. 
C)  negative one times the inverse of the slope of an indifference curve. 
D)  negative one times the slope of a line tangent to an indifference curve. 
A)  the inverse of the slope of an indifference curve. 
B)  the slope of a line tangent to an indifference curve. 
C)  negative one times the inverse of the slope of an indifference curve. 
D)  negative one times the slope of a line tangent to an indifference curve.

Question 20

A curve that shows all of the alternative consumption bundles that the consumer likes equally well is called:

Accepted Answer

A)  a budget constraint. 
B)  an indifference curve. 
C)  an individual demand curve. 
D)  a consumption bundle curve. 
A)  a budget constraint. 
B)  an indifference curve. 
C)  an individual demand curve. 
D)  a consumption bundle curve.

Two products are perfect substitutes if:

Refer to Figure 4.3.Which diagram most likely represents the indifference map for left shoes and right shoes?

When comparing two alternatives X and Y,a consumer either prefers X to Y,prefers Y to X,or is indifferent between them.This property is called:

Refer to Table 4.1.If Mike starts with 4 CDs and 1 economics book,would he be willing to trade one CD for two economics books?

Teresa consumes both steak and lobster.Suppose the formula for her indifference curves is S = U - 1.5L,where S stands for the number of steaks,L stands for the number of lobsters,and U represents utility.Which of the following bundles would Teresa prefer?

The idea that all potentially available alternatives can be ordered according to a consumer's preferences is called:

Frieda enjoys cooking and baking.Her utility function is U(C,B)= 6C + 3B,where C is the number of hours she spends cooking and B is the hours she spends baking.What is Frieda's MRS of cooking with baking?

For any given family of indifference curves,a consumer would prefer to be at a point:

A "bad" would be associated with:

When the more-is-better principle holds,we assign higher utility values to indifference curves:

Refer to Figure 4.3.Which diagram most likely represents the indifference map for a good and a "bad"?

According to Figure 4.1,which of the following statements is true?

Compare and contrast cardinal utility and ordinal utility.Which concept is sufficient for ranking consumers' preferences? Why?

Higher rates of substitution are indicated by _______ values of the marginal rate of substitution.

If the more-is-better principle holds,then indifference curves must:

The marginal rate of substitution between two goods is given by:

A curve that shows all of the alternative consumption bundles that the consumer likes equally well is called:

Introduction

Supply and Demand

Balancing Benefits and Costs

Constraints, Choices, and Demand

Demand and Welfare

Technology and Production

Cost

Profit Maximization

Choices Involving Time

Choices Involving Risk

Choices Involving Strategy

Behavioral Economics

Equilibrium and Efficiency

Market Intervention

General Equilibrium, Efficiency, and Equity

Monopoly

Pricing Policies

Oligopoly

Externalities and Public Goods

Asymmetric Information

Filters

Exam 4: Consumer Preferences

Two products are perfect substitutes if:

Refer to Figure 4.3.Which diagram most likely represents the indifference map for left shoes and right shoes?

When comparing two alternatives X and Y,a consumer either prefers X to Y,prefers Y to X,or is indifferent between them.This property is called:

Refer to Table 4.1.If Mike starts with 4 CDs and 1 economics book,would he be willing to trade one CD for two economics books?

Teresa consumes both steak and lobster.Suppose the formula for her indifference curves is S = U - 1.5L,where S stands for the number of steaks,L stands for the number of lobsters,and U represents utility.Which of the following bundles would Teresa prefer?

The idea that all potentially available alternatives can be ordered according to a consumer's preferences is called:

Frieda enjoys cooking and baking.Her utility function is U(C,B)= 6C + 3B,where C is the number of hours she spends cooking and B is the hours she spends baking.What is Frieda's MRS of cooking with baking?

For any given family of indifference curves,a consumer would prefer to be at a point:

A "bad" would be associated with:

When the more-is-better principle holds,we assign higher utility values to indifference curves:

Refer to Figure 4.3.Which diagram most likely represents the indifference map for a good and a "bad"?

According to Figure 4.1,which of the following statements is true?

Compare and contrast cardinal utility and ordinal utility.Which concept is sufficient for ranking consumers' preferences? Why?

Higher rates of substitution are indicated by _______ values of the marginal rate of substitution.

If the more-is-better principle holds,then indifference curves must:

The marginal rate of substitution between two goods is given by:

A curve that shows all of the alternative consumption bundles that the consumer likes equally well is called:

Introduction

Supply and Demand

Balancing Benefits and Costs

Constraints, Choices, and Demand

Demand and Welfare

Technology and Production

Cost

Profit Maximization

Choices Involving Time

Choices Involving Risk

Choices Involving Strategy

Behavioral Economics

Equilibrium and Efficiency

Market Intervention

General Equilibrium, Efficiency, and Equity

Monopoly

Pricing Policies

Oligopoly

Externalities and Public Goods

Asymmetric Information

Filters