Question 1

From the modern "ordinalist" perspective,the scale used to measure utility:

Accepted Answer

A)  provides an absolute measure of human well-being. 
B)  is completely arbitrary. 
C)  summarizes information about the intensity of preferences. 
D)  is the same for each consumer. 
A)  provides an absolute measure of human well-being. 
B)  is completely arbitrary. 
C)  summarizes information about the intensity of preferences. 
D)  is the same for each consumer.

Question 2

When faced with all available alternatives,the consumer will select the one that is ranked the highest.This principle is called:

Accepted Answer

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

Question 3

Netflix.com asks its customers to rate the videos they have watched.This information is then used to rank videos for other Netflix.com subscribers.These subscribers can then use the video rankings to help them decide on a video to rent.Through this process,Netflix.com is helping its customers apply the:

Accepted Answer

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

Question 4

If an individual prefers X to Y and prefers Y to Z then the consumer must also prefer X to Z.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.

Question 5

Suppose a consumer's MRS is given by the formula MRSPT = T/P,where P stands for the number of pieces of pizza and T stands for the number of tacos.Starting at 12 tacos and 4 pizzas,the consumer must receive:

Accepted Answer

A)  3 tacos to compensate them for the loss of one piece of pizza. 
B)  3 pieces of pizza to compensate them for the loss of one taco. 
C)  1/3 taco to compensate them for the loss of one piece of pizza. 
D)  1/3 piece of pizza to compensate them for the loss of one taco. 
A)  3 tacos to compensate them for the loss of one piece of pizza. 
B)  3 pieces of pizza to compensate them for the loss of one taco. 
C)  1/3 taco to compensate them for the loss of one piece of pizza. 
D)  1/3 piece of pizza to compensate them for the loss of one taco.

Question 6

Suppose Joe's MRS for cookies with crackers is 6 crackers per cookie.Also assume that Mary's MRS for cookies with crackers is 3 crackers per cookie.Assuming that these rates of substitution don't depend on the amounts consumed,which of the following trades would make both Joe and Mary better off?

Accepted Answer

A)  Joe gives Mary 5 crackers in exchange for a cookie. 
B)  Joe gives Mary 2 crackers in exchange for a cookie. 
C)  Joe gives Mary 6 crackers in exchange for a cookie. 
D)  There is not enough information to answer the question. 
A)  Joe gives Mary 5 crackers in exchange for a cookie. 
B)  Joe gives Mary 2 crackers in exchange for a cookie. 
C)  Joe gives Mary 6 crackers in exchange for a cookie. 
D)  There is not enough information to answer the question.

Question 7

The decisions consumers make about which goods to consume are interrelated because:

Accepted Answer

A)  the enjoyment of one good often depends on the consumption of other goods. 
B)  consumers have perfect information regarding all possible consumption bundles. 
C)  consumers can't always distinguish between goods. 
D)  consumers are often indifferent between different goods. 
A)  the enjoyment of one good often depends on the consumption of other goods. 
B)  consumers have perfect information regarding all possible consumption bundles. 
C)  consumers can't always distinguish between goods. 
D)  consumers are often indifferent between different goods.

Question 8

As we move down and to the right along an indifference curve,the marginal rate of substitution:

Accepted Answer

A)  increases. 
B)  decreases. 
C)  remains constant. 
D)  increases, then decreases. 
A)  increases. 
B)  decreases. 
C)  remains constant. 
D)  increases, then decreases.

Question 9

The slope of an indifference curve tells us:

Accepted Answer

A)  the marginal utility the consumer receives from consuming an additional unit of a good. 
B)  how much of one good is required to compensate the consumer for giving up some of another good. 
C)  the amount of utility a consumer receives from consuming a bundle of goods. 
D)  the rate at which utility changes as more of one good is consumed. 
A)  the marginal utility the consumer receives from consuming an additional unit of a good. 
B)  how much of one good is required to compensate the consumer for giving up some of another good. 
C)  the amount of utility a consumer receives from consuming a bundle of goods. 
D)  the rate at which utility changes as more of one good is consumed.

Question 10

Refer to Figure 4.2.The marginal rate of substitution for economics books with CDs is highest at point:

Accepted Answer

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

Question 11

Which of the following correctly expresses the relationship between the marginal utilities of two goods and marginal rate of substitution between the goods?

Accepted Answer

A)  MRSXY = (MUY/MUX) 
B)  MRSXY = (MUX/MUY) 
C)  MRSXY = (U/∆X) 
D)  MRSXY = (U/∆Y) 
A)  MRSXY = (MUY/MUX) 
B)  MRSXY = (MUX/MUY) 
C)  MRSXY = (U/∆X) 
D)  MRSXY = (U/∆Y)

Question 12

Which of the following statements regarding preferences and indifference curves is true?

Accepted Answer

A)  When choosing between two consumption bundles, a consumer will always prefer the consumption bundle on the lower indifference curve. 
B)  A consumer is indifferent between two consumption bundles that are on the same indifference curve. 
C)  When choosing between two consumption bundles, a consumer will always prefer the consumption bundle that is farthest to the right on an indifference curve. 
D)  When choosing between two consumption bundles, a consumer will always prefer the consumption bundle that is farthest to the left on an indifference curve. 
A)  When choosing between two consumption bundles, a consumer will always prefer the consumption bundle on the lower indifference curve. 
B)  A consumer is indifferent between two consumption bundles that are on the same indifference curve. 
C)  When choosing between two consumption bundles, a consumer will always prefer the consumption bundle that is farthest to the right on an indifference curve. 
D)  When choosing between two consumption bundles, a consumer will always prefer the consumption bundle that is farthest to the left on an indifference curve.

Question 13

When there is a high degree of complementarity between two products,then the indifference curves will:

Accepted Answer

A)  be reasonably close to straight lines. 
B)  be perfectly straight lines. 
C)  bend sharply. 
D)  be positively sloped. 
A)  be reasonably close to straight lines. 
B)  be perfectly straight lines. 
C)  bend sharply. 
D)  be positively sloped.

Question 14

The rate at which a consumer will exchange one good for another is called:

Accepted Answer

A)  marginal utility. 
B)  the marginal rate of transformation. 
C)  the rate of substitutability. 
D)  the marginal rate of substitution. 
A)  marginal utility. 
B)  the marginal rate of transformation. 
C)  the rate of substitutability. 
D)  the marginal rate of substitution.

Question 15

Ultimately,the opportunity for mutually beneficial trade between two individuals is based on:

Accepted Answer

A)  the marginal utilities each consumer derives from each good. 
B)  the price each consumer is will to pay for each good. 
C)  the degree of substitutability of each good. 
D)  a comparison of the individuals' utility function. 
A)  the marginal utilities each consumer derives from each good. 
B)  the price each consumer is will to pay for each good. 
C)  the degree of substitutability of each good. 
D)  a comparison of the individuals' utility function.

Question 16

Marginal utility:

Accepted Answer

A)  is the change in a consumer's utility resulting from the addition of a very small amount of some good. 
B)  is the total utility a resulting from consuming some good, divided by the amount consumed. 
C)  is the change in a consumer's utility resulting from the addition of a very small amount of some good, divided by the amount added. 
D)  is the change in a consumer's utility resulting from the addition of a very small amount of some good, divided by the total amount being consumed. 
A)  is the change in a consumer's utility resulting from the addition of a very small amount of some good. 
B)  is the total utility a resulting from consuming some good, divided by the amount consumed. 
C)  is the change in a consumer's utility resulting from the addition of a very small amount of some good, divided by the amount added. 
D)  is the change in a consumer's utility resulting from the addition of a very small amount of some good, divided by the total amount being consumed.

Question 17

Refer to Table 4.1.Mike's preferences are consistent with the Ranking Principle because:

Accepted Answer

A)  the two goods are perfect complements. 
B)  there are no empty cells. 
C)  in each column, the choices at the top are ranked lower than the choices at the bottom. 
D)  in each column, the choices at the top are ranked higher than the choices at the bottom. 
A)  the two goods are perfect complements. 
B)  there are no empty cells. 
C)  in each column, the choices at the top are ranked lower than the choices at the bottom. 
D)  in each column, the choices at the top are ranked higher than the choices at the bottom.

Question 18

Felix always consumes exactly four cookies with a glass of milk.Felix's indifference curves for cookies and milk would be:

Accepted Answer

A)  linear. 
B)  L-shaped. 
C)  convex. 
D)  positively-sloped. 
A)  linear. 
B)  L-shaped. 
C)  convex. 
D)  positively-sloped.

Question 19

A utility function is a mathematical formula that assigns to each consumption bundle a numeric value that represents the:

Accepted Answer

A)  opportunity cost of consuming the bundle. 
B)  consumer's relative well-being from consuming the bundle. 
C)  price the consumer would pay for the bundle. 
D)  rates of substitution of the goods in the bundle. 
A)  opportunity cost of consuming the bundle. 
B)  consumer's relative well-being from consuming the bundle. 
C)  price the consumer would pay for the bundle. 
D)  rates of substitution of the goods in the bundle.

Question 20

Refer to Figure 4.3.Which diagram most likely represents the indifference map for Sony PlayStations and Nintendo GameCubes?

Accepted Answer

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

From the modern "ordinalist" perspective,the scale used to measure utility:

When faced with all available alternatives,the consumer will select the one that is ranked the highest.This principle is called:

If an individual prefers X to Y and prefers Y to Z then the consumer must also prefer X to Z.This property is called:

Suppose a consumer's MRS is given by the formula MRS_PT = T/P,where P stands for the number of pieces of pizza and T stands for the number of tacos.Starting at 12 tacos and 4 pizzas,the consumer must receive:

Suppose Joe's MRS for cookies with crackers is 6 crackers per cookie.Also assume that Mary's MRS for cookies with crackers is 3 crackers per cookie.Assuming that these rates of substitution don't depend on the amounts consumed,which of the following trades would make both Joe and Mary better off?

The decisions consumers make about which goods to consume are interrelated because:

As we move down and to the right along an indifference curve,the marginal rate of substitution:

The slope of an indifference curve tells us:

Refer to Figure 4.2.The marginal rate of substitution for economics books with CDs is highest at point:

Which of the following correctly expresses the relationship between the marginal utilities of two goods and marginal rate of substitution between the goods?

Which of the following statements regarding preferences and indifference curves is true?

When there is a high degree of complementarity between two products,then the indifference curves will:

The rate at which a consumer will exchange one good for another is called:

Ultimately,the opportunity for mutually beneficial trade between two individuals is based on:

Marginal utility:

Refer to Table 4.1.Mike's preferences are consistent with the Ranking Principle because:

Felix always consumes exactly four cookies with a glass of milk.Felix's indifference curves for cookies and milk would be:

A utility function is a mathematical formula that assigns to each consumption bundle a numeric value that represents the:

Refer to Figure 4.3.Which diagram most likely represents the indifference map for Sony PlayStations and Nintendo GameCubes?

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

From the modern "ordinalist" perspective,the scale used to measure utility:

When faced with all available alternatives,the consumer will select the one that is ranked the highest.This principle is called:

If an individual prefers X to Y and prefers Y to Z then the consumer must also prefer X to Z.This property is called:

Suppose a consumer's MRS is given by the formula MRSPT = T/P,where P stands for the number of pieces of pizza and T stands for the number of tacos.Starting at 12 tacos and 4 pizzas,the consumer must receive:

Suppose Joe's MRS for cookies with crackers is 6 crackers per cookie.Also assume that Mary's MRS for cookies with crackers is 3 crackers per cookie.Assuming that these rates of substitution don't depend on the amounts consumed,which of the following trades would make both Joe and Mary better off?

The decisions consumers make about which goods to consume are interrelated because:

As we move down and to the right along an indifference curve,the marginal rate of substitution:

The slope of an indifference curve tells us:

Refer to Figure 4.2.The marginal rate of substitution for economics books with CDs is highest at point:

Which of the following correctly expresses the relationship between the marginal utilities of two goods and marginal rate of substitution between the goods?

Which of the following statements regarding preferences and indifference curves is true?

When there is a high degree of complementarity between two products,then the indifference curves will:

The rate at which a consumer will exchange one good for another is called:

Ultimately,the opportunity for mutually beneficial trade between two individuals is based on:

Marginal utility:

Refer to Table 4.1.Mike's preferences are consistent with the Ranking Principle because:

Felix always consumes exactly four cookies with a glass of milk.Felix's indifference curves for cookies and milk would be:

A utility function is a mathematical formula that assigns to each consumption bundle a numeric value that represents the:

Refer to Figure 4.3.Which diagram most likely represents the indifference map for Sony PlayStations and Nintendo GameCubes?

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

Suppose a consumer's MRS is given by the formula MRS_PT = T/P,where P stands for the number of pieces of pizza and T stands for the number of tacos.Starting at 12 tacos and 4 pizzas,the consumer must receive: