Question 1

(Last Word) Most people do not steal, because

Accepted Answer

A)  stolen goods are subject to the law of diminishing marginal utility. 
B)  the marginal utilities of stolen goods are negative. 
C)  their marginal costs, including guilt costs, are too high. 
D)  stolen goods can only be sold at deep discounts. 
A)  stolen goods are subject to the law of diminishing marginal utility. 
B)  the marginal utilities of stolen goods are negative. 
C)  their marginal costs, including guilt costs, are too high. 
D)  stolen goods can only be sold at deep discounts.

Question 2

The satisfaction or pleasure one gets from consuming a good or service is called

Accepted Answer

A)  price. 
B)  utility. 
C)  income. 
D)  profits. 
A)  price. 
B)  utility. 
C)  income. 
D)  profits.

Question 3

Which of the following statements is correct?

Accepted Answer

A)  Both cash and noncash gift-giving cause value losses. 
B)  Neither cash nor noncash gift-giving causes value losses. 
C)  Noncash gift-giving creates a value loss, but cash gifts do not. 
D)  Cash gifts create a value loss, but noncash gifts do not. 
A)  Both cash and noncash gift-giving cause value losses. 
B)  Neither cash nor noncash gift-giving causes value losses. 
C)  Noncash gift-giving creates a value loss, but cash gifts do not. 
D)  Cash gifts create a value loss, but noncash gifts do not.

Question 4

A child is given $4 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents and hard candies 80 cents each. The marginal utilities derived from each product are as shown in the following table.   Which combination would give the child the maximum utility out of spending $4?

Accepted Answer

A)  6 chocolates and 2 hard candies 
B)  4 chocolates and 3 hard candies 
C)  2 chocolates and 4 hard candies 
D)  0 chocolates and 5 hard candies 
A)  6 chocolates and 2 hard candies 
B)  4 chocolates and 3 hard candies 
C)  2 chocolates and 4 hard candies 
D)  0 chocolates and 5 hard candies

Question 5

The shift of the budget line from cd to ab in the figure is consistent with

Accepted Answer

A)  decreases in the prices of both M and N. 
B)  an increase in the price of M and a decrease in the price of N. 
C)  a decrease in money income. 
D)  an increase in money income. 
A)  decreases in the prices of both M and N. 
B)  an increase in the price of M and a decrease in the price of N. 
C)  a decrease in money income. 
D)  an increase in money income.

Question 6

The price of chicken = $5, while the price of pork = $9. If, after spending her entire budget, the consumer has MU of chicken = 6, while the MU of pork = 12, then the consumer should have bought more chicken and less pork in order to increase her total utility.

Accepted Answer

A) True 
 B)False

Question 7

Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2, respectively, and that the consumer's income is $18.   What quantities of X and Y should be purchased to maximize utility?

Accepted Answer

A)  2 of X and 1 of Y 
B)  4 of X and 5 of Y 
C)  2 of X and 5 of Y 
D)  2 of X and 6 of Y 
A)  2 of X and 1 of Y 
B)  4 of X and 5 of Y 
C)  2 of X and 5 of Y 
D)  2 of X and 6 of Y

Question 8

Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2, respectively, and that the consumer's income is $18.   Which of the following represents the demand schedule for X?

Accepted Answer

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

Question 9

The theory of consumer behavior assumes that

Accepted Answer

A)  consumers behave rationally, attempting to maximize their satisfaction. 
B)  consumers have unlimited money incomes. 
C)  consumers do not know how much marginal utility they obtain from successive units of various products. 
D)  marginal utility is constant. 
A)  consumers behave rationally, attempting to maximize their satisfaction. 
B)  consumers have unlimited money incomes. 
C)  consumers do not know how much marginal utility they obtain from successive units of various products. 
D)  marginal utility is constant.

Question 10

The slope of a budget line reflects the

Accepted Answer

A)  elasticity of demand for the two products. 
B)  price ratio of the two products. 
C)  amount of the consumer's income. 
D)  utility ratio of the two products. 
A)  elasticity of demand for the two products. 
B)  price ratio of the two products. 
C)  amount of the consumer's income. 
D)  utility ratio of the two products.

Question 11

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18.   How many units of the two products will the consumer buy to get maximum utility?

Accepted Answer

A)  1 of X and 4 of Y 
B)  2 of X and 2 of Y 
C)  2 of X and 3 of Y 
D)  3 of X and 4 of Y 
A)  1 of X and 4 of Y 
B)  2 of X and 2 of Y 
C)  2 of X and 3 of Y 
D)  3 of X and 4 of Y

Question 12

If consumers are convinced by ads that Brand X has a lot more value than they originally thought, then the MU/P of X will decrease.

Accepted Answer

A) True 
 B)False

Question 13

The consumer demand curve for a product is downsloping because marginal utility is constant when price declines.

Accepted Answer

A) True 
 B)False

Question 14

The income of a consumer is $40, the price of A is $8, and the price of B is $4. If the quantity of A is measured vertically, then the slope of the budget line is

Accepted Answer

A)  −0.5. 
B)  −1.0. 
C)  −2.0. 
D)  −2.5. 
A)  −0.5. 
B)  −1.0. 
C)  −2.0. 
D)  −2.5.

Question 15

When DVD players start becoming obsolete then, to potential thieves, the

Accepted Answer

A)  marginal utility of stealing them increases. 
B)  marginal utility of stealing them decreases. 
C)  marginal cost of stealing them increases. 
D)  marginal cost of stealing them decreases. 
A)  marginal utility of stealing them increases. 
B)  marginal utility of stealing them decreases. 
C)  marginal cost of stealing them increases. 
D)  marginal cost of stealing them decreases.

Question 16

When diminishing marginal utility starts happening as a person consumes more and more of a given good,

Accepted Answer

A)  total utility will diminish. 
B)  total utility will increase at a diminishing rate. 
C)  marginal utility will become negative. 
D)  total utility will become negative. 
A)  total utility will diminish. 
B)  total utility will increase at a diminishing rate. 
C)  marginal utility will become negative. 
D)  total utility will become negative.

Exam 7: Utility Maximization

(Last Word) Most people do not steal, because

The satisfaction or pleasure one gets from consuming a good or service is called

Which of the following statements is correct?

The shift of the budget line from cd to ab in the figure is consistent with

The price of chicken = $5, while the price of pork = $9. If, after spending her entire budget, the consumer has MU of chicken = 6, while the MU of pork = 12, then the consumer should have bought more chicken and less pork in order to increase her total utility.

Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2, respectively, and that the consumer's income is $18. What quantities of X and Y should be purchased to maximize utility?

Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2, respectively, and that the consumer's income is $18. Which of the following represents the demand schedule for X?

The theory of consumer behavior assumes that

The slope of a budget line reflects the

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18. How many units of the two products will the consumer buy to get maximum utility?

If consumers are convinced by ads that Brand X has a lot more value than they originally thought, then the MU/P of X will decrease.

The consumer demand curve for a product is downsloping because marginal utility is constant when price declines.

The income of a consumer is $40, the price of A is $8, and the price of B is $4. If the quantity of A is measured vertically, then the slope of the budget line is

When DVD players start becoming obsolete then, to potential thieves, the

When diminishing marginal utility starts happening as a person consumes more and more of a given good,

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

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The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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