Question 1

Algebraically, the budget constraint for two goods would be PₓQₓ + PᵧQᵧ is:

Accepted Answer

A)  equal to B. 
B)  less than B. 
C)  greater than B. 
D)  less than or equal to B. 
A)  equal to B. 
B)  less than B. 
C)  greater than B. 
D)  less than or equal to B.

Question 2

The marginal utility of a good must be increased by anything that increases total utility.

Accepted Answer

A) True 
 B)False

Question 3

According to the Case in Point on the discovery of an upward-sloping demand curve, an example of a Giffen good:

Accepted Answer

A)  is rice for poor consumers in southern China. 
B)  potatoes during the Irish famine. 
C)  tortillas for poor consumers in Mexico. 
D)  would be all inferior goods. 
A)  is rice for poor consumers in southern China. 
B)  potatoes during the Irish famine. 
C)  tortillas for poor consumers in Mexico. 
D)  would be all inferior goods.

Question 4

Suppose a consumer really likes rutabagas and likes broccoli fairly well.Suppose the prices of both goods are $0.60 per pound and that the consumer is maximizing utility, consuming 5 pounds of rutabagas and 1/2 pound of broccoli per month.We can conclude that:

Accepted Answer

A)  the marginal utilities of both goods are the same. 
B)  the marginal utility of rutabagas is greater than the marginal utility of broccoli. 
C)  the marginal utility of broccoli is greater than the marginal utility of rutabagas. 
D)  the marginal utility of both goods is zero. 
A)  the marginal utilities of both goods are the same. 
B)  the marginal utility of rutabagas is greater than the marginal utility of broccoli. 
C)  the marginal utility of broccoli is greater than the marginal utility of rutabagas. 
D)  the marginal utility of both goods is zero.

Question 5

If the marginal utility from consuming a good is less than zero, total utility must be falling.

Accepted Answer

A) True 
 B)False

Question 6

Assume that the total utilities for the fifth and sixth units of a good consumed are 83 and 97, respectively.The marginal utility for the sixth unit is:

Accepted Answer

A)  -14. 
B)  14. 
C)  83. 
D)  97. 
A)  -14. 
B)  14. 
C)  83. 
D)  97.

Question 7

In the case of an inferior good, _______ falls when income _______ .

Accepted Answer

A)  supply; rises 
B)  demand; rises 
C)  demand; falls 
D)  supply; falls 
A)  supply; rises 
B)  demand; rises 
C)  demand; falls 
D)  supply; falls

Question 8

Which of the following is true regarding a budget constraint?

Accepted Answer

A)  The budget constraint indicates that consumers desire more income. 
B)  The budget constraint indicates that there are limits on the consumption possibilities for a consumer. 
C)  The budget constraint is based on some, but not all of the prices for goods that consumers may want to buy. 
D)  All of the above statements describe the budget constraint. 
A)  The budget constraint indicates that consumers desire more income. 
B)  The budget constraint indicates that there are limits on the consumption possibilities for a consumer. 
C)  The budget constraint is based on some, but not all of the prices for goods that consumers may want to buy. 
D)  All of the above statements describe the budget constraint.

Question 9

If the first four units of a good consumed have marginal utilities of 60, 50, 40, and 30, respectively, this trend is an indication of the:

Accepted Answer

A)  maximization of utility. 
B)  law of diminishing marginal utility. 
C)  law of consumer equilibrium. 
D)  minimization of utility. 
A)  maximization of utility. 
B)  law of diminishing marginal utility. 
C)  law of consumer equilibrium. 
D)  minimization of utility.

Question 10

Evaluate the following statement: "The substitution and income effects will lead to a fall in the consumption of a normal good when the price of the good falls." Discuss why you agree or disagree.

Accepted Answer

I agree with the statement that the subs

Question 11

Use the following to answer question(s): Consumer Equilibrium 3
  
-(Exhibit: Consumer Equilibrium 3) Assume that you are consuming the combination of goods at point G.Given budget constraint FL, utility can:

Accepted Answer

A)  be increased by consuming more of good A and less of good B. 
B)  be increased by consuming less of good A and more of good B. 
C)  be increased by consuming more of both goods. 
D)  not be increased. 
A)  be increased by consuming more of good A and less of good B. 
B)  be increased by consuming less of good A and more of good B. 
C)  be increased by consuming more of both goods. 
D)  not be increased.

Question 12

Use the following to answer question(s): Consumer Equilibrium 3
  
-(Exhibit: Consumer Equilibrium 3) Assume that you are consuming the combination of goods at point K.Given budget constraint FL, utility can:

Accepted Answer

A)  be increased by consuming more of good A and less of good B. 
B)  be increased by consuming less of good A and more of good B. 
C)  be increased by consuming more of both goods. 
D)  not be increased. 
A)  be increased by consuming more of good A and less of good B. 
B)  be increased by consuming less of good A and more of good B. 
C)  be increased by consuming more of both goods. 
D)  not be increased.

Question 13

If a consumer purchases a combination of commodities a and b such that MUₐ/Pₐ = 40 and MUb/Pb = 60, to maximize utility, the consumer should buy:

Accepted Answer

A)  less of both a and b. 
B)  less of a and more of b. 
C)  more of both a and b. 
D)  more of a and less of b. 
A)  less of both a and b. 
B)  less of a and more of b. 
C)  more of both a and b. 
D)  more of a and less of b.

Question 14

Use the following to answer question(s): Consumer Equilibrium 2
  
-(Exhibit: Consumer Equilibrium 2) Given the budget constraint, a level of total utility not attainable is at point:

Accepted Answer

A)  G. 
B)  K. 
C)  I. 
D)  J. 
A)  G. 
B)  K. 
C)  I. 
D)  J.

Question 15

Greater levels of utility are achieved:

Accepted Answer

A)  on higher indifference curves. 
B)  on lower indifference curves. 
C)  by moving up to the left on a given indifference curve. 
D)  by moving down to the right on a given indifference curve. 
A)  on higher indifference curves. 
B)  on lower indifference curves. 
C)  by moving up to the left on a given indifference curve. 
D)  by moving down to the right on a given indifference curve.

Question 16

Higher indifference curves have greater levels of satisfaction.

Accepted Answer

A) True 
 B)False

Question 17

The term utility is used by economists in describing consumer preferences.

Accepted Answer

A) True 
 B)False

Question 18

The utility-maximization condition for two goods is achieved by equating the:

Accepted Answer

A)  prices of both goods. 
B)  marginal utilities of both goods. 
C)  ratios of total utility to price of both goods. 
D)  ratios of marginal utility to price of both goods. 
A)  prices of both goods. 
B)  marginal utilities of both goods. 
C)  ratios of total utility to price of both goods. 
D)  ratios of marginal utility to price of both goods.

Question 19

Michael Kawamura, a careful maximizer of utility, consumes only two goods, peanut butter and ice cream.He had just achieved the utility-maximizing solution in his consumption of the two goods when the price of peanut butter fell.As he adjusts to this event he will consume:

Accepted Answer

A)  more peanut butter and less ice cream. 
B)  less peanut butter and less ice cream. 
C)  more peanut butter and more ice cream. 
D)  less peanut butter and more ice cream. 
A)  more peanut butter and less ice cream. 
B)  less peanut butter and less ice cream. 
C)  more peanut butter and more ice cream. 
D)  less peanut butter and more ice cream.

Question 20

Given the consumer's income, a decrease in the prices of both commodities X and Y will shift the budget line for those goods to the right.

Accepted Answer

A) True 
 B)False

Algebraically, the budget constraint for two goods would be PₓQₓ + PᵧQᵧ is:

The marginal utility of a good must be increased by anything that increases total utility.

According to the Case in Point on the discovery of an upward-sloping demand curve, an example of a Giffen good:

Suppose a consumer really likes rutabagas and likes broccoli fairly well.Suppose the prices of both goods are $0.60 per pound and that the consumer is maximizing utility, consuming 5 pounds of rutabagas and 1/2 pound of broccoli per month.We can conclude that:

If the marginal utility from consuming a good is less than zero, total utility must be falling.

Assume that the total utilities for the fifth and sixth units of a good consumed are 83 and 97, respectively.The marginal utility for the sixth unit is:

In the case of an inferior good, _ falls when income _ .

Which of the following is true regarding a budget constraint?

If the first four units of a good consumed have marginal utilities of 60, 50, 40, and 30, respectively, this trend is an indication of the:

Evaluate the following statement: "The substitution and income effects will lead to a fall in the consumption of a normal good when the price of the good falls." Discuss why you agree or disagree.

Use the following to answer question(s): Consumer Equilibrium 3 -(Exhibit: Consumer Equilibrium 3) Assume that you are consuming the combination of goods at point G.Given budget constraint FL, utility can:

Use the following to answer question(s): Consumer Equilibrium 3 -(Exhibit: Consumer Equilibrium 3) Assume that you are consuming the combination of goods at point K.Given budget constraint FL, utility can:

If a consumer purchases a combination of commodities a and b such that MUₐ/Pₐ = 40 and MUb/Pb = 60, to maximize utility, the consumer should buy:

Use the following to answer question(s): Consumer Equilibrium 2 -(Exhibit: Consumer Equilibrium 2) Given the budget constraint, a level of total utility not attainable is at point:

Greater levels of utility are achieved:

Higher indifference curves have greater levels of satisfaction.

The term utility is used by economists in describing consumer preferences.

The utility-maximization condition for two goods is achieved by equating the:

Michael Kawamura, a careful maximizer of utility, consumes only two goods, peanut butter and ice cream.He had just achieved the utility-maximizing solution in his consumption of the two goods when the price of peanut butter fell.As he adjusts to this event he will consume:

Given the consumer's income, a decrease in the prices of both commodities X and Y will shift the budget line for those goods to the right.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 7: The Analysis of Consumer Choice

Algebraically, the budget constraint for two goods would be PₓQₓ + PᵧQᵧ is:

The marginal utility of a good must be increased by anything that increases total utility.

According to the Case in Point on the discovery of an upward-sloping demand curve, an example of a Giffen good:

Suppose a consumer really likes rutabagas and likes broccoli fairly well.Suppose the prices of both goods are $0.60 per pound and that the consumer is maximizing utility, consuming 5 pounds of rutabagas and 1/2 pound of broccoli per month.We can conclude that:

If the marginal utility from consuming a good is less than zero, total utility must be falling.

Assume that the total utilities for the fifth and sixth units of a good consumed are 83 and 97, respectively.The marginal utility for the sixth unit is:

In the case of an inferior good, _______ falls when income _______ .

Which of the following is true regarding a budget constraint?

If the first four units of a good consumed have marginal utilities of 60, 50, 40, and 30, respectively, this trend is an indication of the:

Evaluate the following statement: "The substitution and income effects will lead to a fall in the consumption of a normal good when the price of the good falls." Discuss why you agree or disagree.

Use the following to answer question(s): Consumer Equilibrium 3 -(Exhibit: Consumer Equilibrium 3) Assume that you are consuming the combination of goods at point G.Given budget constraint FL, utility can:

Use the following to answer question(s): Consumer Equilibrium 3 -(Exhibit: Consumer Equilibrium 3) Assume that you are consuming the combination of goods at point K.Given budget constraint FL, utility can:

If a consumer purchases a combination of commodities a and b such that MUₐ/Pₐ = 40 and MUb/Pb = 60, to maximize utility, the consumer should buy:

Use the following to answer question(s): Consumer Equilibrium 2 -(Exhibit: Consumer Equilibrium 2) Given the budget constraint, a level of total utility not attainable is at point:

Greater levels of utility are achieved:

Higher indifference curves have greater levels of satisfaction.

The term utility is used by economists in describing consumer preferences.

The utility-maximization condition for two goods is achieved by equating the:

Michael Kawamura, a careful maximizer of utility, consumes only two goods, peanut butter and ice cream.He had just achieved the utility-maximizing solution in his consumption of the two goods when the price of peanut butter fell.As he adjusts to this event he will consume:

Given the consumer's income, a decrease in the prices of both commodities X and Y will shift the budget line for those goods to the right.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

In the case of an inferior good, _ falls when income _ .