Question 1

In using the concept of marginal utility as an argument for a downward-sloping demand curve, economists:

Accepted Answer

A)  are ignoring the law of diminishing marginal utility. 
B)  invoke the law of diminishing marginal utility. 
C)  are denying the law of diminishing marginal utility. 
D)  are doing none of the above. 
A)  are ignoring the law of diminishing marginal utility. 
B)  invoke the law of diminishing marginal utility. 
C)  are denying the law of diminishing marginal utility. 
D)  are doing none of the above.

Question 2

In terms of indifference curves, a demand curve is generated by changes in:

Accepted Answer

A)  income. 
B)  utility. 
C)  the price of one good. 
D)  the price of both goods simultaneously. 
A)  income. 
B)  utility. 
C)  the price of one good. 
D)  the price of both goods simultaneously.

Question 3

An indifference curve shows combinations of two goods that yield:

Accepted Answer

A)  equal prices. 
B)  equal money income. 
C)  equal satisfaction. 
D)  increasing prices. 
A)  equal prices. 
B)  equal money income. 
C)  equal satisfaction. 
D)  increasing prices.

Question 4

Use the following to answer question(s):  
-(Exhibit: Utility) The marginal utility for the fifth unit is:

Accepted Answer

A)  15. 
B)  10. 
C)  5. 
D)  0. 
A)  15. 
B)  10. 
C)  5. 
D)  0.

Question 5

Use the following to answer question(s):  
-(Exhibit: Utility) The marginal utility for the second unit is:

Accepted Answer

A)  35. 
B)  15. 
C)  10. 
D)  5. 
A)  35. 
B)  15. 
C)  10. 
D)  5.

Question 6

Use the following for questions 61-69.
    
-(Exhibit: Consumer Equilibrium 1) Assume that the price of good X is $1 per unit and the price of good Y is $2 per unit, and you consume 4 units of good X and 2 units of good Y.To maximize utility, assuming that the goods are divisible, you would consume:

Accepted Answer

A)  less of both X and Y. 
B)  more of both X and Y. 
C)  less of X and more of Y. 
D)  more of X and less of Y. 
A)  less of both X and Y. 
B)  more of both X and Y. 
C)  less of X and more of Y. 
D)  more of X and less of Y.

Question 7

Use the following for questions 23-27.
Exhibit: Total Utility and Marginal Utility from Consumption of Good A
  
-(Exhibit: Total Utility and Marginal Utility from Consumption of Good A. If the total utility curve of good A is plotted on a graph, the slope of TU between 3 units consumed and 4 units consumed is:

Accepted Answer

A)  1. 
B)  2. 
C)  3. 
D)  4. 
A)  1. 
B)  2. 
C)  3. 
D)  4.

Question 8

Use the following to answer question(s): Consumer Equilibrium 2
  
-(Exhibit: Consumer Equilibrium 2) Assume the consumer is currently operating at point G.Given the budget constraint shown, the consumer would be able to realize more total utility by choosing point ________ , all other things held equal.

Accepted Answer

A)  J 
B)  K 
C)  I 
D)  H 
A)  J 
B)  K 
C)  I 
D)  H

Question 9

The law of diminishing marginal utility indicates that the marginal utility curve eventually becomes:

Accepted Answer

A)  vertical. 
B)  U-shaped. 
C)  upward sloping. 
D)  downward sloping. 
A)  vertical. 
B)  U-shaped. 
C)  upward sloping. 
D)  downward sloping.

Question 10

How much utility is gained by spending an additional dollar on good X?

Accepted Answer

A)  It is the average utility of good X divided by the price of good X. 
B)  MUₓ/Pₓ 
C)  TUₓ/Pₓ 
D)  None of the above are correct. 
A)  It is the average utility of good X divided by the price of good X. 
B)  MUₓ/Pₓ 
C)  TUₓ/Pₓ 
D)  None of the above are correct.

Question 11

The ability of a good to satisfy a want refers to its:

Accepted Answer

A)  utility. 
B)  usefulness. 
C)  worthiness. 
D)  necessity. 
A)  utility. 
B)  usefulness. 
C)  worthiness. 
D)  necessity.

Question 12

In his book, The Wealth of Nations, Adam Smith discussed the "paradox" of value.He pointed out that nothing is more useful than water, but it is sold for a low price.Diamonds, on the other hand, have very little useful value but command a high price.Use the concepts of total and marginal utility to explain this paradox of value.

Accepted Answer

Adam Smith's "paradox" of value can be e

Question 13

In generating a demand curve using indifference curve analysis, it is assumed that:

Accepted Answer

A)  only preferences vary. 
B)  money income remains constant. 
C)  prices remain constant. 
D)  the level of utility remains constant. 
A)  only preferences vary. 
B)  money income remains constant. 
C)  prices remain constant. 
D)  the level of utility remains constant.

Question 14

Following an income-compensated price change, you decide to increase the quantity of pizza purchased each month when the price decreases and therefore purchase fewer hamburgers.This is an indication of the:

Accepted Answer

A)  output effect. 
B)  income effect. 
C)  marginal effect. 
D)  substitution effect. 
A)  output effect. 
B)  income effect. 
C)  marginal effect. 
D)  substitution effect.

Question 15

In prisoner of war camps, as described in the Case in Point, economists would expect to find:

Accepted Answer

A)  the law of diminishing marginal doesn't hold. 
B)  trade prohibited by the lack of money to facilitate exchange. 
C)  that each prisoner consumes all the rations given to them by their captors. 
D)  none of the above. 
A)  the law of diminishing marginal doesn't hold. 
B)  trade prohibited by the lack of money to facilitate exchange. 
C)  that each prisoner consumes all the rations given to them by their captors. 
D)  none of the above.

Question 16

Assume that the total utilities corresponding to the first five units of a product consumed are 14, 20, 25, 29, and 32, respectively.The marginal utility of the third unit is:

Accepted Answer

A)  5. 
B)  6. 
C)  20. 
D)  25. 
A)  5. 
B)  6. 
C)  20. 
D)  25.

Question 17

When the income effect moves in the same direction as the _______ effect, a greater income effect contributes to a _______ price elasticity of demand.

Accepted Answer

A)  substitution; greater 
B)  substitution; smaller 
C)  demand; greater 
D)  budget; smaller 
A)  substitution; greater 
B)  substitution; smaller 
C)  demand; greater 
D)  budget; smaller

Question 18

The utility of a good simply indicates its usefulness.

Accepted Answer

A) True 
 B)False

Question 19

The utility of a good is determined by how much _______ a particular consumer obtains from it.

Accepted Answer

A)  satisfaction 
B)  usefulness 
C)  cost 
D)  need fulfillment 
A)  satisfaction 
B)  usefulness 
C)  cost 
D)  need fulfillment

Question 20

The law of diminishing marginal utility exists for the first three units of a good if they have marginal utilities, respectively, of:

Accepted Answer

A)  8, 9, 10. 
B)  9, 8, 10. 
C)  9, 10, 8. 
D)  10, 9, 8. 
A)  8, 9, 10. 
B)  9, 8, 10. 
C)  9, 10, 8. 
D)  10, 9, 8.

In using the concept of marginal utility as an argument for a downward-sloping demand curve, economists:

In terms of indifference curves, a demand curve is generated by changes in:

An indifference curve shows combinations of two goods that yield:

Use the following to answer question(s): -(Exhibit: Utility) The marginal utility for the fifth unit is:

Use the following to answer question(s): -(Exhibit: Utility) The marginal utility for the second unit is:

Use the following for questions 61-69. -(Exhibit: Consumer Equilibrium 1) Assume that the price of good X is $1 per unit and the price of good Y is $2 per unit, and you consume 4 units of good X and 2 units of good Y.To maximize utility, assuming that the goods are divisible, you would consume:

The law of diminishing marginal utility indicates that the marginal utility curve eventually becomes:

How much utility is gained by spending an additional dollar on good X?

The ability of a good to satisfy a want refers to its:

In generating a demand curve using indifference curve analysis, it is assumed that:

Following an income-compensated price change, you decide to increase the quantity of pizza purchased each month when the price decreases and therefore purchase fewer hamburgers.This is an indication of the:

In prisoner of war camps, as described in the Case in Point, economists would expect to find:

Assume that the total utilities corresponding to the first five units of a product consumed are 14, 20, 25, 29, and 32, respectively.The marginal utility of the third unit is:

When the income effect moves in the same direction as the _ effect, a greater income effect contributes to a _ price elasticity of demand.

The utility of a good simply indicates its usefulness.

The utility of a good is determined by how much _______ a particular consumer obtains from it.

The law of diminishing marginal utility exists for the first three units of a good if they have marginal utilities, respectively, of:

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

In using the concept of marginal utility as an argument for a downward-sloping demand curve, economists:

In terms of indifference curves, a demand curve is generated by changes in:

An indifference curve shows combinations of two goods that yield:

Use the following to answer question(s): -(Exhibit: Utility) The marginal utility for the fifth unit is:

Use the following to answer question(s): -(Exhibit: Utility) The marginal utility for the second unit is:

Use the following for questions 61-69. -(Exhibit: Consumer Equilibrium 1) Assume that the price of good X is $1 per unit and the price of good Y is $2 per unit, and you consume 4 units of good X and 2 units of good Y.To maximize utility, assuming that the goods are divisible, you would consume:

The law of diminishing marginal utility indicates that the marginal utility curve eventually becomes:

How much utility is gained by spending an additional dollar on good X?

The ability of a good to satisfy a want refers to its:

In generating a demand curve using indifference curve analysis, it is assumed that:

Following an income-compensated price change, you decide to increase the quantity of pizza purchased each month when the price decreases and therefore purchase fewer hamburgers.This is an indication of the:

In prisoner of war camps, as described in the Case in Point, economists would expect to find:

Assume that the total utilities corresponding to the first five units of a product consumed are 14, 20, 25, 29, and 32, respectively.The marginal utility of the third unit is:

When the income effect moves in the same direction as the _______ effect, a greater income effect contributes to a _______ price elasticity of demand.

The utility of a good simply indicates its usefulness.

The utility of a good is determined by how much _______ a particular consumer obtains from it.

The law of diminishing marginal utility exists for the first three units of a good if they have marginal utilities, respectively, of:

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

When the income effect moves in the same direction as the _ effect, a greater income effect contributes to a _ price elasticity of demand.