Question 1

Most economists contend that:

Accepted Answer

A)  noncash gifts are more efficient than cash gifts. 
B)  noncash gifts are less efficient than cash gifts. 
C)  noncash and cash gifts are equally efficient. 
D)  government can assess consumer preferences better than can consumers themselves. 
A)  noncash gifts are more efficient than cash gifts. 
B)  noncash gifts are less efficient than cash gifts. 
C)  noncash and cash gifts are equally efficient. 
D)  government can assess consumer preferences better than can consumers themselves. B

Question 2

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

Accepted Answer

A) True 
 B)False  False

Question 3

Noncash gift-giving involves value loss when the marginal utility of the gift to the receiver is less than the product price.

Accepted Answer

A) True 
 B)False  True

Question 4

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. $\begin{array}{c}
\begin{array}{c}
\text {Units}\
\underline{\text {of  X }}\
1\
2\
3\
4\
5\
6
\end{array}
\begin{array}{c}
\text {Marginal}\
\underline{\text {Utility, X}}\
20\
16\
12\
8\
6\
4
\end{array}
\begin{array}{c}
\text {Units}\
\underline{\text {of  Y }}\
1\
2\
3\
4\
5\
6
\end{array}
\begin{array}{c}
\text {Marginal}\
\underline{\text {Utility, Y}}\
16\
14\
12\
10\
8\
6
\end{array}
\end{array}$
 Refer to the data.What level of total utility will the utility-maximizing consumer realize?

Accepted Answer

A)  96 utils. 
B)  108 utils. 
C)  72 utils. 
D)  142 utils. 
A)  96 utils. 
B)  108 utils. 
C)  72 utils. 
D)  142 utils.

Question 5

Answer the question on the basis of the following two schedules,which show the amounts of additional satisfaction (marginal utility)that a consumer would get from successive quantities of products J and K. $\begin{array}{c}
\begin{array}{ccc}
Unit&&\
\text { of } J & & M U_{j} \
\hline
1 & & 56 \
2 & & 48 \
3 & & 32 \
4 & & 24 \
5 & & 20 \
6 & & 16 \
7 & & 12
\end{array}
\begin{array}{ccc}
Unit&&\
\text { of } K & & M U_{k} \
\hline
1 & & 32 \
2 & & 28\
3 & & 24\
4 & & 20\
5 & & 12\
6 & & 10\
7 & & 8
\end{array}
\end{array}$ Refer to the data.If the consumer's money income were cut from $52 to $28,and the prices of J and K remain at $8 and $4 respectively,she would maximize her satisfaction by purchasing:

Accepted Answer

A)  3 units of J and 3 units of K. 
B)  1 unit of J and 3 units of K. 
C)  4 units of J and 1 unit of K. 
D)  2 units of J and 3 units of K. 
A)  3 units of J and 3 units of K. 
B)  1 unit of J and 3 units of K. 
C)  4 units of J and 1 unit of K. 
D)  2 units of J and 3 units of K.

Question 6

The law of diminishing marginal utility states that:

Accepted Answer

A)  total utility is maximized when consumers obtain the same amount of utility per unit of each product consumed. 
B)  beyond some point,additional units of a product will yield less and less extra satisfaction to a consumer. 
C)  price must be lowered to induce firms to supply more of a product. 
D)  it will take larger and larger amounts of resources beyond some point to produce successive units of a product. 
A)  total utility is maximized when consumers obtain the same amount of utility per unit of each product consumed. 
B)  beyond some point,additional units of a product will yield less and less extra satisfaction to a consumer. 
C)  price must be lowered to induce firms to supply more of a product. 
D)  it will take larger and larger amounts of resources beyond some point to produce successive units of a product.

Question 7

Each point on a single indifference curve reflects the same level of total utility for a consumer.

Accepted Answer

A) True 
 B)False

Question 8

The limited money income of consumers results in a so-called budget constraint.

Accepted Answer

A) True 
 B)False

Question 9

Assume initially that the price of X (measured on the horizontal axis)is $9 and the price of Y (measured on the vertical axis)is $4.If the price of X now declines to $6,the budget line will:

Accepted Answer

A)  be unaffected. 
B)  shift outward on the vertical axis. 
C)  shift inward on the horizontal axis. 
D)  shift outward on the horizontal axis. 
A)  be unaffected. 
B)  shift outward on the vertical axis. 
C)  shift inward on the horizontal axis. 
D)  shift outward on the horizontal axis.

Question 10

Mrs.Arnold is spending all her money income by buying bottles of soda and bags of pretzels in such amounts that the marginal utility of the last bottle is 60 utils and the marginal utility of the last bag is 30 utils.The prices of soda and pretzels are $.60 per bottle and $.40 per bag respectively.It can be concluded that:

Accepted Answer

A)  the two commodities are substitute goods. 
B)  Mrs.Arnold should spend more on pretzels and less on soda. 
C)  Mrs.Arnold should spend more on soda and less on pretzels. 
D)  Mrs.Arnold is buying soda and pretzels in the utility-maximizing amounts. 
A)  the two commodities are substitute goods. 
B)  Mrs.Arnold should spend more on pretzels and less on soda. 
C)  Mrs.Arnold should spend more on soda and less on pretzels. 
D)  Mrs.Arnold is buying soda and pretzels in the utility-maximizing amounts.

Question 11

Which of the following has been a significant factor in the ability of iPads to compete effectively against laptop and desktop computers?

Accepted Answer

A)  iPads are often superior to laptop and desktop computers in their ability to create content. 
B)  A scarcity of production capacity has curtailed the manufacture of laptop and desktop computers. 
C)  Many consumers perceive that iPads are superior to laptops and desktop computers for the consumption of digital media. 
D)  The prices of laptops and desktop computers have increased dramatically. 
A)  iPads are often superior to laptop and desktop computers in their ability to create content. 
B)  A scarcity of production capacity has curtailed the manufacture of laptop and desktop computers. 
C)  Many consumers perceive that iPads are superior to laptops and desktop computers for the consumption of digital media. 
D)  The prices of laptops and desktop computers have increased dramatically.

Question 12

Assume a diagram in which a budget line is imposed on an indifference map.A consumer will maximize her utility:

Accepted Answer

A)  at any point where the budget line and an indifference curve intersect. 
B)  at either point where the budget line intersects the horizontal and vertical axes. 
C)  where the budget line is tangent to an indifference curve. 
D)  where the ratio of the two product prices equals the reciprocal of the consumer's income. 
A)  at any point where the budget line and an indifference curve intersect. 
B)  at either point where the budget line intersects the horizontal and vertical axes. 
C)  where the budget line is tangent to an indifference curve. 
D)  where the ratio of the two product prices equals the reciprocal of the consumer's income.

Question 13

The marginal rate of substitution measures the:

Accepted Answer

A)  magnitude of the substitution effect. 
B)  total utility received by a consumer when equilibrium is achieved. 
C)  extra utility that a consumer derives from successive units of a product. 
D)  consumer's willingness to substitute one product for another so that total utility will remain constant. 
A)  magnitude of the substitution effect. 
B)  total utility received by a consumer when equilibrium is achieved. 
C)  extra utility that a consumer derives from successive units of a product. 
D)  consumer's willingness to substitute one product for another so that total utility will remain constant.

Question 14

Which of the following is correct?

Accepted Answer

A)  Budget lines are linear and upsloping;indifference curves are downsloping and concave to the origin. 
B)  Budget lines are linear and downsloping;indifference curves are downsloping and concave to the origin. 
C)  Budget lines are linear and downsloping;indifference curves are downsloping and convex to the origin. 
D)  Budget lines are downsloping and convex to the origin;indifference curves are linear and downsloping. 
A)  Budget lines are linear and upsloping;indifference curves are downsloping and concave to the origin. 
B)  Budget lines are linear and downsloping;indifference curves are downsloping and concave to the origin. 
C)  Budget lines are linear and downsloping;indifference curves are downsloping and convex to the origin. 
D)  Budget lines are downsloping and convex to the origin;indifference curves are linear and downsloping.

Question 15

When a consumer is maximizing total utility,he or she cannot increase total utility by reallocating expenditures among different products.

Accepted Answer

A) True 
 B)False

Question 16

Mary says,"You would have to pay me $50 to attend that pro wrestling event." For Mary,the marginal utility of the event is:

Accepted Answer

A)  zero. 
B)  positive,but declines rapidly. 
C)  negative. 
D)  positive,but less than the ticket price. 
A)  zero. 
B)  positive,but declines rapidly. 
C)  negative. 
D)  positive,but less than the ticket price.

Question 17

(Last Word)Theft and burglary:

Accepted Answer

A)  can be viewed as attempts to maximize utility,given certain marginal costs and marginal benefits. 
B)  are examples of irrational behavior. 
C)  are applications of the law of increasing opportunity cost. 
D)  are less economically rational than crimes of passion and violence. 
A)  can be viewed as attempts to maximize utility,given certain marginal costs and marginal benefits. 
B)  are examples of irrational behavior. 
C)  are applications of the law of increasing opportunity cost. 
D)  are less economically rational than crimes of passion and violence.

Question 18

A rational consumer will try to achieve the highest indifference curve that his or her income will allow.

Accepted Answer

A) True 
 B)False

Question 19

When a consumer shifts purchases from product X to product Y,the marginal utility of:

Accepted Answer

A)  X falls and the marginal utility of Y rises. 
B)  X rises and the marginal utility of Y falls. 
C)  both X and Y rises. 
D)  both X and Y falls. 
A)  X falls and the marginal utility of Y rises. 
B)  X rises and the marginal utility of Y falls. 
C)  both X and Y rises. 
D)  both X and Y falls.

Question 20

Total utility may be determined by:

Accepted Answer

A)  multiplying the marginal utility of the last unit consumed by the number of units consumed. 
B)  summing the marginal utilities of each unit consumed. 
C)  multiplying the marginal utility of the last unit consumed by product price. 
D)  multiplying the marginal utility of the first unit consumed by the number of units consumed. 
A)  multiplying the marginal utility of the last unit consumed by the number of units consumed. 
B)  summing the marginal utilities of each unit consumed. 
C)  multiplying the marginal utility of the last unit consumed by product price. 
D)  multiplying the marginal utility of the first unit consumed by the number of units consumed.

Most economists contend that:

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

Noncash gift-giving involves value loss when the marginal utility of the gift to the receiver is less than the product price.

The law of diminishing marginal utility states that:

Each point on a single indifference curve reflects the same level of total utility for a consumer.

The limited money income of consumers results in a so-called budget constraint.

Assume initially that the price of X (measured on the horizontal axis)is $9 and the price of Y (measured on the vertical axis)is $4.If the price of X now declines to $6,the budget line will:

Which of the following has been a significant factor in the ability of iPads to compete effectively against laptop and desktop computers?

Assume a diagram in which a budget line is imposed on an indifference map.A consumer will maximize her utility:

The marginal rate of substitution measures the:

Which of the following is correct?

When a consumer is maximizing total utility,he or she cannot increase total utility by reallocating expenditures among different products.

Mary says,"You would have to pay me $50 to attend that pro wrestling event." For Mary,the marginal utility of the event is:

(Last Word)Theft and burglary:

A rational consumer will try to achieve the highest indifference curve that his or her income will allow.

When a consumer shifts purchases from product X to product Y,the marginal utility of:

Total utility may be determined by:

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

Filters

Exam 7: Utility Maximization

Most economists contend that:

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

Noncash gift-giving involves value loss when the marginal utility of the gift to the receiver is less than the product price.

The law of diminishing marginal utility states that:

Each point on a single indifference curve reflects the same level of total utility for a consumer.

The limited money income of consumers results in a so-called budget constraint.

Assume initially that the price of X (measured on the horizontal axis)is $9 and the price of Y (measured on the vertical axis)is $4.If the price of X now declines to $6,the budget line will:

Which of the following has been a significant factor in the ability of iPads to compete effectively against laptop and desktop computers?

Assume a diagram in which a budget line is imposed on an indifference map.A consumer will maximize her utility:

The marginal rate of substitution measures the:

Which of the following is correct?

When a consumer is maximizing total utility,he or she cannot increase total utility by reallocating expenditures among different products.

Mary says,"You would have to pay me $50 to attend that pro wrestling event." For Mary,the marginal utility of the event is:

(Last Word)Theft and burglary:

A rational consumer will try to achieve the highest indifference curve that his or her income will allow.

When a consumer shifts purchases from product X to product Y,the marginal utility of:

Total utility may be determined by:

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

Filters