Question 1

In drawing a particular budget line,money income and the prices of the two products are fixed.

Accepted Answer

A) True 
 B)False

Question 2

Indifference analysis assumes that utility is numerically measurable.

Accepted Answer

A) True 
 B)False

Question 3

The diamond-water paradox occurs because:

Accepted Answer

A)  the price of a product is related to its total utility,not its marginal utility. 
B)  the price of a product is related to its marginal utility,not its total utility. 
C)  water is,in fact,very scarce in certain regions of the world. 
D)  diamonds are more useful than water. 
A)  the price of a product is related to its total utility,not its marginal utility. 
B)  the price of a product is related to its marginal utility,not its total utility. 
C)  water is,in fact,very scarce in certain regions of the world. 
D)  diamonds are more useful than water.

Question 4

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 has money income of $52 and the prices of J and K are $8 and $4 respectively,the consumer will maximize her utility by purchasing:

Accepted Answer

A)  2 units of J and 7 units of K. 
B)  5 units of J and 5 units of K. 
C)  4 units of J and 5 units of K. 
D)  6 units of J and 3 units of K. 
A)  2 units of J and 7 units of K. 
B)  5 units of J and 5 units of K. 
C)  4 units of J and 5 units of K. 
D)  6 units of J and 3 units of K.

Question 5

An indifference curve:

Accepted Answer

A)  may be either upsloping or downsloping,depending on whether the two products are complements or substitutes. 
B)  is downsloping and convex to the origin. 
C)  is upsloping and has a constant slope. 
D)  is downsloping and concave to the origin. 
A)  may be either upsloping or downsloping,depending on whether the two products are complements or substitutes. 
B)  is downsloping and convex to the origin. 
C)  is upsloping and has a constant slope. 
D)  is downsloping and concave to the origin.

Question 6

Assume you are spending your full budget and purchasing such amounts of X and Y that the marginal utility from the last units consumed is 40 and 20 utils respectively.Assume (a)the prices of X and Y are $8 and $4 respectively; (b)it takes 3 hours to consume a unit of X and 1 hour to consume a unit of Y;and (c)your time is worth $2 per hour.You:

Accepted Answer

A)  should substitute X for Y until the marginal utility per hour is the same for both products. 
B)  are consuming X and Y in the optimal amounts. 
C)  should consume less of Y and more of X. 
D)  should consume less of X and more of Y. 
A)  should substitute X for Y until the marginal utility per hour is the same for both products. 
B)  are consuming X and Y in the optimal amounts. 
C)  should consume less of Y and more of X. 
D)  should consume less of X and more of Y.

In drawing a particular budget line,money income and the prices of the two products are fixed.

Indifference analysis assumes that utility is numerically measurable.

The diamond-water paradox occurs because:

An indifference curve:

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

In drawing a particular budget line,money income and the prices of the two products are fixed.

Indifference analysis assumes that utility is numerically measurable.

The diamond-water paradox occurs because:

An indifference curve:

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