Question 1

Which of the following statements about the law of diminishing marginal utility is correct?

Accepted Answer

A) As more of a given good is consumed,total utility rises at an increasing rate. 
B) As more of a given good is consumed,marginal utility rises at an increasing rate. 
C) As more of a given good is consumed beyond some level,the marginal utility associated with consumption of additional units tends to decline. 
D) As more of a given good is consumed,total utility rises at a decreasing,then increasing rate. 
A) As more of a given good is consumed,total utility rises at an increasing rate. 
B) As more of a given good is consumed,marginal utility rises at an increasing rate. 
C) As more of a given good is consumed beyond some level,the marginal utility associated with consumption of additional units tends to decline. 
D) As more of a given good is consumed,total utility rises at a decreasing,then increasing rate.

Question 2

Dana likes spending time at the museum (M)as well as the park (P).Given that her utility function takes the form U = U (M,P)use the utility theory approach to algebraically show the condition for her optimal consumption choice.

Accepted Answer

The slope of the indifference curve meas

Question 3

Suppose hamburgers are on the horizontal axis and root beer on the vertical axis.You have a budget allowance of $10,and the price of hamburgers is $4 and root beer is $2.The slope of your budget constraint is _____.

Accepted Answer

A) 0.5 
B) 2 
C) 2.5 
D) 5 
A) 0.5 
B) 2 
C) 2.5 
D) 5

Question 4

Consider a graph with hamburger on the X-axis and cheese crackers on the Y-axis.The outbreak of mad cow disease,which will change the price of hamburgers,will:

Accepted Answer

A) not change the slope of the budget line. 
B) lead to a parallel shift of the budget line depending on the change in price. 
C) change the y-intercept of the budget line. 
D) change the x-intercept of the budget line. 
A) not change the slope of the budget line. 
B) lead to a parallel shift of the budget line depending on the change in price. 
C) change the y-intercept of the budget line. 
D) change the x-intercept of the budget line.

Question 5

The assumption of nonsatiation of preferences states that _____.

Accepted Answer

A) a consumer can rank all possible consumption bundles 
B) consumers have consistent preferences 
C) more of a good is always better 
D) consumers are indifferent between identical goods 
A) a consumer can rank all possible consumption bundles 
B) consumers have consistent preferences 
C) more of a good is always better 
D) consumers are indifferent between identical goods

Question 6

The composite-good convention allows indifference curve analysis to analyze preferences for one good against many other goods as long as:

Accepted Answer

A) all the goods belong to the same category. 
B) the prices of the other goods is kept constant. 
C) all the other goods are normal goods. 
D) income levels of consumers remain unchanged. 
A) all the goods belong to the same category. 
B) the prices of the other goods is kept constant. 
C) all the other goods are normal goods. 
D) income levels of consumers remain unchanged.

Question 7

Which of the following will keep a consumer on the same indifference curve even if he wishes to move to a higher one?

Accepted Answer

A) An increase in the consumer's income 
B) An increase in the relative price of one good the consumer purchases,other prices remaining unchanged 
C) A decrease in the relative price of one good the consumer purchases,other prices remaining unchanged 
D) A doubling of the consumer's income and a halving of the prices of all the goods the consumer purchases 
A) An increase in the consumer's income 
B) An increase in the relative price of one good the consumer purchases,other prices remaining unchanged 
C) A decrease in the relative price of one good the consumer purchases,other prices remaining unchanged 
D) A doubling of the consumer's income and a halving of the prices of all the goods the consumer purchases

Question 8

(
A)Peter and Pip both like apples.Parker has one apple that he can give to either Pip or Peter but he thinks it is fair to give it to the person who gets the most utility from the apple.The decision presents Parker with a problem: since he cannot quantify the utility that Peter and Pip each get from the apple,he cannot compare their utilities and make a fair decision.Is Parker right? Explain.

Accepted Answer

Pat is not necessarily correct.Although

Question 9

Which of the following properties is not assumed to hold for a typical consumer's preferences?

Accepted Answer

A) Nonsatiation 
B) Completeness 
C) Transitivity 
D) Neutrality 
A) Nonsatiation 
B) Completeness 
C) Transitivity 
D) Neutrality

Question 10

Which one of the following assumptions about indifference curves is incorrect?

Accepted Answer

A) Consumers usually prefer more to less. 
B) Consumers' preferences are transitive. 
C) The marginal rate of substitution declines along an indifference curve. 
D) Declining MRS implies that indifference curves are concave to the origin. 
A) Consumers usually prefer more to less. 
B) Consumers' preferences are transitive. 
C) The marginal rate of substitution declines along an indifference curve. 
D) Declining MRS implies that indifference curves are concave to the origin.

Question 11

Which of the following best explains the concept of a corner solution?

Accepted Answer

A) Peter likes peanut butter and jelly and consumes both in positive amounts. 
B) Jane prefers more cheese with her bagel than less. 
C) Tony feels that the price of BMW does not justify what he would have to give up to buy one. 
D) Rebecca likes both apples and pears equally and is willing to substitute one apple for one pear. 
A) Peter likes peanut butter and jelly and consumes both in positive amounts. 
B) Jane prefers more cheese with her bagel than less. 
C) Tony feels that the price of BMW does not justify what he would have to give up to buy one. 
D) Rebecca likes both apples and pears equally and is willing to substitute one apple for one pear.

Question 12

The composite good convention:

Accepted Answer

A) allows three-dimensional analysis. 
B) treats many goods as a group. 
C) cannot be employed in a two-dimensional graph. 
D) incorporates goods that have dual uses in the consumer theory. 
A) allows three-dimensional analysis. 
B) treats many goods as a group. 
C) cannot be employed in a two-dimensional graph. 
D) incorporates goods that have dual uses in the consumer theory.

Question 13

At his current consumption of lobster and hamburgers,Ike's marginal utility from eating lobster is 30 and from hamburger is 5.If the price of a hamburger is $3,and the price of lobster is $20,Ike should:

Accepted Answer

A) purchase less lobster and hamburger in equal amounts. 
B) purchase more lobster and fewer hamburgers. 
C) purchase less lobster and more hamburgers. 
D) purchase more lobster and hamburger in equal amounts. 
A) purchase less lobster and hamburger in equal amounts. 
B) purchase more lobster and fewer hamburgers. 
C) purchase less lobster and more hamburgers. 
D) purchase more lobster and hamburger in equal amounts.

Question 14

If the vertical axis measures yams which cost $20 per unit and the horizontal axis measures xylophones which cost $5 a unit,the slope of the budget line is _____.

Accepted Answer

A) -20 
B) -3 
C) -0.25 
D) -0.33 
A) -20 
B) -3 
C) -0.25 
D) -0.33

Question 15

Define a normal good and an inferior good and give an example of each.

Accepted Answer

A normal good is one which a consumer bu

Which of the following statements about the law of diminishing marginal utility is correct?

Dana likes spending time at the museum (M)as well as the park (P).Given that her utility function takes the form U = U (M,P)use the utility theory approach to algebraically show the condition for her optimal consumption choice.

Suppose hamburgers are on the horizontal axis and root beer on the vertical axis.You have a budget allowance of $10,and the price of hamburgers is $4 and root beer is $2.The slope of your budget constraint is _____.

Consider a graph with hamburger on the X-axis and cheese crackers on the Y-axis.The outbreak of mad cow disease,which will change the price of hamburgers,will:

The assumption of nonsatiation of preferences states that _____.

The composite-good convention allows indifference curve analysis to analyze preferences for one good against many other goods as long as:

Which of the following will keep a consumer on the same indifference curve even if he wishes to move to a higher one?

Which of the following properties is not assumed to hold for a typical consumer's preferences?

Which one of the following assumptions about indifference curves is incorrect?

Which of the following best explains the concept of a corner solution?

The composite good convention:

At his current consumption of lobster and hamburgers,Ike's marginal utility from eating lobster is 30 and from hamburger is 5.If the price of a hamburger is $3,and the price of lobster is $20,Ike should:

If the vertical axis measures yams which cost $20 per unit and the horizontal axis measures xylophones which cost $5 a unit,the slope of the budget line is _____.

Define a normal good and an inferior good and give an example of each.

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 1: An Introduction to Microeconomics

Which of the following statements about the law of diminishing marginal utility is correct?

Dana likes spending time at the museum (M)as well as the park (P).Given that her utility function takes the form U = U (M,P)use the utility theory approach to algebraically show the condition for her optimal consumption choice.

Suppose hamburgers are on the horizontal axis and root beer on the vertical axis.You have a budget allowance of $10,and the price of hamburgers is $4 and root beer is $2.The slope of your budget constraint is _____.

Consider a graph with hamburger on the X-axis and cheese crackers on the Y-axis.The outbreak of mad cow disease,which will change the price of hamburgers,will:

The assumption of nonsatiation of preferences states that _____.

The composite-good convention allows indifference curve analysis to analyze preferences for one good against many other goods as long as:

Which of the following will keep a consumer on the same indifference curve even if he wishes to move to a higher one?

Which of the following properties is not assumed to hold for a typical consumer's preferences?

Which one of the following assumptions about indifference curves is incorrect?

Which of the following best explains the concept of a corner solution?

The composite good convention:

At his current consumption of lobster and hamburgers,Ike's marginal utility from eating lobster is 30 and from hamburger is 5.If the price of a hamburger is $3,and the price of lobster is $20,Ike should:

If the vertical axis measures yams which cost $20 per unit and the horizontal axis measures xylophones which cost $5 a unit,the slope of the budget line is _____.

Define a normal good and an inferior good and give an example of each.

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters