Question 1

Which of the following statements about the real-income effect and the substitution effect is true?

Accepted Answer

A)  The real-income effect always exists,but the substitution effect does not always exist. 
B)  The real-income effect and the substitution effect always exist. 
C)  The real-income effect does not always exist,but the substitution effect always exists. 
D)  The real-income effect and the substitution effect cannot occur at the same time. 
E)  The real-income effect and the substitution effect occur only with an increase in price. 
A)  The real-income effect always exists,but the substitution effect does not always exist. 
B)  The real-income effect and the substitution effect always exist. 
C)  The real-income effect does not always exist,but the substitution effect always exists. 
D)  The real-income effect and the substitution effect cannot occur at the same time. 
E)  The real-income effect and the substitution effect occur only with an increase in price.

Question 2

Refer to the following graph to answer the following questions:
   
-Which of the following statements is true?

Accepted Answer

A)  Water costs more than diamonds. 
B)  The total utility of diamonds is greater than the total utility of water. 
C)  The marginal utility of diamonds is greater than the marginal utility of water. 
D)  The diamond-water paradox does not exist. 
E)  The marginal utility of water is greater than the marginal utility of diamonds. 
A)  Water costs more than diamonds. 
B)  The total utility of diamonds is greater than the total utility of water. 
C)  The marginal utility of diamonds is greater than the marginal utility of water. 
D)  The diamond-water paradox does not exist. 
E)  The marginal utility of water is greater than the marginal utility of diamonds.

Question 3

Connect the idea of the real-income effect and the substitution effect with the law of demand.

Accepted Answer

The law of demand states that holding al

Question 4

For a low-priced good,the ________ is generally negligible and the substitution effect tends to ________.

Accepted Answer

A)  maximization point; disappear 
B)  maximization point; magnify 
C)  real-income effect; yield 
D)  real-income effect; dominate 
E)  complement effect; increase 
A)  maximization point; disappear 
B)  maximization point; magnify 
C)  real-income effect; yield 
D)  real-income effect; dominate 
E)  complement effect; increase

Question 5

Explain a situation in which the real-income effect is not observed when the price of a good decreases.

Accepted Answer

The real-income effect is not observed w

Question 6

Freda and Stefano are presented with two dessert options: ice cream or cookies.Freda values ice cream at 5 utils and cookies at 10 utils.For Stefano,it's 10 and 5,respectively.What can we assume with certainty?

Accepted Answer

A)  Stefano prefers cookies over ice cream. 
B)  Freda prefers ice cream of over cookies. 
C)  Freda's preference for ice cream is equal in magnitude to Stefano's preference for cookies. 
D)  Freda's preference for cookies is equal in magnitude to Stefano's preference for ice cream. 
E)  Freda prefers cookies,and Stefano prefers ice cream. 
A)  Stefano prefers cookies over ice cream. 
B)  Freda prefers ice cream of over cookies. 
C)  Freda's preference for ice cream is equal in magnitude to Stefano's preference for cookies. 
D)  Freda's preference for cookies is equal in magnitude to Stefano's preference for ice cream. 
E)  Freda prefers cookies,and Stefano prefers ice cream.

Question 7

Refer to the following figure to answer the following questions:
  
-The product's total utility in dollars is equal to

Accepted Answer

A)  $250. 
B)  $500. 
C)  $150. 
D)  $15. 
E)  $20. 
A)  $250. 
B)  $500. 
C)  $150. 
D)  $15. 
E)  $20.

Question 8

The consumer optimum

Accepted Answer

A)  occurs when utility declines as consumption increases. 
B)  is the additional satisfaction derived from consuming one more unit of a good or service. 
C)  is the combination of goods and services that maximizes utility for a given income. 
D)  occurs when a consumer buys more of a good as a result of a relative price change. 
E)  occurs when there is a change in purchasing power as a result of a change in the price of a good. 
A)  occurs when utility declines as consumption increases. 
B)  is the additional satisfaction derived from consuming one more unit of a good or service. 
C)  is the combination of goods and services that maximizes utility for a given income. 
D)  occurs when a consumer buys more of a good as a result of a relative price change. 
E)  occurs when there is a change in purchasing power as a result of a change in the price of a good.

Question 9

Refer to the following table to answer the following questions:
  
-If the price of attending a soccer game changes from $20 to $25,the marginal utility per dollar spent for the fifth game changes from

Accepted Answer

A)  3.75 to 3.00. 
B)  4.00 to 3.00. 
C)  5.00 to 4.00. 
D)  3.00 to 3.75. 
E)  18.75 to 15.00. 
A)  3.75 to 3.00. 
B)  4.00 to 3.00. 
C)  5.00 to 4.00. 
D)  3.00 to 3.75. 
E)  18.75 to 15.00.

Question 10

In many competitive eating contests,participants must keep their food "down" in order to have a chance to win.If competitors are unable to meet this qualification,it is probable that marginal utility is

Accepted Answer

A)  negative. 
B)  positive. 
C)  zero. 
D)  decreasing. 
E)  slowing. 
A)  negative. 
B)  positive. 
C)  zero. 
D)  decreasing. 
E)  slowing.

Question 11

It is NOT true that indifference curves

Accepted Answer

A)  represent the various combinations of two goods that yield the same level of utility. 
B)  are typically bowed inward. 
C)  cannot be thick. 
D)  cannot intersect. 
E)  are modeled based on the assumption that people make irrational decisions. 
A)  represent the various combinations of two goods that yield the same level of utility. 
B)  are typically bowed inward. 
C)  cannot be thick. 
D)  cannot intersect. 
E)  are modeled based on the assumption that people make irrational decisions.

Question 12

Refer to the following table to answer the following questions:
  
-Assume that chips cost $1 and soda costs $2.Which of the following combinations of chips and soda satisfies the rule 
 ?

Accepted Answer

A)  2 chips and 4 sodas 
B)  6 chips and 5 sodas 
C)  5 chips and 4 sodas 
D)  5 chips and 1 soda 
E)  6 chips and 7 sodas 
A)  2 chips and 4 sodas 
B)  6 chips and 5 sodas 
C)  5 chips and 4 sodas 
D)  5 chips and 1 soda 
E)  6 chips and 7 sodas

Question 13

Explain why the following indifference curve cannot exist:

Accepted Answer

One key property of indifference curves

Question 14

Joanna is deciding between consuming Good X and Good Y.At her current level of consumption,her marginal utility per dollar for Good X is greater than the marginal utility per dollar for Good Y.To achieve the consumer optimum,Joanna needs to

Accepted Answer

A)  consume more of Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X. 
B)  consume more of Good X until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X. 
C)  consume more of both Good X and Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X. 
D)  consume more of Good X or less of Good Y until the marginal utility per dollar for Good X and Good Y is equal. 
E)  continue at her current level of consumption. 
A)  consume more of Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X. 
B)  consume more of Good X until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X. 
C)  consume more of both Good X and Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X. 
D)  consume more of Good X or less of Good Y until the marginal utility per dollar for Good X and Good Y is equal. 
E)  continue at her current level of consumption.

Question 15

The old saying "getting the biggest bang for your buck" means that

Accepted Answer

A)  consumers never experience diminishing marginal utility. 
B)  consumers maximize their utility. 
C)  consumers spend every dollar in their budget. 
D)  the real-income effect is equal to the substitution effect. 
E)  consumers stop consuming when the marginal utilities of each good are equal regardless of the prices of each good. 
A)  consumers never experience diminishing marginal utility. 
B)  consumers maximize their utility. 
C)  consumers spend every dollar in their budget. 
D)  the real-income effect is equal to the substitution effect. 
E)  consumers stop consuming when the marginal utilities of each good are equal regardless of the prices of each good.

Question 16

Which of the following statements is true about utility?

Accepted Answer

A)  Economists measure utility with a unit they refer to as an utte. 
B)  Everyone receives different levels of satisfaction from the same good or service. 
C)  All products produce the same level of utility. 
D)  Everyone receives the same level of satisfaction from the same good or service. 
E)  Utility is easy to measure across individuals. 
A)  Economists measure utility with a unit they refer to as an utte. 
B)  Everyone receives different levels of satisfaction from the same good or service. 
C)  All products produce the same level of utility. 
D)  Everyone receives the same level of satisfaction from the same good or service. 
E)  Utility is easy to measure across individuals.

Question 17

Draw the indifference curves for two goods that are perfect complements.

Accepted Answer

The answer of Draw the indifference curves for two goods...

Question 18

Refer to the following figure to answer the following questions:
  
-Total utility is negative

Accepted Answer

A)  at all levels of consumption. 
B)  from this consumer's sixth taco on. 
C)  at no time. 
D)  for this consumer's fifth and sixth tacos only. 
E)  when marginal utility is positive. 
A)  at all levels of consumption. 
B)  from this consumer's sixth taco on. 
C)  at no time. 
D)  for this consumer's fifth and sixth tacos only. 
E)  when marginal utility is positive.

Question 19

Indifference curves are typically

Accepted Answer

A)  vertical. 
B)  horizontal. 
C)  bowed inward. 
D)  bowed outward. 
E)  either vertical or horizontal,depending on the consumer. 
A)  vertical. 
B)  horizontal. 
C)  bowed inward. 
D)  bowed outward. 
E)  either vertical or horizontal,depending on the consumer.

Question 20

A typical indifference curve that reflects the trade-off between two goods that are not ________ or ________ has a marginal rate of substitution that falls between these two extremes.

Accepted Answer

A)  "goods"; "bads" 
B)  perfect substitutes; perfect complements 
C)  opportunity costs; utility costs 
D)  right angles; straight lines 
E)  intersections; intrasections 
A)  "goods"; "bads" 
B)  perfect substitutes; perfect complements 
C)  opportunity costs; utility costs 
D)  right angles; straight lines 
E)  intersections; intrasections

Which of the following statements about the real-income effect and the substitution effect is true?

Refer to the following graph to answer the following questions: -Which of the following statements is true?

Connect the idea of the real-income effect and the substitution effect with the law of demand.

For a low-priced good,the is generally negligible and the substitution effect tends to .

Explain a situation in which the real-income effect is not observed when the price of a good decreases.

Freda and Stefano are presented with two dessert options: ice cream or cookies.Freda values ice cream at 5 utils and cookies at 10 utils.For Stefano,it's 10 and 5,respectively.What can we assume with certainty?

Refer to the following figure to answer the following questions: -The product's total utility in dollars is equal to

The consumer optimum

Refer to the following table to answer the following questions: -If the price of attending a soccer game changes from $20 to $25,the marginal utility per dollar spent for the fifth game changes from

In many competitive eating contests,participants must keep their food "down" in order to have a chance to win.If competitors are unable to meet this qualification,it is probable that marginal utility is

It is NOT true that indifference curves

Refer to the following table to answer the following questions: -Assume that chips cost $1 and soda costs $2.Which of the following combinations of chips and soda satisfies the rule ?

Explain why the following indifference curve cannot exist:

Joanna is deciding between consuming Good X and Good Y.At her current level of consumption,her marginal utility per dollar for Good X is greater than the marginal utility per dollar for Good Y.To achieve the consumer optimum,Joanna needs to

The old saying "getting the biggest bang for your buck" means that

Which of the following statements is true about utility?

Draw the indifference curves for two goods that are perfect complements.

Refer to the following figure to answer the following questions: -Total utility is negative

Indifference curves are typically

A typical indifference curve that reflects the trade-off between two goods that are not or has a marginal rate of substitution that falls between these two extremes.

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Elasticity

Market Outcomes and Tax Incidence

Price Controls

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income,inequality,and Poverty

Behavioral Economics and Risk Taking

Health Insurance and Health Care

International Trade

Filters

Exam 16: Consumer Choice

Which of the following statements about the real-income effect and the substitution effect is true?

Refer to the following graph to answer the following questions: -Which of the following statements is true?

Connect the idea of the real-income effect and the substitution effect with the law of demand.

For a low-priced good,the ________ is generally negligible and the substitution effect tends to ________.

Explain a situation in which the real-income effect is not observed when the price of a good decreases.

Freda and Stefano are presented with two dessert options: ice cream or cookies.Freda values ice cream at 5 utils and cookies at 10 utils.For Stefano,it's 10 and 5,respectively.What can we assume with certainty?

Refer to the following figure to answer the following questions: -The product's total utility in dollars is equal to

The consumer optimum

Refer to the following table to answer the following questions: -If the price of attending a soccer game changes from $20 to $25,the marginal utility per dollar spent for the fifth game changes from

In many competitive eating contests,participants must keep their food "down" in order to have a chance to win.If competitors are unable to meet this qualification,it is probable that marginal utility is

It is NOT true that indifference curves

Refer to the following table to answer the following questions: -Assume that chips cost $1 and soda costs $2.Which of the following combinations of chips and soda satisfies the rule ?

Explain why the following indifference curve cannot exist:

Joanna is deciding between consuming Good X and Good Y.At her current level of consumption,her marginal utility per dollar for Good X is greater than the marginal utility per dollar for Good Y.To achieve the consumer optimum,Joanna needs to

The old saying "getting the biggest bang for your buck" means that

Which of the following statements is true about utility?

Draw the indifference curves for two goods that are perfect complements.

Refer to the following figure to answer the following questions: -Total utility is negative

Indifference curves are typically

A typical indifference curve that reflects the trade-off between two goods that are not ________ or ________ has a marginal rate of substitution that falls between these two extremes.

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Elasticity

Market Outcomes and Tax Incidence

Price Controls

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income,inequality,and Poverty

Behavioral Economics and Risk Taking

Health Insurance and Health Care

International Trade

Filters

For a low-priced good,the is generally negligible and the substitution effect tends to .

A typical indifference curve that reflects the trade-off between two goods that are not or has a marginal rate of substitution that falls between these two extremes.