Question 1

The principle of diminishing marginal utility implies

Accepted Answer

A)  indifference curves are concave. 
B)  indifference curves are convex. 
C)  indifference curves are straight lines. 
D)  as your consumption level increases, the marginal utility received from consumption of an additional unit increases. 
A)  indifference curves are concave. 
B)  indifference curves are convex. 
C)  indifference curves are straight lines. 
D)  as your consumption level increases, the marginal utility received from consumption of an additional unit increases. B

Question 2

Imagine an indifference curve graph with units of clothing on the y-axis and visits to the neighborhood pizza joint for dinner on the x-axis. If the indifference curves for this individual are negatively sloped but close to horizontal, it means

Accepted Answer

A)  the marginal utility from another pizza dinner is high relative to the marginal utility of clothing. 
B)  the marginal utility from another pizza dinner is low relative to the marginal utility of clothing 
C)  this person doesn't like pizza at all. 
D)  this person can spend a lot of money on clothes at times. 
A)  the marginal utility from another pizza dinner is high relative to the marginal utility of clothing. 
B)  the marginal utility from another pizza dinner is low relative to the marginal utility of clothing 
C)  this person doesn't like pizza at all. 
D)  this person can spend a lot of money on clothes at times. B

Question 3

Suppose that a consumer has the utility function U = 5X + 7Y. The MRSx,y  is

Accepted Answer

A)  7/5 
B)  5/7 
C)  1.00 since X and Y are perfect substitutes. 
D)  0 since X and Y are perfect complements. 
A)  7/5 
B)  5/7 
C)  1.00 since X and Y are perfect substitutes. 
D)  0 since X and Y are perfect complements. B

Question 4

Identify the truthfulness of the following statements. I. Diminishing marginal utility and increasing total utility are incompatible with each other.
II) When marginal utility is negative, total utility is decreasing.

Accepted Answer

A)  Both I and II are true. 
B)  Both I and II are false. 
C)  I is true; II is false. 
D)  I is false; II is true. 
A)  Both I and II are true. 
B)  Both I and II are false. 
C)  I is true; II is false. 
D)  I is false; II is true.

Question 5

Which of the following statements is false?

Accepted Answer

A)  Marginal utility may be negative. 
B)  Marginal utility is the slope of total utility. 
C)  If the more is better assumption is satisfied, total utility will increase as consumption increases. 
D)  If the more is better assumption is satisfied, the marginal utility from consuming the second unit must be greater than the marginal utility from consuming the first unit. 
A)  Marginal utility may be negative. 
B)  Marginal utility is the slope of total utility. 
C)  If the more is better assumption is satisfied, total utility will increase as consumption increases. 
D)  If the more is better assumption is satisfied, the marginal utility from consuming the second unit must be greater than the marginal utility from consuming the first unit.

Question 6

If indifference curves are upward sloping, this violates the assumption that preferences

Accepted Answer

A)  are complete 
B)  are transitive. 
C)  violates the assumption that more is better 
D)  Upward sloping indifference curves do not violate any of the assumptions about preferences. 
A)  are complete 
B)  are transitive. 
C)  violates the assumption that more is better 
D)  Upward sloping indifference curves do not violate any of the assumptions about preferences.

Question 7

An illustration of an indifference curve has:

Accepted Answer

A)  prices of the goods on the axes. 
B)  quantities of the goods on the axes. 
C)  price on the vertical axis, quantity on the horizontal axis. 
D)  Price on the horizontal axis, quantity on the vertical axis. 
A)  prices of the goods on the axes. 
B)  quantities of the goods on the axes. 
C)  price on the vertical axis, quantity on the horizontal axis. 
D)  Price on the horizontal axis, quantity on the vertical axis.

Question 8

Which of the following utility functions is an example of Cobb-Douglas preferences?

Accepted Answer

A)  $U ( x , y ) = y \sqrt { x }$ 
B)  $U ( x , y ) = \min \{ 2 x , y \}$ 
C)  $U ( x , y ) = 3 x + 5 y$ 
D)  $U ( x , y ) = 2 x ^ { 2 } + 4 y$ 
A)  $U ( x , y ) = y \sqrt { x }$ 
B)  $U ( x , y ) = \min \{ 2 x , y \}$ 
C)  $U ( x , y ) = 3 x + 5 y$ 
D)  $U ( x , y ) = 2 x ^ { 2 } + 4 y$

Question 9

If MRSx, y is constant at 5, then which of the following is false?

Accepted Answer

A)  The slope of the indifference curve is positive. 
B)  The goods are perfect substitutes. 
C)  The indifference curves are linear. 
D)  The slope of the indifference curve is negative. 
A)  The slope of the indifference curve is positive. 
B)  The goods are perfect substitutes. 
C)  The indifference curves are linear. 
D)  The slope of the indifference curve is negative.

Question 10

Assume that a consumer prefers watching Yu-Gi-Oh to watching Teen Titans, and that this same consumer prefers watching Teen Titans to watching Sponge Bob. Further assume that this same consumer states, "I would prefer to watch Sponge Bob to watching Yu-Gi-Oh." This consumer's preferences violate which of the following key assumptions?

Accepted Answer

A)  Completeness. 
B)  Transitivity. 
C)  More is better. 
D)  Both completeness and transitivity. 
A)  Completeness. 
B)  Transitivity. 
C)  More is better. 
D)  Both completeness and transitivity.

Question 11

Suppose the marginal rate of substitution of x for y is given by MRSx, y = 5x/7y

Accepted Answer

A)  The indifference curves will be bowed away from the origin. 
B)  The indifference curves will be bowed in towards the origin. 
C)  The indifference curves will be straight lines. 
D)  It is not possible to tell the shape of the indifference curves with only this information. 
A)  The indifference curves will be bowed away from the origin. 
B)  The indifference curves will be bowed in towards the origin. 
C)  The indifference curves will be straight lines. 
D)  It is not possible to tell the shape of the indifference curves with only this information.

Question 12

Wendy is very indecisive. She can't decide whether she should go on a cruise or spend her vacation at her friend's home. Her preferences violate the assumption of:

Accepted Answer

A)  Completeness. 
B)  Transitivity. 
C)  More is better. 
D)  Both completeness and transitivity. 
A)  Completeness. 
B)  Transitivity. 
C)  More is better. 
D)  Both completeness and transitivity.

Question 13

One adhesive having twice the adhesive power of another is an example of

Accepted Answer

A)  Ordinal ranking. 
B)  Johnson's theory of adhesivity. 
C)  Cardinal ranking. 
D)  Transitivity. 
A)  Ordinal ranking. 
B)  Johnson's theory of adhesivity. 
C)  Cardinal ranking. 
D)  Transitivity.

Question 14

If two goods are perfect complements, then

Accepted Answer

A)  the marginal rate of substitution is constant. 
B)  the indifference curves are straight lines. 
C)  the indifference curves are "L-shaped." 
D)  both a) and b) are true. 
A)  the marginal rate of substitution is constant. 
B)  the indifference curves are straight lines. 
C)  the indifference curves are "L-shaped." 
D)  both a) and b) are true.

Question 15

Suppose that a consumer has the utility function U = 5A + 7B. If $A$ is measured on the horizontal axis

Accepted Answer

A)  The indifference curves will be L-shaped. 
B)  The indifference curves will be horizontal. 
C)  The indifference curves will be straight lines with slope -5/7. 
D)  The indifference curves will be straight lines with slope -7/5. 
A)  The indifference curves will be L-shaped. 
B)  The indifference curves will be horizontal. 
C)  The indifference curves will be straight lines with slope -5/7. 
D)  The indifference curves will be straight lines with slope -7/5.

Question 16

Suppose that a consumer has utility function U= Ax2y2 with MUx = 2Ay2x and MUy = 2Ax2y. Which of the following statements is false?

Accepted Answer

A)  The marginal utilities are positive. 
B)  The marginal rate of substitution is diminishing. 
C)  The indifference curves are bowed away from the origin. 
D)  The indifference curves are downwards sloping. 
A)  The marginal utilities are positive. 
B)  The marginal rate of substitution is diminishing. 
C)  The indifference curves are bowed away from the origin. 
D)  The indifference curves are downwards sloping.

Question 17

Given a utility function U = 3A2B3, which of the following is true?

Accepted Answer

A)  MUA = 3A2  
B)  MUB = 9A2B2 
C)  The marginal rate of substitution cannot be determined. 
D)  The marginal utility for each good is negative. 
A)  MUA = 3A2  
B)  MUB = 9A2B2 
C)  The marginal rate of substitution cannot be determined. 
D)  The marginal utility for each good is negative.

Question 18

The assumption that more is better requires the consumer

Accepted Answer

A)  to rank any two baskets. 
B)  to say that basket C is preferred to basket
A if basket B is preferred to basket A and basket C is preferred to basket B . 
C)  to rank a basket with more units of all goods higher than a basket with fewer units of all goods. 
D)  to have a diminishing marginal rate of substitution. 
A)  to rank any two baskets. 
B)  to say that basket C is preferred to basket
A if basket B is preferred to basket A and basket C is preferred to basket B . 
C)  to rank a basket with more units of all goods higher than a basket with fewer units of all goods. 
D)  to have a diminishing marginal rate of substitution.

Question 19

Suppose the marginal rate of substitution of x for y is constant for all levels of x and y . Goods x and y are

Accepted Answer

A)  perfect substitutes. 
B)  perfect complements. 
C)  normal goods. 
D)  inferior goods. 
A)  perfect substitutes. 
B)  perfect complements. 
C)  normal goods. 
D)  inferior goods.

Question 20

If a consumer would rather eat three bars of chocolate than four bars of chocolate, this consumer's preferences violate which of the following key assumptions?

Accepted Answer

A)  Completeness. 
B)  Transitivity. 
C)  More is better. 
D)  Both completeness and transitivity. 
A)  Completeness. 
B)  Transitivity. 
C)  More is better. 
D)  Both completeness and transitivity.

The principle of diminishing marginal utility implies

Imagine an indifference curve graph with units of clothing on the y-axis and visits to the neighborhood pizza joint for dinner on the x-axis. If the indifference curves for this individual are negatively sloped but close to horizontal, it means

Suppose that a consumer has the utility function U = 5X + 7Y. The MRS_x,y is

Identify the truthfulness of the following statements. I. Diminishing marginal utility and increasing total utility are incompatible with each other. II) When marginal utility is negative, total utility is decreasing.

Which of the following statements is false?

If indifference curves are upward sloping, this violates the assumption that preferences

An illustration of an indifference curve has:

Which of the following utility functions is an example of Cobb-Douglas preferences?

If MRS_{x, y}is constant at 5, then which of the following is false?

Suppose the marginal rate of substitution of x for y is given by MRS_{x, y} = 5x/7y

Wendy is very indecisive. She can't decide whether she should go on a cruise or spend her vacation at her friend's home. Her preferences violate the assumption of:

One adhesive having twice the adhesive power of another is an example of

If two goods are perfect complements, then

Suppose that a consumer has the utility function U = 5A + 7B. If $A$ is measured on the horizontal axis

Suppose that a consumer has utility function U= Ax²y²with MU_x = 2Ay²x and MU_y = 2Ax²y. Which of the following statements is false?

Given a utility function U = 3A²B³, which of the following is true?

The assumption that more is better requires the consumer

Suppose the marginal rate of substitution of x for y is constant for all levels of x and y . Goods x and y are

If a consumer would rather eat three bars of chocolate than four bars of chocolate, this consumer's preferences violate which of the following key assumptions?

Analyzing Economic Problems

Demand and Supply Analysis

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Cost Curves

Perfectly Competitive Markets

Competitive Markets: Applications

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

Filters

Exam 3: Consumer Preferences and the Concept of Utility

The principle of diminishing marginal utility implies

Imagine an indifference curve graph with units of clothing on the y-axis and visits to the neighborhood pizza joint for dinner on the x-axis. If the indifference curves for this individual are negatively sloped but close to horizontal, it means

Suppose that a consumer has the utility function U = 5X + 7Y. The MRSx,y is

Identify the truthfulness of the following statements. I. Diminishing marginal utility and increasing total utility are incompatible with each other. II) When marginal utility is negative, total utility is decreasing.

Which of the following statements is false?

If indifference curves are upward sloping, this violates the assumption that preferences

An illustration of an indifference curve has:

Which of the following utility functions is an example of Cobb-Douglas preferences?

If MRSx, y is constant at 5, then which of the following is false?

Suppose the marginal rate of substitution of x for y is given by MRSx, y = 5x/7y

Wendy is very indecisive. She can't decide whether she should go on a cruise or spend her vacation at her friend's home. Her preferences violate the assumption of:

One adhesive having twice the adhesive power of another is an example of

If two goods are perfect complements, then

Suppose that a consumer has the utility function U = 5A + 7B. If AAA is measured on the horizontal axis

Suppose that a consumer has utility function U= Ax2y2 with MUx = 2Ay2x and MUy = 2Ax2y. Which of the following statements is false?

Given a utility function U = 3A2B3, which of the following is true?

The assumption that more is better requires the consumer

Suppose the marginal rate of substitution of x for y is constant for all levels of x and y . Goods x and y are

If a consumer would rather eat three bars of chocolate than four bars of chocolate, this consumer's preferences violate which of the following key assumptions?

Analyzing Economic Problems

Demand and Supply Analysis

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Cost Curves

Perfectly Competitive Markets

Competitive Markets: Applications

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

Filters

Suppose that a consumer has the utility function U = 5X + 7Y. The MRS_x,y is

If MRS_{x, y}is constant at 5, then which of the following is false?

Suppose the marginal rate of substitution of x for y is given by MRS_{x, y} = 5x/7y

Suppose that a consumer has the utility function U = 5A + 7B. If $A$ is measured on the horizontal axis

Suppose that a consumer has utility function U= Ax²y²with MU_x = 2Ay²x and MU_y = 2Ax²y. Which of the following statements is false?

Given a utility function U = 3A²B³, which of the following is true?