Question 1

Goods with upward-sloping demand curves are referred to as

Accepted Answer

A) Marshall goods. 
B) Giffen goods. 
C) substitute goods. 
D) luxury goods. 
A) Marshall goods. 
B) Giffen goods. 
C) substitute goods. 
D) luxury goods.

Question 2

Identify the one statement that does not demonstrate how social effects influence consumer choice.

Accepted Answer

A) Students in an Economics class are required to purchase a textbook assigned by the professor. 
B) There is utility gained from consuming goods or services that others are consuming. 
C) Some products that people consume are determined by the social popularity of the products. 
D) Companies such as Zappos.com and Netflix invite their consumers to write reviews about their experience with their products which are then posted on the Internet for others to see. 
A) Students in an Economics class are required to purchase a textbook assigned by the professor. 
B) There is utility gained from consuming goods or services that others are consuming. 
C) Some products that people consume are determined by the social popularity of the products. 
D) Companies such as Zappos.com and Netflix invite their consumers to write reviews about their experience with their products which are then posted on the Internet for others to see.

Question 3

Adhira buys chocolates and almonds.She has 3 bars of chocolates and 4 bags of almonds.The marginal utility of the third chocolate bar is 18 units of utility and the marginal utility from the fourth bag of almonds is also 18.Is Adhira maximising her utility?

Accepted Answer

A) Yes,the marginal utility from the last unit of each good is equal. 
B) No,she must buy 1 more chocolate bar to equate her quantities of the two goods. 
C) No,she must buy cut back to 3 bags of almonds to equate her quantities of the two goods. 
D) Without information on her income and the prices of the two goods,we cannot answer the question. 
A) Yes,the marginal utility from the last unit of each good is equal. 
B) No,she must buy 1 more chocolate bar to equate her quantities of the two goods. 
C) No,she must buy cut back to 3 bags of almonds to equate her quantities of the two goods. 
D) Without information on her income and the prices of the two goods,we cannot answer the question.

Question 4

Figure 6-6  
-Refer to Figure 6-6.Given the budget constraint in the diagram,which of the following statements is false?

Accepted Answer

A) The consumer receives the same level of utility from consumption bundles d,e and f. 
B) Consumption bundles b and c yield the same level of utility,which is higher than the utility represented by bundle a. 
C) Although the consumer receives the same level of utility from bundles d and e,she cannot afford to purchase bundle d. 
D) The consumer's optimal bundle could be bundle d,e or f. 
A) The consumer receives the same level of utility from consumption bundles d,e and f. 
B) Consumption bundles b and c yield the same level of utility,which is higher than the utility represented by bundle a. 
C) Although the consumer receives the same level of utility from bundles d and e,she cannot afford to purchase bundle d. 
D) The consumer's optimal bundle could be bundle d,e or f.

Question 5

Table 6-1
  
 Keegan has $30 to spend on Pita Wraps and Bubble Tea.The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3.Table 6-1 shows his total utility from different quantities of the two items.
-Refer to Table 6-1.What is Keegan's optimal consumption bundle?

Accepted Answer

A) 3 pita wraps and 3 bubble teas 
B) 3 pita wraps and 4 bubble teas 
C) 4 pita wraps and 2 bubble teas 
D) 5 pita wraps and 0 bubble teas 
A) 3 pita wraps and 3 bubble teas 
B) 3 pita wraps and 4 bubble teas 
C) 4 pita wraps and 2 bubble teas 
D) 5 pita wraps and 0 bubble teas

Question 6

An advantage of Microsoft Windows is its compatibility with the widest range of hardware and software.The dominance of Windows is self-reinforcing: hardware and software manufacturers ensure that their products are compatible with Windows in order to have access to the large number of Windows users.Which principle best describes this scenario?

Accepted Answer

A) endowment effects 
B) endorsement effects 
C) economies of scale 
D) network externalities 
A) endowment effects 
B) endorsement effects 
C) economies of scale 
D) network externalities

Question 7

A standard which came to the market first,such as the QWERTY letter layout in typewriters,can become entrenched (this layout is still used in computer keyboards today).What is this phenomenon called?

Accepted Answer

A) network externalities 
B) path dependency 
C) sunk cost 
D) comparative advantage 
A) network externalities 
B) path dependency 
C) sunk cost 
D) comparative advantage

Question 8

Some economists have suggested that network externalities result in consumers being locked into the use of products with inferior technologies.Economists Stan Leibowitz and Stephen Margolis have studied cases that have been cited as examples of this and found that

Accepted Answer

A) there is no convincing evidence that the alternative technologies were superior. 
B) consumers sometimes do become locked into the use of products with inferior technologies. 
C) in all of these cases,network externalities resulted in market failure. 
D) consumers use products with inferior technologies when their prices are lower than products with superior technologies. 
A) there is no convincing evidence that the alternative technologies were superior. 
B) consumers sometimes do become locked into the use of products with inferior technologies. 
C) in all of these cases,network externalities resulted in market failure. 
D) consumers use products with inferior technologies when their prices are lower than products with superior technologies.

Question 9

The substitution effect of an increase in the price of Cornflakes refers to

Accepted Answer

A) the decrease in the demand for Cornflakes when its price rises. 
B) the result that consumers will now switch to a substitute good such as Cheerios,and the demand curve for Cornflakes shifts to the left. 
C) the fact that the higher price of Cornflakes lowers consumers' purchasing power,holding money income constant. 
D) the fact that the higher price of Cornflakes relative to its substitutes,such as Cheerios,causes consumers to buy less Cornflakes. 
A) the decrease in the demand for Cornflakes when its price rises. 
B) the result that consumers will now switch to a substitute good such as Cheerios,and the demand curve for Cornflakes shifts to the left. 
C) the fact that the higher price of Cornflakes lowers consumers' purchasing power,holding money income constant. 
D) the fact that the higher price of Cornflakes relative to its substitutes,such as Cheerios,causes consumers to buy less Cornflakes.

Question 10

In making decisions about what to consume,a person's goal is to

Accepted Answer

A) allocate her limited income among all the products she wishes to buy so that she receives the highest total utility. 
B) buy low-priced goods rather than high-priced goods. 
C) maximise her marginal utility from the goods and services she wishes to buy using her limited income. 
D) consume as many necessities as possible and then,if there is money left over,buy luxuries. 
A) allocate her limited income among all the products she wishes to buy so that she receives the highest total utility. 
B) buy low-priced goods rather than high-priced goods. 
C) maximise her marginal utility from the goods and services she wishes to buy using her limited income. 
D) consume as many necessities as possible and then,if there is money left over,buy luxuries.

Question 11

In order to derive an individual's demand curve for salmon,we would observe what happens to the utility-maximising bundle when we change

Accepted Answer

A) income and hold everything else constant. 
B) tastes and preferences and hold everything else constant. 
C) the price of the product and hold everything else constant. 
D) the price of a close substitute and hold everything else constant. 
A) income and hold everything else constant. 
B) tastes and preferences and hold everything else constant. 
C) the price of the product and hold everything else constant. 
D) the price of a close substitute and hold everything else constant.

Question 12

Table 6-4
  
-Refer to Table 6-4.For steak and cheese and grilled chicken sandwiches,the table contains the values of the marginal utility (MU)and marginal utility per dollar (MU/P)for Mabel Jarvis.Mabel has $14 to spend on steak and cheese and grilled chicken sandwiches.Which of the following statements is true?

Accepted Answer

A) If Mabel maximises her utility,she will buy three steak and cheese sandwiches and two grilled chicken sandwiches. 
B) If Mabel was maximising her utility when spending $14 and then received an additional $4,she would receive the most marginal utility per dollar if her next purchase was another grilled chicken sandwich. 
C) Mabel will first buy two steak and cheese sandwiches;then with her remaining $6 she will buy three grilled chicken sandwiches. 
D) To maximise her utility,Mabel will need a total of $36,the income needed to buy 6 steak and cheese sandwiches and 6 grilled chicken sandwiches. 
A) If Mabel maximises her utility,she will buy three steak and cheese sandwiches and two grilled chicken sandwiches. 
B) If Mabel was maximising her utility when spending $14 and then received an additional $4,she would receive the most marginal utility per dollar if her next purchase was another grilled chicken sandwich. 
C) Mabel will first buy two steak and cheese sandwiches;then with her remaining $6 she will buy three grilled chicken sandwiches. 
D) To maximise her utility,Mabel will need a total of $36,the income needed to buy 6 steak and cheese sandwiches and 6 grilled chicken sandwiches.

Question 13

Avner is maximising total utility by buying sports magazines and protein supplements.For him to buy more sports magazines,

Accepted Answer

A) the price of protein supplements has to fall. 
B) the price of sports magazines has to fall. 
C) the price of sports magazines has to rise. 
D) Since Avner is maximising his utility,nothing can change the consumption of sports magazines. 
A) the price of protein supplements has to fall. 
B) the price of sports magazines has to fall. 
C) the price of sports magazines has to rise. 
D) Since Avner is maximising his utility,nothing can change the consumption of sports magazines.

Question 14

Consumers maximise total utility within their budget constraint by

Accepted Answer

A) buying the cheapest goods they can find. 
B) buying whatever they like the best. 
C) buying the goods with the largest marginal utility per dollar spent. 
D) spending the same dollar amount for each good. 
A) buying the cheapest goods they can find. 
B) buying whatever they like the best. 
C) buying the goods with the largest marginal utility per dollar spent. 
D) spending the same dollar amount for each good.

Question 15

Table 6-7
   Table 6-7 shows Antonio's utility from beer and pizza.
-Refer to Table 6-7.Suppose Antonio has $10 to spend and the price of beer = $2 per glass and the price of pizza = $2 per slice.How many of each good will he consume when he maximises his utility?

Accepted Answer

A) 2 glasses of beer,1 slice of pizza 
B) 2 glasses of beer,3 slices of pizza 
C) 3 glasses of beer,2 slices of pizza 
D) 4 glasses of beer,5 slices of pizza 
A) 2 glasses of beer,1 slice of pizza 
B) 2 glasses of beer,3 slices of pizza 
C) 3 glasses of beer,2 slices of pizza 
D) 4 glasses of beer,5 slices of pizza

Question 16

What is an indifference curve? Why can indifference curves never cross?

Accepted Answer

An indifference curve shows the combinat

Question 17

If your total satisfaction increases when you consume another unit,your marginal utility must be

Accepted Answer

A) increasing. 
B) decreasing. 
C) negative. 
D) positive. 
A) increasing. 
B) decreasing. 
C) negative. 
D) positive.

Question 18

The income effect due to a price decrease will result in an increase in the quantity demanded for

Accepted Answer

A) a Giffen good. 
B) an inferior good. 
C) a public good. 
D) a normal good. 
A) a Giffen good. 
B) an inferior good. 
C) a public good. 
D) a normal good.

Question 19

Which of the following is not a characteristic of indifference curves?

Accepted Answer

A) Indifference curves cannot intersect. 
B) Indifference curves are usually bowed in,or convex. 
C) The slope of an indifference curve is negative. 
D) The closer to the origin,the greater the utility level. 
A) Indifference curves cannot intersect. 
B) Indifference curves are usually bowed in,or convex. 
C) The slope of an indifference curve is negative. 
D) The closer to the origin,the greater the utility level.

Question 20

As a consumer consumes more and more of a product in a particular time period,eventually marginal utility

Accepted Answer

A) rises. 
B) is constant. 
C) declines. 
D) fluctuates. 
A) rises. 
B) is constant. 
C) declines. 
D) fluctuates.

Goods with upward-sloping demand curves are referred to as

Identify the one statement that does not demonstrate how social effects influence consumer choice.

Adhira buys chocolates and almonds.She has 3 bars of chocolates and 4 bags of almonds.The marginal utility of the third chocolate bar is 18 units of utility and the marginal utility from the fourth bag of almonds is also 18.Is Adhira maximising her utility?

Figure 6-6 -Refer to Figure 6-6.Given the budget constraint in the diagram,which of the following statements is false?

Table 6-1 Keegan has $30 to spend on Pita Wraps and Bubble Tea.The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3.Table 6-1 shows his total utility from different quantities of the two items. -Refer to Table 6-1.What is Keegan's optimal consumption bundle?

A standard which came to the market first,such as the QWERTY letter layout in typewriters,can become entrenched (this layout is still used in computer keyboards today).What is this phenomenon called?

Some economists have suggested that network externalities result in consumers being locked into the use of products with inferior technologies.Economists Stan Leibowitz and Stephen Margolis have studied cases that have been cited as examples of this and found that

The substitution effect of an increase in the price of Cornflakes refers to

In making decisions about what to consume,a person's goal is to

In order to derive an individual's demand curve for salmon,we would observe what happens to the utility-maximising bundle when we change

Avner is maximising total utility by buying sports magazines and protein supplements.For him to buy more sports magazines,

Consumers maximise total utility within their budget constraint by

Table 6-7 Table 6-7 shows Antonio's utility from beer and pizza. -Refer to Table 6-7.Suppose Antonio has $10 to spend and the price of beer = $2 per glass and the price of pizza = $2 per slice.How many of each good will he consume when he maximises his utility?

What is an indifference curve? Why can indifference curves never cross?

If your total satisfaction increases when you consume another unit,your marginal utility must be

The income effect due to a price decrease will result in an increase in the quantity demanded for

Which of the following is not a characteristic of indifference curves?

As a consumer consumes more and more of a product in a particular time period,eventually marginal utility

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

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Exam 6: Consumer Choice and Behavioural Economics

Goods with upward-sloping demand curves are referred to as

Identify the one statement that does not demonstrate how social effects influence consumer choice.

Adhira buys chocolates and almonds.She has 3 bars of chocolates and 4 bags of almonds.The marginal utility of the third chocolate bar is 18 units of utility and the marginal utility from the fourth bag of almonds is also 18.Is Adhira maximising her utility?

Figure 6-6 -Refer to Figure 6-6.Given the budget constraint in the diagram,which of the following statements is false?

Table 6-1 Keegan has $30 to spend on Pita Wraps and Bubble Tea.The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3.Table 6-1 shows his total utility from different quantities of the two items. -Refer to Table 6-1.What is Keegan's optimal consumption bundle?

A standard which came to the market first,such as the QWERTY letter layout in typewriters,can become entrenched (this layout is still used in computer keyboards today).What is this phenomenon called?

Some economists have suggested that network externalities result in consumers being locked into the use of products with inferior technologies.Economists Stan Leibowitz and Stephen Margolis have studied cases that have been cited as examples of this and found that

The substitution effect of an increase in the price of Cornflakes refers to

In making decisions about what to consume,a person's goal is to

In order to derive an individual's demand curve for salmon,we would observe what happens to the utility-maximising bundle when we change

Avner is maximising total utility by buying sports magazines and protein supplements.For him to buy more sports magazines,

Consumers maximise total utility within their budget constraint by

Table 6-7 Table 6-7 shows Antonio's utility from beer and pizza. -Refer to Table 6-7.Suppose Antonio has $10 to spend and the price of beer = $2 per glass and the price of pizza = $2 per slice.How many of each good will he consume when he maximises his utility?

What is an indifference curve? Why can indifference curves never cross?

If your total satisfaction increases when you consume another unit,your marginal utility must be

The income effect due to a price decrease will result in an increase in the quantity demanded for

Which of the following is not a characteristic of indifference curves?

As a consumer consumes more and more of a product in a particular time period,eventually marginal utility

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters