Question 1

The rate at which a consumer will exchange one good for another is called

Accepted Answer

A)  Marginal utility 
B)  The marginal rate of transformation 
C)  The rate of substitutability 
D)  The marginal rate of substitution 
A)  Marginal utility 
B)  The marginal rate of transformation 
C)  The rate of substitutability 
D)  The marginal rate of substitution D

Question 2

Higher rates of substitution are indicated by _______ _______ values of the marginal rate of substitution.

Accepted Answer

A)  Small negative 
B)  Large negative 
C)  Small positive 
D)  Large positive 
A)  Small negative 
B)  Large negative 
C)  Small positive 
D)  Large positive D

Question 3

Two products are perfect complements if

Accepted Answer

A)  A consumer is willing to swap one for another at a fixed rate 
B)  They are valuable only when used together in fixed proportions 
C)  Their indifference curves are "straight lines." 
D)  They lie on the same indifference curve 
A)  A consumer is willing to swap one for another at a fixed rate 
B)  They are valuable only when used together in fixed proportions 
C)  Their indifference curves are "straight lines." 
D)  They lie on the same indifference curve B

Question 4

Frieda enjoys cooking and baking.Her utility function is U(C,B)= 6C + 3B,where C is the number of hours she spends cooking and B is the hours she spends baking.What is Frieda's MRS of cooking with baking?

Accepted Answer

A)  1/6 
B)  2 
C)  6 
D)  Cannot be determined from the given information 
A)  1/6 
B)  2 
C)  6 
D)  Cannot be determined from the given information

Question 5

When there is a high degree of complimentarily between two products,then their indifference curves will

Accepted Answer

A)  Be reasonably close to straight lines 
B)  Be perfectly straight lines 
C)  Bend sharply 
D)  Be positively sloped 
A)  Be reasonably close to straight lines 
B)  Be perfectly straight lines 
C)  Bend sharply 
D)  Be positively sloped

Question 6

The marginal rate of substitution between two goods is given by

Accepted Answer

A)  The inverse of the slope of an indifference curve 
B)  The slope of a line tangent to an indifference curve 
C)  Negative one times the inverse of the slope of an indifference curve 
D)  Negative one times the slope of a line tangent to an indifference curve 
A)  The inverse of the slope of an indifference curve 
B)  The slope of a line tangent to an indifference curve 
C)  Negative one times the inverse of the slope of an indifference curve 
D)  Negative one times the slope of a line tangent to an indifference curve

Question 7

When the more-is-better principle holds,we assign higher utility values to indifference curves

Accepted Answer

A)  That are closer to the origin 
B)  That are farther from the origin 
C)  That are concave 
D)  That are L-shaped 
A)  That are closer to the origin 
B)  That are farther from the origin 
C)  That are concave 
D)  That are L-shaped

Question 8

The slope of an indifference curve tells us

Accepted Answer

A)  The marginal utility the consumer receives from consuming an additional unit of a good 
B)  How much of one good is required to compensate the consumer for giving up some of another good 
C)  The amount of utility a consumer receives from consuming a bundle of goods 
D)  The rate at which utility changes as more of one good is consumed 
A)  The marginal utility the consumer receives from consuming an additional unit of a good 
B)  How much of one good is required to compensate the consumer for giving up some of another good 
C)  The amount of utility a consumer receives from consuming a bundle of goods 
D)  The rate at which utility changes as more of one good is consumed

Question 9

In modern microeconomic theory,utility functions summarize

Accepted Answer

A)  Cardinal information about preferences 
B)  Ordinal information about preferences 
C)  Absolute information about preferences 
D)  Both cardinal and ordinal information about preferences 
A)  Cardinal information about preferences 
B)  Ordinal information about preferences 
C)  Absolute information about preferences 
D)  Both cardinal and ordinal information about preferences

Question 10

If the more-is-better principle holds,then indifference curves must

Accepted Answer

A)  Be positively-sloped 
B)  Be negatively-sloped 
C)  Be thin 
D)  Be concave 
A)  Be positively-sloped 
B)  Be negatively-sloped 
C)  Be thin 
D)  Be concave

Question 11

Netflix.ca asks its customers to rate the videos they have watched.This information is then used to rank videos for other Netflix.ca subscribers.These subscribers can then use the video rankings to help them decide on a video to rent.Through this process,Netflix.ca is applying the

Accepted Answer

A)  Ranking principle 
B)  Choice principle 
C)  More-is-better principle 
D)  The indifference principle 
A)  Ranking principle 
B)  Choice principle 
C)  More-is-better principle 
D)  The indifference principle

Question 12

-Refer to Figure 4.3,which relates to two consumers shopping for a new car.Which of the following statements is true?

Accepted Answer

A)  Fuel efficiency is more important to Gina than it is to Greg 
B)  Horsepower is just as important to Gina as it is to Greg 
C)  Fuel efficiency is more important to Greg than it is to Gina 
D)  Indifference curves cannot be used to compare consumers' tastes 
A)  Fuel efficiency is more important to Gina than it is to Greg 
B)  Horsepower is just as important to Gina as it is to Greg 
C)  Fuel efficiency is more important to Greg than it is to Gina 
D)  Indifference curves cannot be used to compare consumers' tastes

Question 13

Felix always consumes exactly four cookies with a glass of milk.Felix's indifference curves for cookies and milk would be

Accepted Answer

A)  Linear 
B)  L-shaped 
C)  Convex 
D)  Positively sloped 
A)  Linear 
B)  L-shaped 
C)  Convex 
D)  Positively sloped

Question 14

Suppose Frank is completely indifferent between drinking Coke and drinking Pepsi.Then Frank's indifference curves for Coke and Pepsi would be

Accepted Answer

A)  Linear 
B)  L-shaped 
C)  Convex 
D)  Positively sloped 
A)  Linear 
B)  L-shaped 
C)  Convex 
D)  Positively sloped

Question 15

A curve that shows all of the alternative consumption bundles that the consumer likes equally well is called

Accepted Answer

A)  A budget constraint 
B)  An indifference curve 
C)  An individual demand curve 
D)  A consumption bundle curve 
A)  A budget constraint 
B)  An indifference curve 
C)  An individual demand curve 
D)  A consumption bundle curve

Question 16

Teresa consumes both steak and lobster.Suppose the formula for her indifference curves is S = U - 1.5L,where S stands for the number of steaks,L stands for the number of lobsters and U represents utility.Which of the following bundles would Teresa prefer?

Accepted Answer

A)  10 steaks and 4 lobsters 
B)  9 steaks and 5 lobsters 
C)  12 steaks and 2 lobsters 
D)  There is not enough information to answer the question 
A)  10 steaks and 4 lobsters 
B)  9 steaks and 5 lobsters 
C)  12 steaks and 2 lobsters 
D)  There is not enough information to answer the question

Question 17

For any given family of indifference curves,a consumer would prefer to be at a point

Accepted Answer

A)  On the indifference curve that is closest to the origin 
B)  That is far to the right on an indifference curve 
C)  That is far to the left on an indifference curve 
D)  On the indifference curve that is farthest from the origin 
A)  On the indifference curve that is closest to the origin 
B)  That is far to the right on an indifference curve 
C)  That is far to the left on an indifference curve 
D)  On the indifference curve that is farthest from the origin

Question 18

Marginal utility

Accepted Answer

A)  Is the change in a consumer's utility resulting from the addition of a very small amount of some good 
B)  Is the total utility a resulting from consuming some good, divided by the amount consumed 
C)  Is the change in a consumer's utility resulting from the addition of a very small amount of some good, divided by the amount added 
D)  Is the change in a consumer's utility resulting from the addition of a very small amount of some good, divided by the total amount being consumed 
A)  Is the change in a consumer's utility resulting from the addition of a very small amount of some good 
B)  Is the total utility a resulting from consuming some good, divided by the amount consumed 
C)  Is the change in a consumer's utility resulting from the addition of a very small amount of some good, divided by the amount added 
D)  Is the change in a consumer's utility resulting from the addition of a very small amount of some good, divided by the total amount being consumed

Question 19

Harriet enjoys watching both American Idol and Desperate Housewives on television.Her preferences correspond to the utility function U(A,D)= 2A + 4ÖD,where A stands for the number of hours she watches American Idol and D is the number of hours she watches Desperate Housewives.
a)How would Harriet rank the following alternatives: 4 hours of American Idol and 2 hours of Desperate Housewives,2 hours of American Idol and 4 hours of Desperate Housewives and 3 hours of American Idol and 3 hours of Desperate Housewives?
b)Suppose that one week,Desperate Housewives is not shown,but there is a two-hour American Idol special (instead of the usual one-hour program).Is Harriet better off or worse off? Explain.
c)Would Harriet's preferences change if her utility function was expressed as U(A,D)= 2A + 4ÖD + 6? Why or why not?

Accepted Answer

a)First - 4 hours of American Idol and 2

Question 20

A "bad" would be associated with

Accepted Answer

A)  Zero marginal utility 
B)  A very small amount of marginal utility 
C)  Negative marginal utility 
D)  Positive marginal utility 
A)  Zero marginal utility 
B)  A very small amount of marginal utility 
C)  Negative marginal utility 
D)  Positive marginal utility

The rate at which a consumer will exchange one good for another is called

Higher rates of substitution are indicated by _ _ values of the marginal rate of substitution.

Two products are perfect complements if

Frieda enjoys cooking and baking.Her utility function is U(C,B)= 6C + 3B,where C is the number of hours she spends cooking and B is the hours she spends baking.What is Frieda's MRS of cooking with baking?

When there is a high degree of complimentarily between two products,then their indifference curves will

The marginal rate of substitution between two goods is given by

When the more-is-better principle holds,we assign higher utility values to indifference curves

The slope of an indifference curve tells us

In modern microeconomic theory,utility functions summarize

If the more-is-better principle holds,then indifference curves must

Netflix.ca asks its customers to rate the videos they have watched.This information is then used to rank videos for other Netflix.ca subscribers.These subscribers can then use the video rankings to help them decide on a video to rent.Through this process,Netflix.ca is applying the

-Refer to Figure 4.3,which relates to two consumers shopping for a new car.Which of the following statements is true?

Felix always consumes exactly four cookies with a glass of milk.Felix's indifference curves for cookies and milk would be

Suppose Frank is completely indifferent between drinking Coke and drinking Pepsi.Then Frank's indifference curves for Coke and Pepsi would be

A curve that shows all of the alternative consumption bundles that the consumer likes equally well is called

Teresa consumes both steak and lobster.Suppose the formula for her indifference curves is S = U - 1.5L,where S stands for the number of steaks,L stands for the number of lobsters and U represents utility.Which of the following bundles would Teresa prefer?

For any given family of indifference curves,a consumer would prefer to be at a point

Marginal utility

A "bad" would be associated with

Introduction

Supply and Demand3

Balancing Benefits and Costs

Constraints, Choices, and Demand

Rom Demand to Welfare

Technology and Production

Cost

Rofit Maximization

Choices Involving Time

Choices Involving Risk

Choices Involving Strategy

Behavioral Economics

Equilibrium and Efficiency

Market Intervention

General Equilibrium, Efficiency, and Equity

Monopoly

Pricing Policies

Oligopoly

Externalities and Public Goods

Filters

Exam 4: Principles and Preferences

The rate at which a consumer will exchange one good for another is called

Higher rates of substitution are indicated by _______ _______ values of the marginal rate of substitution.

Two products are perfect complements if

Frieda enjoys cooking and baking.Her utility function is U(C,B)= 6C + 3B,where C is the number of hours she spends cooking and B is the hours she spends baking.What is Frieda's MRS of cooking with baking?

When there is a high degree of complimentarily between two products,then their indifference curves will

The marginal rate of substitution between two goods is given by

When the more-is-better principle holds,we assign higher utility values to indifference curves

The slope of an indifference curve tells us

In modern microeconomic theory,utility functions summarize

If the more-is-better principle holds,then indifference curves must

Netflix.ca asks its customers to rate the videos they have watched.This information is then used to rank videos for other Netflix.ca subscribers.These subscribers can then use the video rankings to help them decide on a video to rent.Through this process,Netflix.ca is applying the

-Refer to Figure 4.3,which relates to two consumers shopping for a new car.Which of the following statements is true?

Felix always consumes exactly four cookies with a glass of milk.Felix's indifference curves for cookies and milk would be

Suppose Frank is completely indifferent between drinking Coke and drinking Pepsi.Then Frank's indifference curves for Coke and Pepsi would be

A curve that shows all of the alternative consumption bundles that the consumer likes equally well is called

Teresa consumes both steak and lobster.Suppose the formula for her indifference curves is S = U - 1.5L,where S stands for the number of steaks,L stands for the number of lobsters and U represents utility.Which of the following bundles would Teresa prefer?

For any given family of indifference curves,a consumer would prefer to be at a point

Marginal utility

A "bad" would be associated with

Introduction

Supply and Demand3

Balancing Benefits and Costs

Constraints, Choices, and Demand

Rom Demand to Welfare

Technology and Production

Cost

Rofit Maximization

Choices Involving Time

Choices Involving Risk

Choices Involving Strategy

Behavioral Economics

Equilibrium and Efficiency

Market Intervention

General Equilibrium, Efficiency, and Equity

Monopoly

Pricing Policies

Oligopoly

Externalities and Public Goods

Filters

Higher rates of substitution are indicated by _ _ values of the marginal rate of substitution.