Question 1

Behavioral economics suggests that people face human limitations that prevent them from examining every possible choice available to them,with the implication that

Accepted Answer

A) the consumer optimum implied by utility theory is an inappropriate approach to deriving demand curves. 
B) the consumer optimum implied by utility theory is an appropriate approach to deriving demand curves. 
C) marginal utility is always equal to zero. 
D) marginal utility is always negative. 
A) the consumer optimum implied by utility theory is an inappropriate approach to deriving demand curves. 
B) the consumer optimum implied by utility theory is an appropriate approach to deriving demand curves. 
C) marginal utility is always equal to zero. 
D) marginal utility is always negative.

Question 2

"As an individual consumes more units of a good,her total utility falls because of the law of diminishing marginal utility." Do you agree or disagree? Explain.

Accepted Answer

Disagree.The law of diminishing marginal

Question 3

When a consumer is at the consumer optimum,

Accepted Answer

A)  $\mathrm { MU } _ { \mathrm { a } }$ =
$\mathrm { MU } _ { \mathrm { b } }$ =
$\mathrm { MU } _ { \mathrm { C } }$ = ...=
$\mathrm { MU } _ { \mathrm { n } }$ . 
B)  $\mathrm { MU } _ { \mathrm { a } }$ /
$\mathrm { P } _ { a }$ =
$\mathrm { MU } _ { \mathrm { b } }$ /
$P _ { b }$ =
$\mathrm { MU } _ { \mathrm { C } }$ /
$\mathrm { P } _ { \mathrm { C } }$ = ...=
$\mathrm { MU } _ { \mathrm { n } }$ /
$P _ { n }$ = 1. 
C)  $\mathrm { TU } _ { \mathrm { a } }$ =
$\mathrm { TU } _ { b }$ =
$\mathrm { TU } _ { \mathrm { c } }$ = ...=
$\mathrm { TU } _ { \mathrm { n } }$ . 
D)  $\mathrm { MU } _ { \mathrm { a } }$ /
$\mathrm { P } _ { a }$ =
$\mathrm { MU } _ { \mathrm { b } }$ /
$P _ { b }$ =
$\mathrm { MU } _ { \mathrm { C } }$ /
$\mathrm { P } _ { \mathrm { C } }$ = ...=
$\mathrm { MU } _ { \mathrm { n } }$ /
$P _ { n }$ . 
A)  $\mathrm { MU } _ { \mathrm { a } }$ =
$\mathrm { MU } _ { \mathrm { b } }$ =
$\mathrm { MU } _ { \mathrm { C } }$ = ...=
$\mathrm { MU } _ { \mathrm { n } }$ . 
B)  $\mathrm { MU } _ { \mathrm { a } }$ /
$\mathrm { P } _ { a }$ =
$\mathrm { MU } _ { \mathrm { b } }$ /
$P _ { b }$ =
$\mathrm { MU } _ { \mathrm { C } }$ /
$\mathrm { P } _ { \mathrm { C } }$ = ...=
$\mathrm { MU } _ { \mathrm { n } }$ /
$P _ { n }$ = 1. 
C)  $\mathrm { TU } _ { \mathrm { a } }$ =
$\mathrm { TU } _ { b }$ =
$\mathrm { TU } _ { \mathrm { c } }$ = ...=
$\mathrm { TU } _ { \mathrm { n } }$ . 
D)  $\mathrm { MU } _ { \mathrm { a } }$ /
$\mathrm { P } _ { a }$ =
$\mathrm { MU } _ { \mathrm { b } }$ /
$P _ { b }$ =
$\mathrm { MU } _ { \mathrm { C } }$ /
$\mathrm { P } _ { \mathrm { C } }$ = ...=
$\mathrm { MU } _ { \mathrm { n } }$ /
$P _ { n }$ .

Question 4

The price of hamburgers is $2 and the price of movies is $4.The consumer has $14 of income.The consumer is purchasing 3 hamburgers and receiving 20 utils for the last hamburger.He is also purchasing 2 movies and receiving 40 utils for the last movie.This set of goods

Accepted Answer

A) is an optimum since the entire income is spent and the marginal utility per dollar spent is the same for the last unit of each good. 
B) is an optimum since the entire income is spent and total utility is minimized. 
C) is not an optimum because the marginal utility per dollar spent is greater for hamburgers than for movies. 
D) is not an optimum because the consumer has not spent all of his money. 
A) is an optimum since the entire income is spent and the marginal utility per dollar spent is the same for the last unit of each good. 
B) is an optimum since the entire income is spent and total utility is minimized. 
C) is not an optimum because the marginal utility per dollar spent is greater for hamburgers than for movies. 
D) is not an optimum because the consumer has not spent all of his money.

Question 5

-Using the above figure,we can conclude that

Accepted Answer

A) the consumer will purchase goods at combination M. 
B) the consumer is indifferent between J and M. 
C) K is the optimal combination of goods. 
D) L is preferred to K. 
A) the consumer will purchase goods at combination M. 
B) the consumer is indifferent between J and M. 
C) K is the optimal combination of goods. 
D) L is preferred to K.

Question 6

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Quantity of Movies } \
\text { Watched per Week }
\end{array} & \begin{array} { c } 
\text { Michelle's Total } \
\text { Utility per Week }
\end{array} & \begin{array} { c } 
\text { Robert's Total } \
\text { Utility per Week }
\end{array} \
\hline 0 & 0 & 0 \
1 & 100 & 100 \
2 & 195 & 190 \
3 & 270 & 270 \
4 & 340 & 340 \
5 & 390 & 400 \
6 & 420 & 350 \
7 & 435 & 390 \
8 & 445 & 420 \
9 & 450 & 440 \
10 & 440 & 450 \
\hline
\end{array}$$
-Refer to the above table.The marginal utility of the 6th movie for Michelle is

Accepted Answer

A) 25 units of utility. 
B) 30 units of utility. 
C) 35 units of utility. 
D) 40 units of utility. 
A) 25 units of utility. 
B) 30 units of utility. 
C) 35 units of utility. 
D) 40 units of utility.

Question 7

The expression "getting the most bang for your buck" is an illustration of the

Accepted Answer

A) total utility/price ratio. 
B) total utility/marginal utility ratio 
C) marginal utility/price ratio. 
D) marginal utility/total utility ratio. 
A) total utility/price ratio. 
B) total utility/marginal utility ratio 
C) marginal utility/price ratio. 
D) marginal utility/total utility ratio.

Question 8

The slope of the budget constraint line is the

Accepted Answer

A) income of consumers divided by the price of each good. 
B) ratio of this year's income to last year's income. 
C) rate of exchange between the two goods. 
D) ratio of different levels of income. 
A) income of consumers divided by the price of each good. 
B) ratio of this year's income to last year's income. 
C) rate of exchange between the two goods. 
D) ratio of different levels of income.

Question 9

The total utility of consuming 6 units of a good is 255.The marginal utility of the 6th unit is 45 and the marginal utility of the 5th unit is 60.The total utility of consuming 5 units of the good is

Accepted Answer

A) 300. 
B) 150. 
C) 210. 
D) 195. 
A) 300. 
B) 150. 
C) 210. 
D) 195.

Question 10

When you purchase the lower-priced store brand bread instead of the more expensive name brand,you are experiencing

Accepted Answer

A) the substitution effect. 
B) the income effect. 
C) a fall in total utility. 
D) diminishing marginal product. 
A) the substitution effect. 
B) the income effect. 
C) a fall in total utility. 
D) diminishing marginal product.

Question 11

The price of hamburgers is $2 and the price of movies is $4.The consumer has $14 of income.The consumer is purchasing 3 hamburgers and receiving 30 utils for the last hamburger.He is also purchasing 2 movies and receiving 40 utils for the last movie.This set of goods

Accepted Answer

A) is an optimum since the entire income is spent and the marginal utility per dollar spent is the same for the last unit of each good. 
B) is an optimum since the entire income is spent and total utility is maximized. 
C) is not an optimum because the marginal utility per dollar spent is greater for hamburgers than for movies. 
D) is not an optimum because the consumer has not spent all of his money. 
A) is an optimum since the entire income is spent and the marginal utility per dollar spent is the same for the last unit of each good. 
B) is an optimum since the entire income is spent and total utility is maximized. 
C) is not an optimum because the marginal utility per dollar spent is greater for hamburgers than for movies. 
D) is not an optimum because the consumer has not spent all of his money.

Question 12

Marginal utility is

Accepted Answer

A) the utility received from consuming one unit of a good. 
B) the change in total utility due to a one-unit change in the quantity of a good consumed. 
C) the total utility received from consuming a certain quantity of a good divided by the quantity. 
D) the utility received by the last consumer of a good. 
A) the utility received from consuming one unit of a good. 
B) the change in total utility due to a one-unit change in the quantity of a good consumed. 
C) the total utility received from consuming a certain quantity of a good divided by the quantity. 
D) the utility received by the last consumer of a good.

Question 13

If the budget line rotates,then we know that

Accepted Answer

A) income has changed. 
B) their has been a change in the consumer's tastes. 
C) the price of one of the goods had changed. 
D) the consumer was not maximizing their utility. 
A) income has changed. 
B) their has been a change in the consumer's tastes. 
C) the price of one of the goods had changed. 
D) the consumer was not maximizing their utility.

Question 14

The consumption possibilities curve is the

Accepted Answer

A) supply curve. 
B) demand curve. 
C) budget constraint. 
D) indifference curve. 
A) supply curve. 
B) demand curve. 
C) budget constraint. 
D) indifference curve.

Question 15

When you buy something,you do so because of the satisfaction you expect to receive from having and using that good.Another term that can be used for satisfaction is

Accepted Answer

A) need. 
B) purchasing power. 
C) utility. 
D) price elasticity. 
A) need. 
B) purchasing power. 
C) utility. 
D) price elasticity.

Question 16

A curve that shows a set of consumption alternatives that give the same level of satisfaction is

Accepted Answer

A) a substitution curve. 
B) a budget line. 
C) an indifference curve. 
D) an income curve. 
A) a substitution curve. 
B) a budget line. 
C) an indifference curve. 
D) an income curve.

Question 17

Increases in total utility from the consumption of a good decrease as more is consumed.This statement is

Accepted Answer

A) the law of diminishing marginal utility. 
B) the law of average utility. 
C) the consumer optimum. 
D) false. 
A) the law of diminishing marginal utility. 
B) the law of average utility. 
C) the consumer optimum. 
D) false.

Question 18

Economists use what term to describe the want-satisfying power of a good?

Accepted Answer

A) Demand 
B) Utility 
C) Marginal propensity to consume 
D) Income elasticity 
A) Demand 
B) Utility 
C) Marginal propensity to consume 
D) Income elasticity

Question 19

-Use the above figure.When the budget line rotates from "b" to "c"

Accepted Answer

A) fewer units of J and fewer units of K will be purchased. 
B) more units of J and more units of K will be purchased. 
C) fewer units of J and more units of K will be purchased. 
D) more units of J and fewer units of K will be purchased. 
A) fewer units of J and fewer units of K will be purchased. 
B) more units of J and more units of K will be purchased. 
C) fewer units of J and more units of K will be purchased. 
D) more units of J and fewer units of K will be purchased.

Question 20

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Quantity of Movies } \
\text { Watched per Week }
\end{array} & \begin{array} { c } 
\text { Michelle's Total } \
\text { Utility per Week }
\end{array} & \begin{array} { c } 
\text { Robert's Total } \
\text { Utility per Week }
\end{array} \
\hline 0 & 0 & 0 \
1 & 100 & 100 \
2 & 195 & 190 \
3 & 270 & 270 \
4 & 340 & 340 \
5 & 390 & 400 \
6 & 420 & 350 \
7 & 435 & 390 \
8 & 445 & 420 \
9 & 450 & 440 \
10 & 440 & 450 \
\hline
\end{array}$$
-Refer to the above table.The marginal utility of the 8th movie for Robert is

Accepted Answer

A) 30 units of utility. 
B) 20 units of utility. 
C) 420 units of utility. 
D) 5 units of utility. 
A) 30 units of utility. 
B) 20 units of utility. 
C) 420 units of utility. 
D) 5 units of utility.

Exam 7: Consumer Choice

Behavioral economics suggests that people face human limitations that prevent them from examining every possible choice available to them,with the implication that

"As an individual consumes more units of a good,her total utility falls because of the law of diminishing marginal utility." Do you agree or disagree? Explain.

When a consumer is at the consumer optimum,

The price of hamburgers is $2 and the price of movies is $4.The consumer has $14 of income.The consumer is purchasing 3 hamburgers and receiving 20 utils for the last hamburger.He is also purchasing 2 movies and receiving 40 utils for the last movie.This set of goods

-Using the above figure,we can conclude that

Quantity of Movies Watched per Week Michelle's Total Utility per Week Robert's Total Utility per Week 0 0 0 1 100 100 2 195 190 3 270 270 4 340 340 5 390 400 6 420 350 7 435 390 8 445 420 9 450 440 10 440 450 -Refer to the above table.The marginal utility of the 6th movie for Michelle is

The expression "getting the most bang for your buck" is an illustration of the

The slope of the budget constraint line is the

The total utility of consuming 6 units of a good is 255.The marginal utility of the 6th unit is 45 and the marginal utility of the 5th unit is 60.The total utility of consuming 5 units of the good is

When you purchase the lower-priced store brand bread instead of the more expensive name brand,you are experiencing

The price of hamburgers is $2 and the price of movies is $4.The consumer has $14 of income.The consumer is purchasing 3 hamburgers and receiving 30 utils for the last hamburger.He is also purchasing 2 movies and receiving 40 utils for the last movie.This set of goods

Marginal utility is

If the budget line rotates,then we know that

The consumption possibilities curve is the

When you buy something,you do so because of the satisfaction you expect to receive from having and using that good.Another term that can be used for satisfaction is

A curve that shows a set of consumption alternatives that give the same level of satisfaction is

Increases in total utility from the consumption of a good decrease as more is consumed.This statement is

Economists use what term to describe the want-satisfying power of a good?

-Use the above figure.When the budget line rotates from "b" to "c"

Quantity of Movies Watched per Week Michelle's Total Utility per Week Robert's Total Utility per Week 0 0 0 1 100 100 2 195 190 3 270 270 4 340 340 5 390 400 6 420 350 7 435 390 8 445 420 9 450 440 10 440 450 -Refer to the above table.The marginal utility of the 8th movie for Robert is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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