Question 1

Initially,a consumer is at an optimum.Then the price of X increases.Consequently,

Accepted Answer

A)  $MU _ { X }$ /
$\mathrm { P } _ { \mathrm { X } }$ 
$MU _ { Y }$ /
$P _ { Y }$ . 
C)  $MU _ { X }$ /
$\mathrm { P } _ { \mathrm { X } }$ =
$\text { MUY }$ /
$P _ { Y }$ . 
D)  $\mathrm { MUX }$ >
$\text { MUY }$ . 
A)  $MU _ { X }$ /
$\mathrm { P } _ { \mathrm { X } }$ 
$MU _ { Y }$ /
$P _ { Y }$ . 
C)  $MU _ { X }$ /
$\mathrm { P } _ { \mathrm { X } }$ =
$\text { MUY }$ /
$P _ { Y }$ . 
D)  $\mathrm { MUX }$ >
$\text { MUY }$ .

Question 2

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity of } \
\text { Good X/Wk }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Utility }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Good Y/Wk }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Utility }
\end{array} \
\hline 1 & 1200 & 1 & 1700 \
2 & 1000 & 2 & 1400 \
3 & 800 & 3 & 1100 \
4 & 600 & 4 & 800 \
5 & 400 & 5 & 500 \
6 & 100 & 6 & 200 \
\hline
\end{array}$$
-Refer to the above table.If the price of Good X is $2,the price of Good Y is $2,and the consumer has $14,the rational consumer will purchase

Accepted Answer

A) 3 units of Good X and 4 units of Good Y. 
B) 6 units of Good X and 6 units of Good Y. 
C) 6 units of Good X and 0 units of Good Y. 
D) 3 units of Good X and 3 units of Good Y. 
A) 3 units of Good X and 4 units of Good Y. 
B) 6 units of Good X and 6 units of Good Y. 
C) 6 units of Good X and 0 units of Good Y. 
D) 3 units of Good X and 3 units of Good Y.

Question 3

The consumer optimum for consuming two goods is achieved when

Accepted Answer

A) the total utility from each good is equal. 
B) the price of each good is equal. 
C) the price multiplied by the marginal utility is equal for the two goods. 
D) the marginal utility per last dollar spent is equal for the two goods. 
A) the total utility from each good is equal. 
B) the price of each good is equal. 
C) the price multiplied by the marginal utility is equal for the two goods. 
D) the marginal utility per last dollar spent is equal for the two goods.

Question 4

-Use the above figure.What would make all possible points attainable for the individual to consume?

Accepted Answer

A) A decrease in the price of good y. 
B) An increase in the price of good y. 
C) An increase in the price of good x. 
D) A decrease in income. 
A) A decrease in the price of good y. 
B) An increase in the price of good y. 
C) An increase in the price of good x. 
D) A decrease in income.

Question 5

A consumer is at an optimum when the price of one good she has been consuming decreases.As a result

Accepted Answer

A) the value of the marginal utility of the last unit consumed has increased. 
B) the value of the marginal utility of the last unit consumed has decreased. 
C) the price of the other good must decrease too. 
D) the marginal utility of the last dollar spent on this good is now greater than the marginal utility of the last dollar spent on other goods. 
A) the value of the marginal utility of the last unit consumed has increased. 
B) the value of the marginal utility of the last unit consumed has decreased. 
C) the price of the other good must decrease too. 
D) the marginal utility of the last dollar spent on this good is now greater than the marginal utility of the last dollar spent on other goods.

Question 6

Utility analysis assumes that the consumer's tastes and preferences are

Accepted Answer

A) dependent on income and education. 
B) predetermined and stable. 
C) dependent on national origin. 
D) dependent on geographic location. 
A) dependent on income and education. 
B) predetermined and stable. 
C) dependent on national origin. 
D) dependent on geographic location.

Question 7

If a dinner guest is serious when claiming he just could not get enough of your lasagna and that the more he ate the more he wanted,you would conclude that for him the marginal utility of lasagna was

Accepted Answer

A) increasing. 
B) decreasing. 
C) zero. 
D) constant. 
A) increasing. 
B) decreasing. 
C) zero. 
D) constant.

Question 8

The quantity of good A is measured along the vertical axis,and the quantity of good B is measures along the horizontal axis.If the price of Good A falls B)the vertical intercept of the budget line moves along the vertical axis toward the origin.

Accepted Answer

A) the vertical intercept of the budget line moves along the vertical axis away from the origin. 
B) of the budget line will increase. 
C) the horizontal intercept (along Good 
D) none of the above 
A) the vertical intercept of the budget line moves along the vertical axis away from the origin. 
B) of the budget line will increase. 
C) the horizontal intercept (along Good 
D) none of the above

Question 9

If a consumer concludes that the marginal utility of the last dollar spent on vegetables exceeds the marginal utility of the last dollar spent on junk food,he will respond by

Accepted Answer

A) consuming relatively more junk food and fewer vegetables. 
B) consuming relatively more vegetables and less junk food. 
C) consuming equal amounts of vegetables and junk food. 
D) halting consumption of junk food altogether. 
A) consuming relatively more junk food and fewer vegetables. 
B) consuming relatively more vegetables and less junk food. 
C) consuming equal amounts of vegetables and junk food. 
D) halting consumption of junk food altogether.

Question 10

The quantity of good Y is measured along the vertical axis,and the quantity of good X is measured along the horizontal axis.If the prices of both good Y and good X rise,the budget line

Accepted Answer

A) shifts outward to the right and the vertical and horizontal intercepts will both rise. 
B) shifts inward to the left and both intercepts will decline. 
C) rotates,rising along the vertical axis but falling along the horizontal axis. 
D) none of the above 
A) shifts outward to the right and the vertical and horizontal intercepts will both rise. 
B) shifts inward to the left and both intercepts will decline. 
C) rotates,rising along the vertical axis but falling along the horizontal axis. 
D) none of the above

Question 11

John is currently spending all of his income.For the last unit of Good A consumed John gets 20 utils and for the last unit of Good B consumed he gets 10 utils.The price of Good A is $1.The price of Good B is $10.If John wants to maximize his utility he should

Accepted Answer

A) continue to purchase the same amount of Good A and Good B. 
B) increase the consumption of Good A and decrease the consumption of Good B. 
C) decrease the consumption of Good A and increase the consumption of Good B. 
D) decrease the consumption of Good A and decrease the consumption of Good B. 
A) continue to purchase the same amount of Good A and Good B. 
B) increase the consumption of Good A and decrease the consumption of Good B. 
C) decrease the consumption of Good A and increase the consumption of Good B. 
D) decrease the consumption of Good A and decrease the consumption of Good B.

Question 12

Which of the following is NOT consistent with the law of diminishing marginal utility?

Accepted Answer

A) Newspaper vending machines are not as secure as soft drink machines. 
B) A student selects to eat at an all-you-can-eat restaurant rather than at a restaurant that charges for refills. 
C) A student's enjoyment of opera increases the more she listens to it. 
D) A symphony has free throat lozenges in their lobby. 
A) Newspaper vending machines are not as secure as soft drink machines. 
B) A student selects to eat at an all-you-can-eat restaurant rather than at a restaurant that charges for refills. 
C) A student's enjoyment of opera increases the more she listens to it. 
D) A symphony has free throat lozenges in their lobby.

Question 13

The budget line

Accepted Answer

A) shifts to the left as income increases. 
B) has a positive slope. 
C) is a vertical line. 
D) shows the combination of goods that can be purchased at fixed prices and with a given income. 
A) shifts to the left as income increases. 
B) has a positive slope. 
C) is a vertical line. 
D) shows the combination of goods that can be purchased at fixed prices and with a given income.

Question 14

Which of the following best describes the consumer optimum?

Accepted Answer

A)  $\mathrm { MU } _ { \mathrm { a } }$ /
$\mathrm { P } _ { a }$ =
$\mathrm { TU } _ { b }$ /
$P _ { b }$ 
B)  $\mathrm { MU } _ { \mathrm { a } }$ /
$\mathrm { TU } _ { \mathrm { a } }$ =
$\mathrm { P } _ { a }$ 
C)  $\mathrm { MU } _ { \mathrm { a } }$ /
$\mathrm { P } _ { a }$ =
$\mathrm { MU } _ { \mathrm { b } }$ /
$P _ { b }$ = ...=
$\mathrm { MU } _ { \mathrm { Z } }$ /
$P _ { Z }$ 
D) change in TU/change in P = MU 
A)  $\mathrm { MU } _ { \mathrm { a } }$ /
$\mathrm { P } _ { a }$ =
$\mathrm { TU } _ { b }$ /
$P _ { b }$ 
B)  $\mathrm { MU } _ { \mathrm { a } }$ /
$\mathrm { TU } _ { \mathrm { a } }$ =
$\mathrm { P } _ { a }$ 
C)  $\mathrm { MU } _ { \mathrm { a } }$ /
$\mathrm { P } _ { a }$ =
$\mathrm { MU } _ { \mathrm { b } }$ /
$P _ { b }$ = ...=
$\mathrm { MU } _ { \mathrm { Z } }$ /
$P _ { Z }$ 
D) change in TU/change in P = MU

Question 15

What is the principle of diminishing marginal utility?

Accepted Answer

The principle of marginal utility is tha

Question 16

If marginal utility is zero,

Accepted Answer

A) a rational consumer will consume one more unit. 
B) a rational consumer will consume one less unit next time. 
C) a rational consumer will not consume additional units beyond this point. 
D) a rational consumer will consume one more unit if the price is zero. 
A) a rational consumer will consume one more unit. 
B) a rational consumer will consume one less unit next time. 
C) a rational consumer will not consume additional units beyond this point. 
D) a rational consumer will consume one more unit if the price is zero.

Question 17

$$\begin{array} { c r c c c } 
\text { Quantity } &  \text { Total Utility } \
\hline\text { Per Week } & \text { Amy } & \text { Robert } & \text { David } & \text { Michelle } \
\hline 0 & 0 & 0 & 0 & 0 \
1 & 5.0 & 100 & 600 & 60 \
2 & 9.9 & 190 & 1200 & 130 \
3 & 14.7 & 270 & 1800 & 220 \
4 & 19.4 & 340 & 2400 & 310 \
5 & 24.0 & 400 & 3000 & 425 \
6 & 28.5 & 450 & 3600 & 575 \
7 & 32.9 & 490 & 4200 & 900 \
8 & 37.2 & 520 & 4800 & 1275 \
9 & 41.4 & 510 & 5400 & 1770
\end{array}$$
-Refer to the above table.Amy's utility schedule shows

Accepted Answer

A) diminishing marginal utility throughout the entire schedule. 
B) initially increasing marginal utility and then decreasing marginal utility. 
C) initially decreasing marginal utility and then increasing marginal utility. 
D) increasing marginal utility throughout the entire schedule. 
A) diminishing marginal utility throughout the entire schedule. 
B) initially increasing marginal utility and then decreasing marginal utility. 
C) initially decreasing marginal utility and then increasing marginal utility. 
D) increasing marginal utility throughout the entire schedule.

Question 18

Juan and Sophia have decided to stop studying economics and get a bite to eat.Juan wants to go for a pizza and Sophia wants a hamburger.They decide to go for pizza.What can we conclude from this?

Accepted Answer

A) Juan always gets more utility from pizza than Sophia does. 
B) Sophia gets less utility from pizza than she could from a hamburger. 
C) Sophia will get negative utility from the pizza. 
D) Utility analysis does not work here since Sophia did not eat a hamburger. 
A) Juan always gets more utility from pizza than Sophia does. 
B) Sophia gets less utility from pizza than she could from a hamburger. 
C) Sophia will get negative utility from the pizza. 
D) Utility analysis does not work here since Sophia did not eat a hamburger.

Question 19

Diminishing marginal utility means that as more of a good is consumed,

Accepted Answer

A) the rate at which total utility increases starts to diminish. 
B) the rate at which total utility increases stays the same. 
C) the rate at which total utility increases starts to increase. 
D) there is no impact on the rate of change of total utility. 
A) the rate at which total utility increases starts to diminish. 
B) the rate at which total utility increases stays the same. 
C) the rate at which total utility increases starts to increase. 
D) there is no impact on the rate of change of total utility.

Question 20

The quantities of Good M are plotted on the vertical axis while the quantities of Good N are plotted on the horizontal axis.The prices of both M and N fall.The intercepts of the budget line would

Accepted Answer

A) decline along both axes. 
B) rise on the vertical axis and also rise on the horizontal axis. 
C) rise on the horizontal axis but stay unchanged on the vertical axis. 
D) rise on the vertical axis but stay unchanged along the horizontal axis. 
A) decline along both axes. 
B) rise on the vertical axis and also rise on the horizontal axis. 
C) rise on the horizontal axis but stay unchanged on the vertical axis. 
D) rise on the vertical axis but stay unchanged along the horizontal axis.

Exam 7: Consumer Choice

Initially,a consumer is at an optimum.Then the price of X increases.Consequently,

Quantity of Good X/Wk Marginal Utility Quantity of Good Y/Wk Marginal Utility 1 1200 1 1700 2 1000 2 1400 3 800 3 1100 4 600 4 800 5 400 5 500 6 100 6 200 -Refer to the above table.If the price of Good X is $2,the price of Good Y is $2,and the consumer has $14,the rational consumer will purchase

The consumer optimum for consuming two goods is achieved when

-Use the above figure.What would make all possible points attainable for the individual to consume?

A consumer is at an optimum when the price of one good she has been consuming decreases.As a result

Utility analysis assumes that the consumer's tastes and preferences are

If a dinner guest is serious when claiming he just could not get enough of your lasagna and that the more he ate the more he wanted,you would conclude that for him the marginal utility of lasagna was

The quantity of good A is measured along the vertical axis,and the quantity of good B is measures along the horizontal axis.If the price of Good A falls B)the vertical intercept of the budget line moves along the vertical axis toward the origin.

If a consumer concludes that the marginal utility of the last dollar spent on vegetables exceeds the marginal utility of the last dollar spent on junk food,he will respond by

The quantity of good Y is measured along the vertical axis,and the quantity of good X is measured along the horizontal axis.If the prices of both good Y and good X rise,the budget line

John is currently spending all of his income.For the last unit of Good A consumed John gets 20 utils and for the last unit of Good B consumed he gets 10 utils.The price of Good A is $1.The price of Good B is $10.If John wants to maximize his utility he should

Which of the following is NOT consistent with the law of diminishing marginal utility?

The budget line

Which of the following best describes the consumer optimum?

What is the principle of diminishing marginal utility?

If marginal utility is zero,

Juan and Sophia have decided to stop studying economics and get a bite to eat.Juan wants to go for a pizza and Sophia wants a hamburger.They decide to go for pizza.What can we conclude from this?

Diminishing marginal utility means that as more of a good is consumed,

The quantities of Good M are plotted on the vertical axis while the quantities of Good N are plotted on the horizontal axis.The prices of both M and N fall.The intercepts of the budget line would

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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