Question 1

The marginal rate of substitution is

Accepted Answer

A) equal to unit changes in the quantities of both goods so that utility rises. 
B) the slope of the budget line at all points. 
C) the change in the quantity of one good that just offsets a unit change in another good,keeping utility constant. 
D) found by adding additional units. 
A) equal to unit changes in the quantities of both goods so that utility rises. 
B) the slope of the budget line at all points. 
C) the change in the quantity of one good that just offsets a unit change in another good,keeping utility constant. 
D) found by adding additional units.

Question 2

The consumer optimum is the set of goods and services,subject to the limited income of the consumer,that

Accepted Answer

A) the consumer can afford to buy. 
B) is characterized by zero marginal utility on each good and service. 
C) maximizes the level of satisfaction for each consumer. 
D) is characterized by increasing marginal utility. 
A) the consumer can afford to buy. 
B) is characterized by zero marginal utility on each good and service. 
C) maximizes the level of satisfaction for each consumer. 
D) is characterized by increasing marginal utility.

Question 3

A consumer with unlimited income will continue consuming goods until

Accepted Answer

A) the marginal utility of each is equal to zero. 
B) the marginal utility of each is negative. 
C) total utility rises. 
D) marginal utility equals total utility. 
A) the marginal utility of each is equal to zero. 
B) the marginal utility of each is negative. 
C) total utility rises. 
D) marginal utility equals total utility.

Question 4

A consumer has been buying 5 magazines and 2 books a month for many months.The price of books then increases.To attain a new optimum,the consumer will

Accepted Answer

A) buy more magazines because they are now relatively more valuable than they were before,while continuing to buy the same number of books. 
B) buy more books because they are now relatively more valuable than they were before. 
C) buy the same number of books and magazines as before because they provide different types of utility. 
D) buy fewer books than before because they are relatively more expensive than they were before. 
A) buy more magazines because they are now relatively more valuable than they were before,while continuing to buy the same number of books. 
B) buy more books because they are now relatively more valuable than they were before. 
C) buy the same number of books and magazines as before because they provide different types of utility. 
D) buy fewer books than before because they are relatively more expensive than they were before.

Question 5

Which of the following statements is FALSE regarding consumer choice?

Accepted Answer

A) Each change in price has a substitution effect and a real income effect. 
B) When price falls,the consumer chooses in favor of the cheaper good. 
C) Diminishing marginal utility is one reason for a downward sloping demand curve. 
D) Purchasing power has an inverse relationship with the rise in income. 
A) Each change in price has a substitution effect and a real income effect. 
B) When price falls,the consumer chooses in favor of the cheaper good. 
C) Diminishing marginal utility is one reason for a downward sloping demand curve. 
D) Purchasing power has an inverse relationship with the rise in income.

Question 6

If the quantity of hamburgers is measured along the horizontal axis and the quantity of movies is measured along the vertical axis,and the price of a hamburger is $2.00 while the price of a movie is $12,then the slope of the budget line is

Accepted Answer

A) -1/3. 
B) -3.5 
C) -1/6. 
D) -6. 
A) -1/3. 
B) -3.5 
C) -1/6. 
D) -6.

Question 7

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity of } \
\text { Good X/Wk }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Utility }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Good Y/Wk }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Utility }
\end{array} \
\hline 1 & 1200 & 1 & 1700 \
2 & 1000 & 2 & 1400 \
3 & 800 & 3 & 1100 \
4 & 600 & 4 & 800 \
5 & 400 & 5 & 500 \
6 & 100 & 6 & 200 \
\hline
\end{array}$$
-Refer to the above table.If the price of Good X is $2,the price of Good Y is $1,and the consumer has $9,the rational consumer will purchase

Accepted Answer

A) 6 units of Good X and 0 units of Good Y. 
B) 6 units of Good X and 3 units of Good Y. 
C) 2 units of Good X and 5 units of Good Y. 
D) 5 units of Good X and 6 units of Good Y. 
A) 6 units of Good X and 0 units of Good Y. 
B) 6 units of Good X and 3 units of Good Y. 
C) 2 units of Good X and 5 units of Good Y. 
D) 5 units of Good X and 6 units of Good Y.

Question 8

In economics,another term for satisfaction is

Accepted Answer

A) income elasticity. 
B) price elasticity. 
C) utility. 
D) marginal productivity. 
A) income elasticity. 
B) price elasticity. 
C) utility. 
D) marginal productivity.

Question 9

-Given the above figure,if Joey was a rational consumer he would NOT eat more than ________ piece(s)of pizza.

Accepted Answer

A) 1 
B) 5 
C) 4 
D) 6 
A) 1 
B) 5 
C) 4 
D) 6

Question 10

Which of the following is FALSE about indifference curves?

Accepted Answer

A) They are downward sloping. 
B) They are convex to the origin. 
C) They intersect. 
D) They can shift. 
A) They are downward sloping. 
B) They are convex to the origin. 
C) They intersect. 
D) They can shift.

Question 11

With a given level of money income,when the price of a product that a consumer buys declines,the purchasing power of your money income

Accepted Answer

A) decreases. 
B) increases. 
C) is unchanged. 
D) can increase or decreases depending on the goods being consumed. 
A) decreases. 
B) increases. 
C) is unchanged. 
D) can increase or decreases depending on the goods being consumed.

Question 12

$$\begin{array} { l c l c } 
\text { Pepsi } & \text { MU of Pepsi } & \text { Pizza } & \text { MU of Pizza } \
\hline \text { 1st can } & 18 & \text { 1st slice } & 7 \
\text { 2nd can } & 15 & \text { 2nd slice } & 6 \
\text { 3rd can } & 12 & \text { 3rd slice } & 4 \
\text { 4th can } & 9 & \text { 4th slice } & 3 \
\text { 5th can } & 6 & \text { 5th slice } & 0 \
\hline
\end{array}$$
-Using the above table,if the price of Pepsi is $3,how many cans of Pepsi would have to be consumed in order to have a marginal utility to price ratio of 3?

Accepted Answer

A) one can 
B) two cans 
C) three cans 
D) four cans 
A) one can 
B) two cans 
C) three cans 
D) four cans

Question 13

$$\begin{array} { c c c } 
\text { Slices of Pizza } & \text { Total Utility } & \text { Marginal Utility } \
0 & 0 & - \
1 & 20 & \
2 & 50 & \
3 & & 20 \
4 & & 10 \
5 & & 0
\end{array}$$
-In the above table,the marginal utility of the second slice of pizza is

Accepted Answer

A) 20. 
B) 30. 
C) 50. 
D) 10. 
A) 20. 
B) 30. 
C) 50. 
D) 10.

Question 14

$$\begin{array} { c c c } 
\text { Combination } & \text { Good A } & \text { Good B } \
\hline \text { A } & 17 & 4 \
\text { B } & 13 & 5 \
\text { C } & 10 & 6 \
\text { D } & 8 & 7\\hline
\end{array}$$
-Refer to the above table.The table gives the various combinations of Good A and Good B along Jane's indifference curve.The marginal rate of substitution when Jane goes from combination B to combination C is

Accepted Answer

A) 4:1. 
B) 3:1. 
C) 2:1. 
D) 0. 
A) 4:1. 
B) 3:1. 
C) 2:1. 
D) 0.

Question 15

Your allergies are bad this summer so your allergist writes you a prescription to relieve your symptoms.When you get to the pharmacy,you notice the name brand allergy medicine is more expensive than its generic equivalent.You purchase the generic equivalent and demonstrate all of the following EXCEPT

Accepted Answer

A) the principle of substitution of one product for another. 
B) the principle of diminishing marginal utility. 
C) when price decreases,the quantity demanded increases. 
D) a price change may affect consumer optimum. 
A) the principle of substitution of one product for another. 
B) the principle of diminishing marginal utility. 
C) when price decreases,the quantity demanded increases. 
D) a price change may affect consumer optimum.

Question 16

$$\begin{array} { c c c c c } 
\text { Quantity } &  \text { Total Utility } \
\hline \text { per Week } & \text { Michelle } & \text { Robert } & \text { David } & \text { Lauren } \
\hline 0 & 0 & 0 & 0 & 0 \
1 & 50 & 1000 & 60 & 60 \
2 & 99 & 1900 & 120 & 130 \
3 & 147 & 2700 & 180 & 220 \
4 & 194 & 3400 & 240 & 310 \
5 & 240 & 4000 & 300 & 425 \
6 & 285 & 4500 & 360 & 575 \
7 & 329 & 4900 & 420 & 900 \
8 & 372 & 5200 & 480 & 1275 \
9 & 414 & 5400 & 540 & 1770 \
\hline
\end{array}$$
-According to the above table,what is Robert's marginal utility of the 5th unit?

Accepted Answer

A) 60 
B) 4500 
C) 600 
D) 500 
A) 60 
B) 4500 
C) 600 
D) 500

Question 17

An indifference curve

Accepted Answer

A) must be convex to the origin. 
B) must be concave to the origin. 
C) may be convex or concave to the origin. 
D) depends on the prices of the products and the consumer's income. 
A) must be convex to the origin. 
B) must be concave to the origin. 
C) may be convex or concave to the origin. 
D) depends on the prices of the products and the consumer's income.

Question 18

$$\begin{array}{l}
\text { Glasses of }\
\begin{array} { c c c } 
\text { Water } & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 100 & \
2 & 175 & \
3 & 225 & \
4 & 250 & \
5 & 260 & \
6 & 255 &
\end{array}
\end{array}$$
-Using the above table,diminishing marginal utility begins after the ________ glass of water is consumed.

Accepted Answer

A) 1st 
B) 2nd 
C) 6th 
D) 5th 
A) 1st 
B) 2nd 
C) 6th 
D) 5th

Question 19

If someone complains that she doesn't feel very well because she ate too much pizza,we would conclude that the marginal utility of the last piece of pizza eaten was

Accepted Answer

A) positive. 
B) zero. 
C) very large. 
D) negative. 
A) positive. 
B) zero. 
C) very large. 
D) negative.

Question 20

An increase in consumer income will

Accepted Answer

A) shift the budget constraint and increase its slope. 
B) reduce consumption of all normal goods. 
C) pivot the budget constraint on the axis with the good that has the higher price. 
D) shift out the budget constraint and increase the consumption of both goods,if they are normal goods. 
A) shift the budget constraint and increase its slope. 
B) reduce consumption of all normal goods. 
C) pivot the budget constraint on the axis with the good that has the higher price. 
D) shift out the budget constraint and increase the consumption of both goods,if they are normal goods.

The marginal rate of substitution is

The consumer optimum is the set of goods and services,subject to the limited income of the consumer,that

A consumer with unlimited income will continue consuming goods until

A consumer has been buying 5 magazines and 2 books a month for many months.The price of books then increases.To attain a new optimum,the consumer will

Which of the following statements is FALSE regarding consumer choice?

If the quantity of hamburgers is measured along the horizontal axis and the quantity of movies is measured along the vertical axis,and the price of a hamburger is $2.00 while the price of a movie is $12,then the slope of the budget line is

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 $1,and the consumer has $9,the rational consumer will purchase

In economics,another term for satisfaction is

-Given the above figure,if Joey was a rational consumer he would NOT eat more than ________ piece(s)of pizza.

Which of the following is FALSE about indifference curves?

With a given level of money income,when the price of a product that a consumer buys declines,the purchasing power of your money income

Slices of Pizza Total Utility Marginal Utility 0 0 - 1 20 2 50 3 20 4 10 5 0 -In the above table,the marginal utility of the second slice of pizza is

Combination Good A Good B A 17 4 B 13 5 C 10 6 D 8 7 -Refer to the above table.The table gives the various combinations of Good A and Good B along Jane's indifference curve.The marginal rate of substitution when Jane goes from combination B to combination C is

An indifference curve

Glasses of Water Total Utility Marginal Utility 1 100 2 175 3 225 4 250 5 260 6 255 -Using the above table,diminishing marginal utility begins after the ________ glass of water is consumed.

If someone complains that she doesn't feel very well because she ate too much pizza,we would conclude that the marginal utility of the last piece of pizza eaten was

An increase in consumer income will

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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Exam 7: Consumer Choice

The marginal rate of substitution is

The consumer optimum is the set of goods and services,subject to the limited income of the consumer,that

A consumer with unlimited income will continue consuming goods until

A consumer has been buying 5 magazines and 2 books a month for many months.The price of books then increases.To attain a new optimum,the consumer will

Which of the following statements is FALSE regarding consumer choice?

If the quantity of hamburgers is measured along the horizontal axis and the quantity of movies is measured along the vertical axis,and the price of a hamburger is $2.00 while the price of a movie is $12,then the slope of the budget line is

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 $1,and the consumer has $9,the rational consumer will purchase

In economics,another term for satisfaction is

-Given the above figure,if Joey was a rational consumer he would NOT eat more than ________ piece(s)of pizza.

Which of the following is FALSE about indifference curves?

With a given level of money income,when the price of a product that a consumer buys declines,the purchasing power of your money income

Slices of Pizza Total Utility Marginal Utility 0 0 - 1 20 2 50 3 20 4 10 5 0 -In the above table,the marginal utility of the second slice of pizza is

Combination Good A Good B A 17 4 B 13 5 C 10 6 D 8 7 -Refer to the above table.The table gives the various combinations of Good A and Good B along Jane's indifference curve.The marginal rate of substitution when Jane goes from combination B to combination C is

An indifference curve

Glasses of Water Total Utility Marginal Utility 1 100 2 175 3 225 4 250 5 260 6 255 -Using the above table,diminishing marginal utility begins after the ________ glass of water is consumed.

If someone complains that she doesn't feel very well because she ate too much pizza,we would conclude that the marginal utility of the last piece of pizza eaten was

An increase in consumer income will

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

Filters