Question 1

Explain how utility analysis can be used to derive a downward sloping demand curve.

Accepted Answer

Given the law of diminishing marginal ut

Question 2

A representative unit that measures the want-satisfying power of a good is

Accepted Answer

A) a margin. 
B) purchasing power. 
C) income. 
D) a util. 
A) a margin. 
B) purchasing power. 
C) income. 
D) a util.

Question 3

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

Accepted Answer

A) 420 
B) 400 
C) 120 
D) 60 
A) 420 
B) 400 
C) 120 
D) 60

Question 4

The average demand curve slopes downward due to all of the following EXCEPT

Accepted Answer

A) the law of increasing relative costs. 
B) the laws of diminishing marginal utility. 
C) the real-income effect. 
D) the principle of substitution. 
A) the law of increasing relative costs. 
B) the laws of diminishing marginal utility. 
C) the real-income effect. 
D) the principle of substitution.

Question 5

The total utility of water is

Accepted Answer

A) lower than the total and marginal utility of diamonds. 
B) lower than the total utility of diamonds,but the marginal utility is higher. 
C) higher than the total utility of diamonds,but the marginal utility of diamonds is higher. 
D) the same as the total utility of diamonds,but the marginal utilities are the same. 
A) lower than the total and marginal utility of diamonds. 
B) lower than the total utility of diamonds,but the marginal utility is higher. 
C) higher than the total utility of diamonds,but the marginal utility of diamonds is higher. 
D) the same as the total utility of diamonds,but the marginal utilities are the same.

Question 6

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

Accepted Answer

A) 50. 
B) 70. 
C) 80. 
D) 20. 
A) 50. 
B) 70. 
C) 80. 
D) 20.

Question 7

If Frank has been consuming 5 hamburgers per week at a consumer optimum,and the price of hamburgers falls,how will Frank respond?

Accepted Answer

A) He will save more income. 
B) He will buy more of everything. 
C) He will buy more burgers. 
D) He will buy more of everything except burgers. 
A) He will save more income. 
B) He will buy more of everything. 
C) He will buy more burgers. 
D) He will buy more of everything except burgers.

Question 8

In order for a consumer to choose between two different goods,he has to take into consideration the

Accepted Answer

A) marginal utility of production. 
B) marginal utility divided by the price. 
C) marginal utility plus the price. 
D) total utility divided by price. 
A) marginal utility of production. 
B) marginal utility divided by the price. 
C) marginal utility plus the price. 
D) total utility divided by price.

Question 9

A representative unit by which utility is measured is

Accepted Answer

A) a util. 
B) utility. 
C) marginal utility. 
D) ordinal utility. 
A) a util. 
B) utility. 
C) marginal utility. 
D) ordinal utility.

Question 10

How does an increase in the price of an individual good or service affect a consumer optimum,and how does this help explain the law of demand?

Accepted Answer

Each person makes choices such that the

Question 11

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity of } \
\text { Magazines/Wk }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Utility }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Paperbacks/Wk }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Utility }
\end{array} \
\hline 0 & 0 & 0 & 0 \
1 & 60 & 1 & 200 \
2 & 100 & 2 & 400 \
3 & 130 & 3 & 500 \
4 & 140 & 4 & 550 \
5 & 142 & 5 & 575 \
6 & 142 & 6 & 580
\end{array}$$
-Refer to the above table If the price of a magazine is $2 and the price of a paperback book is $5 and the consumer has $40,the rational consumer will purchase

Accepted Answer

A) 2 magazines and 2 books. 
B) 2 magazines and 3 books. 
C) 5 magazines and 6 books. 
D) 6 magazines and 6 books. 
A) 2 magazines and 2 books. 
B) 2 magazines and 3 books. 
C) 5 magazines and 6 books. 
D) 6 magazines and 6 books.

Question 12

A consumer has spent all of his funds on hamburgers and movies.The price of a hamburger is $1 and the price of a movie is $5.The marginal utility of the last hamburger is 5 and the marginal utility of the last movie is 40.This consumer has

Accepted Answer

A) not maximized utility.To maximize utility,he should cut back on movies and buy more hamburgers. 
B) not maximized utility.To maximize utility,he should cut back on hamburgers and buy more movies. 
C) not maximized utility.To maximize utility,he should cut back consumption of each. 
D) maximized utility. 
A) not maximized utility.To maximize utility,he should cut back on movies and buy more hamburgers. 
B) not maximized utility.To maximize utility,he should cut back on hamburgers and buy more movies. 
C) not maximized utility.To maximize utility,he should cut back consumption of each. 
D) maximized utility.

Question 13

An indifference curve shows

Accepted Answer

A) the combinations of goods that a consumer does not like very much. 
B) the combinations of goods that generate the same ratio of marginal utilities. 
C) the set of consumption alternatives that yield the same amount of total utility. 
D) the set of consumption alternatives that yield the same amount of marginal utility. 
A) the combinations of goods that a consumer does not like very much. 
B) the combinations of goods that generate the same ratio of marginal utilities. 
C) the set of consumption alternatives that yield the same amount of total utility. 
D) the set of consumption alternatives that yield the same amount of marginal utility.

Question 14

If an individual's utility from consuming two goods increases,then there must be

Accepted Answer

A) a downward rotation of the individual's indifference curve. 
B) an inward rotation of the individual's indifference curve. 
C) an outward shift of the individual's indifference curve. 
D) in inward shift of the individual's indifference curve. 
A) a downward rotation of the individual's indifference curve. 
B) an inward rotation of the individual's indifference curve. 
C) an outward shift of the individual's indifference curve. 
D) in inward shift of the individual's indifference curve.

Question 15

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity of } \
\text { Hamburgers/Wk }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Utility }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Broadway Shows/Wk }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Utility }
\end{array} \
\hline 1 & 40 & 1 & 400 \
2 & 60 & 2 & 700 \
3 & 76 & 3 & 850 \
4 & 86 & 4 & 950 \
5 & 91 & 5 & 1000 \
6 & 93 & 6 & 1025 \
\hline
\end{array}$$
-Refer to the above table.If the price of a hamburger is $2,the price of a Broadway Show is $60,and the consumer has $128,what is the consumer optimum?

Accepted Answer

A) 2 hamburgers and 2 Broadway shows. 
B) 2 hamburgers and 3 Broadway shows. 
C) 3 hamburgers and 2 Broadway shows. 
D) 4 hamburgers and 2 Broadway shows. 
A) 2 hamburgers and 2 Broadway shows. 
B) 2 hamburgers and 3 Broadway shows. 
C) 3 hamburgers and 2 Broadway shows. 
D) 4 hamburgers and 2 Broadway shows.

Question 16

Let the quantity of hamburgers be measured along the vertical axis and the quantity of movies be measured along the horizontal axis.If the price of a hamburger is $1.50 and the price of a movie is $6,then the slope of the budget line is

Accepted Answer

A) -6. 
B) -4. 
C) -3. 
D) -0.25. 
A) -6. 
B) -4. 
C) -3. 
D) -0.25.

Question 17

Holding all other prices and money income constant,if the price of food rises,then the consumer will adjust her expenditures and

Accepted Answer

A) reach an optimum on a higher indifference curve. 
B) reach an optimum on a lower indifference curve. 
C) reach an optimum on the same indifference curve. 
D) her level of satisfaction may go up or down. 
A) reach an optimum on a higher indifference curve. 
B) reach an optimum on a lower indifference curve. 
C) reach an optimum on the same indifference curve. 
D) her level of satisfaction may go up or down.

Question 18

Suppose that indifference curve I1 lies to the left of indifference curve I2.We can conclude that

Accepted Answer

A) some,but not all,points on indifference curve I1 will correspond to higher utility than points along indifference curve I2. 
B) some,but not all,points on indifference curve I1 will correspond to lower utility than points along indifference curve I2. 
C) all points along indifference curve I1 will correspond to higher utility than points along indifference curve I2. 
D) all points along indifference curve I1 will correspond to lower utility than points along indifference curve I2. 
A) some,but not all,points on indifference curve I1 will correspond to higher utility than points along indifference curve I2. 
B) some,but not all,points on indifference curve I1 will correspond to lower utility than points along indifference curve I2. 
C) all points along indifference curve I1 will correspond to higher utility than points along indifference curve I2. 
D) all points along indifference curve I1 will correspond to lower utility than points along indifference curve I2.

Question 19

After consuming what quantity of pizza does the consumer in the table below experience diminishing marginal utility? $$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity } \
\text { of Pizza }
\end{array} & \begin{array} { c } 
\text { Marginal Utility } \
\text { of Pizza }
\end{array} \
\hline 1 & 100 \
2 & 80 \
3 & 60 \
4 & 40 \
\hline
\end{array}$$

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 20

Mathematically the marginal rate of substitution is

Accepted Answer

A) always a negative number. 
B) always a positive number. 
C) is equal to 1. 
D) sometimes a positive and sometimes a negative number. 
A) always a negative number. 
B) always a positive number. 
C) is equal to 1. 
D) sometimes a positive and sometimes a negative number.

Explain how utility analysis can be used to derive a downward sloping demand curve.

A representative unit that measures the want-satisfying power of a good is

The average demand curve slopes downward due to all of the following EXCEPT

The total utility of water is

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

If Frank has been consuming 5 hamburgers per week at a consumer optimum,and the price of hamburgers falls,how will Frank respond?

In order for a consumer to choose between two different goods,he has to take into consideration the

A representative unit by which utility is measured is

How does an increase in the price of an individual good or service affect a consumer optimum,and how does this help explain the law of demand?

A consumer has spent all of his funds on hamburgers and movies.The price of a hamburger is $1 and the price of a movie is $5.The marginal utility of the last hamburger is 5 and the marginal utility of the last movie is 40.This consumer has

An indifference curve shows

If an individual's utility from consuming two goods increases,then there must be

Let the quantity of hamburgers be measured along the vertical axis and the quantity of movies be measured along the horizontal axis.If the price of a hamburger is $1.50 and the price of a movie is $6,then the slope of the budget line is

Holding all other prices and money income constant,if the price of food rises,then the consumer will adjust her expenditures and

Suppose that indifference curve I1 lies to the left of indifference curve I2.We can conclude that

After consuming what quantity of pizza does the consumer in the table below experience diminishing marginal utility? Quantity of Pizza Marginal Utility of Pizza 1 100 2 80 3 60 4 40

Mathematically the marginal rate of substitution 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

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Exchange Rates and the Balance of Payments

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Exam 7: Consumer Choice

Explain how utility analysis can be used to derive a downward sloping demand curve.

A representative unit that measures the want-satisfying power of a good is

The average demand curve slopes downward due to all of the following EXCEPT

The total utility of water is

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

If Frank has been consuming 5 hamburgers per week at a consumer optimum,and the price of hamburgers falls,how will Frank respond?

In order for a consumer to choose between two different goods,he has to take into consideration the

A representative unit by which utility is measured is

How does an increase in the price of an individual good or service affect a consumer optimum,and how does this help explain the law of demand?

A consumer has spent all of his funds on hamburgers and movies.The price of a hamburger is $1 and the price of a movie is $5.The marginal utility of the last hamburger is 5 and the marginal utility of the last movie is 40.This consumer has

An indifference curve shows

If an individual's utility from consuming two goods increases,then there must be

Let the quantity of hamburgers be measured along the vertical axis and the quantity of movies be measured along the horizontal axis.If the price of a hamburger is $1.50 and the price of a movie is $6,then the slope of the budget line is

Holding all other prices and money income constant,if the price of food rises,then the consumer will adjust her expenditures and

Suppose that indifference curve I1 lies to the left of indifference curve I2.We can conclude that

After consuming what quantity of pizza does the consumer in the table below experience diminishing marginal utility? Quantity of Pizza Marginal Utility of Pizza 1 100 2 80 3 60 4 40

Mathematically the marginal rate of substitution 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

Filters