Deck 7: Consumer Behavior

Question 1

Utility measurements are:

A)a relative ranking of how much different people enjoy a particular good.
B)used to compare one person's preference for a good to another person's preference.
C)a relative ranking of the satisfaction a person gets from alternative combinations of things.
D)None of these are true.

Answer 1

a relative ranking of the satisfaction a person gets from alternative combinations of things.

Question 2

Revealed preference is:

A)the idea that people's preferences can be determined by observing their choices and behavior.
B)the notion that people reveal the utility they get by reporting it on a numerical scale.
C)the method that psychologists, anthropologists, and economists use to measure utility.
D)All of these are correct.

Answer 2

the idea that people's preferences can be determined by observing their choices and behavior.

Question 3

Billy is deciding whether to stay home and watch TV or go out with friends. If Billy decides to stay home, we can conclude that he:

A)is a homebody who rarely goes out.
B)will receive more utility from watching TV than going out with friends.
C)wants to stay home this time, but will likely choose to go out with friends the next time.
D)has revealed a preference to always be alone.

Answer 3

will receive more utility from watching TV than going out with friends.

Question 4

Utility is useful when:

A)comparing the relative satisfaction different consumers receive from a particular good.
B)predicting whether a good or service will sell more if the price is lowered.
C)quantitatively describing a person's preferences for one good over another.
D)describing exactly how much an individual values one particular good.

Question 5

What is a bundle in terms of utility?

A)A specific combination of goods and services an individual could consume.
B)The number of people that choose a particular combination of goods.
C)A curve describing different combinations of goods and services an individual could choose to consume.
D)The sale of goods or services at a discounted price.

Question 6

Mariana has an hour of free time during which she could either go for a run or swim at the local pool. She decides to swim. Economists would conclude that Mariana:

A)is revealing a preference for swimming over running.
B)will receive less utility from swimming than playing soccer.
C)was unable to go for a run at that time.
D)is more skilled at swimming than running.

Question 7

Corey has a blue sweater and a denim jacket. On some days he chooses to wear the sweater but on others he chooses to wear the jacket. Economists would most likely conclude that:

A)Corey's preferences have changed.
B)Corey's preferences have not changed, but other factors, such as the temperature outside, may have changed.
C)Corey is not acting rationally but rather considering the emotional impact of his choice.
D)Corey's preferences for wearing a jacket versus wearing a sweater are not defined.

Question 8

Utility is:

A)a way of describing a consumer's satisfaction.
B)only applicable to goods that are purchased.
C)a measure of a consumer's income.
D)All of these are correct.

Question 9

A utility function is an equation for calculating:

A)the maximum utility an individual can derive.
B)the total utility an individual derives from consuming a particular good over a particular time period.
C)the total utility a group of people derive from consuming a particular good.
D)the total utility that an individual derives from consuming a particular combination of goods and services.

Question 10

What is a baseline assumption that economists make about consumer behavior?

A)People are rational utility maximizers.
B)People will always choose short-term benefits to longer-term payoffs.
C)People will always choose what makes them happiest.
D)People are unpredictable.

Question 11

Utility is:

A)maximized by rational individuals.
B)revealed by observing choices an individual makes.
C)the satisfaction individuals get from different bundles of goods.
D)All of these are correct.

Question 12

Utility is:

A)a quantitative measure of consumers' preferences.
B)an objective measure of a person's happiness.
C)as difficult to measure as an individual's income level.
D)a meaningful number measuring a consumer's precise level of satisfaction.

Question 13

Nikolaj makes a New Year's resolution to lose weight. On January 3 ^rd, he decides to go out for ice cream instead of going to the gym. Using the concept of revealed preference, economists would most likely conclude that Nikolaj:

A)is not a rational individual.
B)gains more utility from ice cream than working out.
C)has changed his preferences.
D)has no control over the actions he makes.

Question 14

Individuals will make choices to maximize their:

A)constraints.
B)utility.
C)income.
D)values.

Question 15

Economists assume that an individual chooses the option that:

A)gives the individual the least utility.
B)gives the individual the most utility.
C)creates the most utility for society.
D)is the most efficient choice.

Question 16

After browsing his cabinets to see what meals he can make, Ken is deciding whether to make tacos or spaghetti for dinner. If Ken makes spaghetti, we can conclude:I. Ken would receive zero utility from eating tacos.II. Eating spaghetti for dinner will give Ken more utility than eating tacos.III. Eating spaghetti for dinner will give Ken positive utility.

A)III only
B)II only
C)II and III only
D)I, II and III

Question 17

According to revealed preference, a consumer that chooses to smoke cigarettes:

A)derives more utility from smoking than from other goods that could have been purchased with the money spent on cigarettes.
B)derives more happiness from smoking than from other goods that could have purchased with the money spent on cigarettes.
C)is minimizing utility given the options available.
D)is behaving irrationally.

Question 18

Pranav is deciding what to drink from a cooler that contains cans of soda pop and iced tea. When Pranav chooses iced tea, we assume that he will receive more utility from drinking iced tea than soda pop. Which economic concept is this conclusion based on?

A)Revealed preference
B)Utility minimization
C)Satisfaction scales
D)Rational behavior

Question 19

Which of the following statements is true about individuals and utility?

A)Individuals seek to maximize utility.
B)Individuals seek to minimize utility.
C)Individuals will either minimize or maximize utility depending on the situation.
D)Individuals focus more on maximizing income than utility.

Question 20

After browsing the shoe store for a while, Bob buys a pair of Nike running shoes. Economists would say that Bob:

A)is revealing a strong distaste for New Balance running shoes.
B)will always choose Nike over any other shoe brand.
C)receives more utility per dollar from Nike running shoes than any other pair in the store.
D)would receive disutility from other pairs of running shoes.

Question 21

Roberto and Pasua like to eat pizza twice a week, burritos once a week, and steak four days a week. This variety of dinner choices illustrates the concept of:

A)instable preferences.
B)negative marginal utility.
C)diminishing marginal utility.
D)income maximization.

Question 22

When successive units of a typical good are consumed, the marginal utility gained:

A)tends to decrease.
B)tends to increase.
C)may increase or decrease depending on the cost of the good.
D)tends to stay the same.

Question 23

The principle of diminishing marginal utility states that:

A)individuals rarely maximize their total utility, as it continually diminishes over time.
B)the change in total utility that comes from consuming one additional unit of a good or service fluctuates depending on how many units are consumed in total.
C)the additional utility gained from consuming successive units of a good or service tends to be smaller than the utility gained from the previous unit.
D)the additional utility gained from consuming different bundles of goods and services tends to be smaller than the utility gained from consuming just one bundle of goods and services.

Question 24

Linus has just watched two hours of TV. Which of the following is likely true?

A)His second hour of watching TV reduced his total utility.
B)His second hour of watching TV added less to his total utility than did the first.
C)His third hour of watching TV will decrease his total utility.
D)His third hour of watching TV will increase his total utility by at least as much as the second.

Question 25

If Bella eats one piece of pie, she receives a utility of 10. If she continues eating, a second piece of pie will yield a marginal utility of 8, a third will yield a marginal utility of 2, and a fourth will yield a marginal utility of -2. Which of the following statements is true?

A)Bella's marginal utility is not diminishing.
B)Bella's total utility will decrease if she eats a third piece of pie.
C)Bella's total utility will be maximized if she eats three pieces of pie.
D)Bella's total utility decreases after the first piece of pie.

Question 26

Sadie has just eaten a donut that gave her a utility of 6. If she chooses to eat another donut, we can assume that:

A)she will receive an increase in utility of more than 6 from the additional donut.
B)she will receive a decrease in utility from the additional donut.
C)she will receive an increase in utility of less than 6 from the additional donut.
D)her total utility will fall because of diminishing marginal utility.

Question 27

If Bohai has one piece of gum in his mouth, he receives a utility of 12. If he puts a second piece of gum in his mouth, he will receive a marginal utility of 6. Adding a third piece will give a marginal utility of 1, and adding a fourth piece will cause Bohai to gag, yielding a marginal utility of -4. Which of the following statements is true?

A)Bob's total utility from chewing four pieces of gum would be 23.
B)Bob's total utility will decrease if he chews the fourth piece of gum.
C)Bob's total utility will be maximized if he eats two pieces of gum.
D)Bob's total utility will decrease after the first piece of gum.

Question 28

Neema has an hour of free time she can spend doing one of three activities. Spending the hour reading would give her a utility of 4, playing video games would give her a utility of 2, and jogging would give her a utility of 6. Based on this information, economists could predict that Neema will:

A)read.
B)play video games.
C)go jogging.
D)do nothing, since no activity gives a utility greater than 10.

Question 29

Johnny spends his Saturday doing a variety of activities. In the morning he exercises and does yard work. He reads in the afternoon and hosts a dinner party in the evening. Economists would say his choice to do a variety of activities instead of spending all of his time on one activity illustrates the concept of:

A)tastes and preferences.
B)budget constraints.
C)diminishing marginal utility.
D)income effect.

Question 30

Kaito has an hour to spend reading at the library. Spending that hour reading a graphic novel would give him a utility of 5, reading a biography would give him a utility of 4, and reading his economics textbook would give him a utility of 9. An economist would predict that Kaito will spend his hour reading:

A)a graphic novel.
B)a biography.
C)his economics textbook.
D)It is impossible to predict how Kaito will spend his time.

Question 31

Howard has just smoked a cigarette. If he chooses to smoke a second one:

A)he will experience a drop in total utility.
B)he would not be acting rationally.
C)he will derive less marginal utility from it than his first.
D)None of these are true.

Question 32

Elijah has just eaten his second popsicle. Using the concept of marginal utility, we can say that the utility he will receive from eating a third popsicle will:

A)reduce his total utility.
B)not reduce his total utility.
C)be less than the utility he received from the second popsicle, but will still increase his total utility.
D)be less than the utility he received from the second popsicle, and may increase or decrease his total utility.

Question 33

Katya just finished drinking a bottle of Coke. Using the concept of marginal utility, we can say that the utility Katya will receive if she drinks another bottle of Coke:

A)will reduce her total utility.
B)will increase her total utility.
C)will be the same as that of her first.
D)may reduce or increase her total utility.

Question 34

Catarina has just eaten her second bowl of cereal. Which of the following is likely true?

A)Her second bowl reduced her total utility.
B)Her second bowl added less to her total utility than the first.
C)Her third bowl will decrease her total utility.
D)Her third bowl will increase her total utility by at least as much as the second.

Question 35

If successive units of a good are consumed, the marginal utility gained typically:

A)increases at the same rate for all people.
B)increases at different rates for different people.
C)decreases at the same rate for all people.
D)decreases at different rates for different people.

Question 36

Grace has received a utility of 8 from eating a slice of pizza. If she chooses to eat a second slice:

A)she will experience a drop in total utility.
B)she would not be acting rationally.
C)she will experience an increase in total utility.
D)None of these are true.

Question 37

After watching a movie, Alan chooses to go for a walk rather than watch a second movie. Economists would explain his choice using the concept of:

A)budget constraints.
B)diminishing marginal utility.
C)income effect.
D)substitution effect.

Question 38

Thinking about the total utility gained from the consumption of a typical good, we can say in general that:

A)total utility will rise, peak, and then decline as more and more units are consumed.
B)consuming more and more units of a good will eventually cause marginal utility to increase.
C)total utility will increase by decreasing amounts until it is maximized, after which it declines.
D)total utility is maximized at the point at which the marginal utility is greatest.

Question 39

Marginal utility:

A)explains why individuals find it difficult to maximize their total utility.
B)is the change in total utility that comes from consuming one additional unit of a good or service.
C)can only be applied to situations in which individuals can choose among several goods or services.
D)is the loss in utility an individual experiences after making a bad decision.

Question 40

Riding her bike for one hour has given Aditi a utility of 7. If Aditi chooses to ride her bike for another hour, we can assume that:

A)she will receive a marginal utility of more than 7.
B)she will receive a marginal utility of 7.
C)she will receive a marginal utility of less than 7.
D)her total utility will fall because of diminishing utility.

Question 41

A budget constraint shows different bundles of goods that all:

A)yield the same total utility.
B)cost the same amount.
C)maximize an individual's utility.
D)maximize total utility at varying levels of income.

Question 42

The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items.

What is the total utility Jack will receive if he consumes bundle D?

A)1,160
B)1,300
C)950
D)2,220

Question 43

Zachary spends his day off studying for a total of four hours and exercising for one hour. Using the concept of utility to explain his choices, which of the following is true?

A)The total utility he received from exercising for one hour was greater than the total utility he received from studying for four hours.
B)The marginal utility he received from exercising for the first hour was greater than the marginal utility he received from studying for the first hour.
C)The marginal utility he would have received from studying for a fifth hour would have been negative.
D)The marginal utility he would have received from studying for a fifth hour would have been less than the marginal utility he received from the first hour of exercise.

Question 44

The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items.

If we assume Jack is a rational utility maximizer, then we can predict he will buy _____with his $10.

A)bundle A
B)bundle B
C)bundle C
D)bundle D

Question 45

Olivia decides to forgo a third slice of pizza and eats an ice cream cone instead. This behavior exemplifies the economic concept of:

A)diminishing marginal utility.
B)altruism.
C)reciprocity.
D)selfishness.

Question 46

One individual's budget constraint:

A)will be the same as another individual's budget constraint if they have the same income.
B)will be the same as another individual's budget constraint if they have the same income and preferences.
C)will be the same as another individual's budget constraint if they have the same preferences.
D)can never be the same as another individual's budget constraint.

Question 47

The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items.

If Jack decides to consume bundle D, we can conclude that he:

A)still has money left to spend.
B)is not maximizing his utility.
C)could consume more of both goods.
D)All of these are correct.

Question 48

Which of the following statements about a budget constraint is true?

A)Each bundle gives an individual a different amount of utility and costs a different amount of money.
B)Each bundle gives an individual a different amount of utility, but costs the same amount of money.
C)Each bundle gives an individual the same amount of utility and costs the same amount of money.
D)Each bundle gives an individual the same amount of utility, but costs a different amount of money.

Question 49

The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items.

If Jack consumes 3 popsicles and 1 ice cream cone, then:

A)he still has $5 left to spend.
B)the price of ice cream must have increased to $8.
C)the price of popsicles must have decreased.
D)None of these are true.

Question 50

Dave and Diya play two games of tennis before deciding to stop for lunch. Using the concept of utility to explain their choices, we can conclude that:

A)the marginal utility of the second game must have been zero.
B)the marginal utility they would receive from playing a third game must be negative.
C)the marginal utility they would receive from playing a third game must be less than the marginal utility they would receive from eating lunch.
D)All of these are correct.

Question 51

The table shown describes the different combinations of goods that Brianna can consume, given that she has $80 to spend on these two items.

Considering the information in the table, what is the price of a concert ticket?

A)$20
B)$10
C)$40
D)$15

Question 52

The table shown describes all the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items.

The bundle of goods that will give Jack the highest total utility is:

A)bundle E.
B)bundle B.
C)bundle C.
D)bundle D.

Question 53

The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items.

Considering the information in the table, what is the price of an ice cream cone?

A)$2
B)$1
C)$4
D)$5

Question 54

A budget constraint is a line that is composed of:

A)all possible combinations of goods and services that maximize a consumer's total utility.
B)the additional utility gained from consuming all possible combinations of goods and services.
C)all possible combinations of goods and services that a consumer can buy with his or her income.
D)the total utility gained from consuming all possible combinations of goods and services with a certain income.

Question 55

When someone is served pizza and soda for dinner, that individual would typically eat some pizza, then drink some soda, then eat more pizza, and so on, until consumption of both pizza and soda ceases. How can this behavior be explained using economic concepts?

A)The individual is revealing an indecisiveness about whether more utility is received from pizza or from soda.
B)People tend to act irrationally around food, and the concept of utility maximization cannot be applied.
C)The individual continues to eat each good until the marginal utility for the one good is lower than the other.
D)The concept of unlimited wants states that an individual will never tire of eating pizza and soda.

Question 56

The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items.

After consuming 2 popsicles and 2 ice cream cones Jack still has _____ left to spend.

A)$4
B)$6
C)$8
D)$2

Question 57

The table shown describes the different combinations of goods that Brianna can consume, given that she has $80 to spend on these two items.

Brianna's utility-maximizing bundle of goods is _____ concert tickets and _____ movie tickets.

A)3; 2
B)2; 4
C)1; 6
D)0; 8

Question 58

Assume the graph shown displays Caleb's marginal utility for pairs of shoes. Which of the following statements is true? Remove rule below A. Caleb's

A)Caleb's total utility decreases as the number of shoes increases.
B)Caleb does not like shoes.
C)Caleb's total utility is negative after eight pairs of shoes.
D)Caleb's total utility starts decreasing after eight pairs of shoes.

Question 59

Courtney rides her bike for one hour and received a marginal utility of 8. After that first hour, she stops to eat an ice cream cone and then rides her bike for another hour. Which of the following statements is true?

A)The utility she would have received from eating a second ice cream cone would have been more than the utility she received from biking for a second hour.
B)The utility she received from eating the ice cream cone was more than 8.
C)The utility she received from eating the ice cream cone was less than the utility she received from the second hour of bike riding.
D)The utility she would have received from a third hour of biking would have been less than the utility she gained from eating an ice cream cone.

Question 60

Assume the graph shown displays Nadia's total utility function for pairs of gloves. Which of the following statements is true?I. The marginal utility of the 10th of gloves is negative.II. The marginal utility of gloves increases first and then decreases.III. The marginal utility of the 6th pair of gloves is smaller than the marginal utility of the 1st pair of gloves.

A)I and III
B)II and III
C)I and II
D)I, II, and III

Question 61

If the graph shown represents Damien's budget constraint, what can be said about burritos?

A)Burritos cost twice as much as salads.
B)Burritos cost half as much as salads.
C)Damien likes burritos more than salads.
D)Damien is willing to pay twice as much for burritos as he is for salads.

Question 62

The slope of a budget constraint:

A)represents the opportunity cost of the two goods relative to each other.
B)represents the relative marginal utilities from consuming the two goods.
C)measures the total utility the consumer gets from consuming the two goods.
D)is the consumer's income level.

Question 63

Assume the graph shown represents Isaac's budget constraint. Isaac has $60 to spend on movie rentals and movie theater tickets. Which of the following can be said about Isaac's choices?

A)Isaac can buy three times as many movie rentals as movie theater tickets.
B)Movies theater tickets must cost $15 each.
C)Movie rentals must cost $5 each.
D)All of these are correct.

Question 64

If the graph shown represents Stella's budget constraint, and salads cost $8, how much does Stella have to spend on these two items?

A)$40
B)$64
C)$48
D)This question cannot be answered without more information.

Question 65

Assume Larry's budget constraint is represented by line B in the graph shown. His opportunity cost of one gallon of milk is:

A)6 cases of soda.
B)exactly one case of soda.
C)less than one case of soda.
D)more than one case of soda.

Question 66

The budget constraint represented by line A is _____ than the budget constraint represented by line B. Thus, soda is relatively _____ expensive in line A than in line B.

A)steeper; less
B)steeper; less.
C)flatter; more
D)flatter; more.

Question 67

Suppose Bill has $48 to spend on the two items in the graph shown. If movie tickets cost $8, which line represents Bill's budget constraint?

A)Line A
B)Line B
C)Line C
D)Either line A or B

Question 68

Assume the graph shown represents Grace's budget constraint. Which of the following is true?

A)Grace's total utility is constant along her budget constraint.
B)The marginal utility Grace receives is the same for each combination of goods on her budget constraint.
C)Grace's total spending is constant along her budget constraint.
D)Grace is indifferent between consuming any bundle that lies on the budget constraint.

Question 69

If the graph shown represents Jordan's budget constraint, which of the following must be true?

A)Jordan will spend twice as much on burritos as she does on salads.
B)Jordan could consume either four salads or eight burritos.
C)Jordan gets twice as much utility from salads as she does from burritos.
D)All of these are correct.

Question 70

If Imani's budget constraint is represented in the graph shown, what trade-off does she face in terms of these two goods?

A)Two cases of soda for every three gallons of milk
B)One case of soda for every one and a half gallons of milk
C)Three cases of soda for every four and a half gallons of milk
D)All of these accurately reflect Imani's tradeoff.

Question 71

Assume the graph shown represents Laila's budget constraint. If a movie rental costs $4, what income must Laila have to spend on these two items?

A)$18
B)$16
C)$56
D)Cannot be determined without more information.

Question 72

Assume the graph shown represents Ayesha's budget constraint. If a movie rental costs $3, what must a movie theater ticket cost?

A)$10.50
B)$14
C)$9
D)$12

Question 73

Assume Willow's weekly income is $56 and she wants to spend it on either salads or burritos. If her budget constraint is pictured in the graph shown, which of the following must be true?

A)Willow will buy more burritos than salads because they are less expensive.
B)Willow will buy more salads than burritos because they are less expensive.
C)Salads must cost $14, and burritos must cost $7.
D)Salads must cost $8, and burritos must cost $4.

Question 74

If Bert's budget constraint is represented in the graph shown, his opportunity cost of three bags of chips is:

A)twelve pints of ice cream.
B)eight pints of ice cream.
C)four pints of ice cream.
D)Cannot answer without knowing Bert's income.

Question 75

If the graph shown represents Tina's budget constraint, which of the following consumption bundles can Tina not afford?

A)Three movies in the theater and six movie rentals
B)Two movies in the theater and seven movie rentals
C)Four movies in the theater and zero movie rentals
D)One movie in the theater and ten movie rentals

Question 76

Assume the graph shown represents Ayesha's budget constraint. If she has $48 to spend on these two items, what must a movie theater ticket cost?

A)$8
B)$6
C)$4
D)$12

Question 77

If Xavier's budget constraint is represented in the graph shown, and the price of a bag of chips is $3, what is Xavier's income?

A)$9
B)$27
C)$12
D)Cannot answer this without knowing the price of soda.

Question 78

If the graph shown represents Stella's budget constraint, and she has an income of $60 to spend on these two items, Stella could choose which consumption bundle?

A)Six salads and eight burritos
B)Four salads and four burritos
C)Two salads and six burritos
D)Three salads and four burritos

Question 79

If the graph shown represents Taylor's budget constraint, which of the following consumption bundles could Taylor choose?I. Four video games and twelve comic booksII. Three video games and three comic booksIII. Two video games and eight comic booksIV. One video game and six comic books

A)I only
B)II and III
C)II and IV
D)I, II, and III

Question 80

Assume Kevin has $48 to spend on the two items in the graph shown. If books cost $12, which line represents Kevin's budget constraint?

A)Line A
B)Line B
C)Line C
D)Either line A or B