Deck 7: Consumer Behavior
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Deck 7: Consumer Behavior
1
Utility is:
A)useful in describing a person's preferences for one good over another.
B)useful in comparing different people's preferences for a particular good.
C)useful in predicting when to put an item on sale.
D)an interesting concept,but not really useful for anything.
A)useful in describing a person's preferences for one good over another.
B)useful in comparing different people's preferences for a particular good.
C)useful in predicting when to put an item on sale.
D)an interesting concept,but not really useful for anything.
useful in describing a person's preferences for one good over another.
2
One baseline assumption that economists make is:
A)people are rational utility maximizers.
B)people will always choose short-term benefits to longer-term payoffs.
C)people will not always choose what makes them happiest.
D)people are unpredictable.
A)people are rational utility maximizers.
B)people will always choose short-term benefits to longer-term payoffs.
C)people will not always choose what makes them happiest.
D)people are unpredictable.
people are rational utility maximizers.
3
Bart is seen standing in front of the cooler that contains containers of iced tea and lemonade.Moments later,we see Bart drinking iced tea,and we conclude Bart is getting more utility from that drink than lemonade.We drew that conclusion based on what economic concept?
A)Revealed preference
B)Utility minimization
C)Satisfaction scales
D)Rational behavior
A)Revealed preference
B)Utility minimization
C)Satisfaction scales
D)Rational behavior
Revealed preference
4
Billy is deciding whether to watch TV at home or go spend time with his friends.If Billy decides to stay home,we can conclude that:
A)Billy is a homebody and never goes out.
B)Billy will get more utility from watching TV than spending time with his friends.
C)Billy will regret not spending more time with his friends.
D)Billy's revealed preference is to always be alone.
A)Billy is a homebody and never goes out.
B)Billy will get more utility from watching TV than spending time with his friends.
C)Billy will regret not spending more time with his friends.
D)Billy's revealed preference is to always be alone.
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5
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 true.
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 true.
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6
Mary makes a New Year's resolution to lose weight.On January 3rd,Mary decides to go to Ben & Jerry's for ice cream instead of going to the gym.Using the concept of revealed preference,we can conclude that Mary:
A)is not a rational individual.
B)actually gains more utility from ice cream than working out.
C)is a liar.
D)All of these are true.
A)is not a rational individual.
B)actually gains more utility from ice cream than working out.
C)is a liar.
D)All of these are true.
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7
A utility function is:
A)a formula for calculating the most utility a particular person can derive.
B)a formula for calculating the total utility that a particular person derives from consuming a particular good over a particular time period.
C)a formula for calculating the total utility that a group of people derive from consuming a particular good.
D)a formula for calculating the total utility that a particular person derives from consuming a combination of goods and services.
A)a formula for calculating the most utility a particular person can derive.
B)a formula for calculating the total utility that a particular person derives from consuming a particular good over a particular time period.
C)a formula for calculating the total utility that a group of people derive from consuming a particular good.
D)a formula for calculating the total utility that a particular person derives from consuming a combination of goods and services.
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8
Utility is:
A)maximized by rational individuals.
B)revealed by observing choices an individual makes.
C)the value individuals place on different bundles of goods.
D)All of these are true.
A)maximized by rational individuals.
B)revealed by observing choices an individual makes.
C)the value individuals place on different bundles of goods.
D)All of these are true.
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9
After browsing his cabinets to see what meals he can make,Ken is deciding whether to make nachos or spaghetti for dinner.If Ken makes spaghetti,we can conclude:
A)Ken doesn't like nachos.
B)Ken prefers nachos over spaghetti.
C)Ken will get more utility from having spaghetti for dinner than nachos.
D)None of these is true.
A)Ken doesn't like nachos.
B)Ken prefers nachos over spaghetti.
C)Ken will get more utility from having spaghetti for dinner than nachos.
D)None of these is true.
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10
Utility is:
A)difficult to measure because it is very subjective.
B)as easy to measure as price signals in the economy.
C)as difficult to measure as an individual's income level.
D)None of these statements is true.
A)difficult to measure because it is very subjective.
B)as easy to measure as price signals in the economy.
C)as difficult to measure as an individual's income level.
D)None of these statements is true.
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11
When economists observe someone make a choice,they assume the individual chooses:
A)what gives him the most utility.
B)what gives him the least utility.
C)what creates the most utility for society.
D)what is the most efficient choice.
A)what gives him the most utility.
B)what gives him the least utility.
C)what creates the most utility for society.
D)what is the most efficient choice.
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12
Individuals will make choices to maximize their:
A)preferences.
B)utility.
C)income.
D)values.
A)preferences.
B)utility.
C)income.
D)values.
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13
Which of the following statements is true about individuals and utility?
A)Individuals always seek to maximize utility.
B)Individuals always seek to maximize their income,not utility.
C)Individuals will either minimize or maximize utility depending on the situation.
D)Individuals rarely try to maximize their utility.
A)Individuals always seek to maximize utility.
B)Individuals always seek to maximize their income,not utility.
C)Individuals will either minimize or maximize utility depending on the situation.
D)Individuals rarely try to maximize their utility.
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14
Utility measurements are:
A)a relative ranking of the values a person places on alternative combinations of things.
B)a relative ranking of how much people enjoy a particular good.
C)used to compare one person's preference for a good to another person's preference.
D)None of these is true.
A)a relative ranking of the values a person places on alternative combinations of things.
B)a relative ranking of how much people enjoy a particular good.
C)used to compare one person's preference for a good to another person's preference.
D)None of these is true.
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15
Utility is:
A)at the heart of all microeconomic thinking.
B)a way of describing the value that a person places on something.
C)what drives decision making in individuals.
D)All of these are true.
A)at the heart of all microeconomic thinking.
B)a way of describing the value that a person places on something.
C)what drives decision making in individuals.
D)All of these are true.
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16
After browsing several pairs of shoes,Bob buys a pair of Nike running shoes.Economists would say that:
A)Bob is revealing his strong distaste for New Balance running shoes.
B)Bob is revealing he will always choose Nike over any other shoe brand.
C)Bob will get more utility per dollar from the Nike running shoes than any other in the store.
D)Bob made a poor choice,if he really prefers Adidas.
A)Bob is revealing his strong distaste for New Balance running shoes.
B)Bob is revealing he will always choose Nike over any other shoe brand.
C)Bob will get more utility per dollar from the Nike running shoes than any other in the store.
D)Bob made a poor choice,if he really prefers Adidas.
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17
Barbie is deciding whether to play soccer or go swimming over the next hour.She decides to swim.Economists would conclude that Barbie:
A)is revealing a preference for swimming over soccer.
B)will get more utility from swimming during the next hour than playing soccer.
C)will always choose swimming over soccer,ceteris paribus.
D)All of these are true.
A)is revealing a preference for swimming over soccer.
B)will get more utility from swimming during the next hour than playing soccer.
C)will always choose swimming over soccer,ceteris paribus.
D)All of these are true.
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18
Carrie is deciding between wearing her blue sweater or her denim jacket.If she chooses her sweater,we can conclude:
A)Carrie will gain more utility from wearing the sweater than the jacket right now.
B)Carrie will never choose the jacket as long as she owns the sweater.
C)Carrie is irrational if she chooses the jacket over the sweater.
D)We cannot conclude any of these things.
A)Carrie will gain more utility from wearing the sweater than the jacket right now.
B)Carrie will never choose the jacket as long as she owns the sweater.
C)Carrie is irrational if she chooses the jacket over the sweater.
D)We cannot conclude any of these things.
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19
Revealed preference is:
A)widely accepted and used by economists,psychologists,and anthropologists.
B)unique to economics and somewhat controversial.
C)unique to economics,but accepted by all social sciences.
D)used by many economists,psychologists,and anthropologists,yet remains somewhat controversial.
A)widely accepted and used by economists,psychologists,and anthropologists.
B)unique to economics and somewhat controversial.
C)unique to economics,but accepted by all social sciences.
D)used by many economists,psychologists,and anthropologists,yet remains somewhat controversial.
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20
A bundle:
A)is a unique combination of goods and services an individual could choose to consume.
B)describes the amount of people that choose a particular combination of goods.
C)is a curve describing different combinations of goods and services an individual could choose to consume.
D)is a function that calculates the total utility that a particular person derives from consuming a combination of goods and services.
A)is a unique combination of goods and services an individual could choose to consume.
B)describes the amount of people that choose a particular combination of goods.
C)is a curve describing different combinations of goods and services an individual could choose to consume.
D)is a function that calculates the total utility that a particular person derives from consuming a combination of goods and services.
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21
The marginal utility gained from the consumption of successive units of a normal good:
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.
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.
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22
Linus has just watched two hours of TV.We can say:
A)his second hour of watching TV likely reduced his total utility.
B)his second hour of watching TV likely added less to his total utility than the first.
C)if he watches a third hour it will likely decrease his total utility.
D)if he watches a third hour it will likely increase his total utility by at least as much as the second.
A)his second hour of watching TV likely reduced his total utility.
B)his second hour of watching TV likely added less to his total utility than the first.
C)if he watches a third hour it will likely decrease his total utility.
D)if he watches a third hour it will likely increase his total utility by at least as much as the second.
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23
Ben is asked to rate the utility he would get from reading different types of publications for the next hour.If he read a graphic novel he would get utility of 5.If he read a biography,he would get utility of 4,and if he read his economics textbook,he would get utility of 9.An economist would predict that Ben will spend his next hour reading:
A)a graphic novel.
B)a biography.
C)his economics textbook.
D)It is impossible to predict how Ben will spend his time.
A)a graphic novel.
B)a biography.
C)his economics textbook.
D)It is impossible to predict how Ben will spend his time.
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24
Dave and Buster play two games of tennis,then decide to go have lunch.This type of decision making can be explained using the concept of:
A)the income effect.
B)the substitution effect.
C)diminishing marginal utility.
D)income maximization.
A)the income effect.
B)the substitution effect.
C)diminishing marginal utility.
D)income maximization.
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25
After watching a movie,Alan chooses not to watch a second and goes for a walk instead.Economists could explain his choices using the concept of:
A)budget constraints.
B)diminishing marginal utility.
C)income effect.
D)substitution effect.
A)budget constraints.
B)diminishing marginal utility.
C)income effect.
D)substitution effect.
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26
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 is not acting rationally.
C)he will derive less utility from it than his first.
D)None of these is true.
A)he will experience a drop in total utility.
B)he is not acting rationally.
C)he will derive less utility from it than his first.
D)None of these is true.
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27
If Bella eats one piece of pie,she gains a utility of 10.If she continues,a second piece yields a marginal utility of 8,a third will bring marginal utility of 2,and a fourth piece of pie will yield a marginal utility of -2.We can say:
A)Bella's total utility from eating four pieces of pie would be 22.
B)Bella's total utility will decrease if she eats the third piece of pie.
C)Bella's total utility will be maximized if she eats three pieces.
D)Bella's total utility decreases after the first piece of pie.
A)Bella's total utility from eating four pieces of pie would be 22.
B)Bella's total utility will decrease if she eats the third piece of pie.
C)Bella's total utility will be maximized if she eats three pieces.
D)Bella's total utility decreases after the first piece of pie.
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28
Nona has just gone on a bike ride for an hour and received a utility of 7.If she chooses to continue to ride her bike for another hour:
A)we can assume she will get at least a utility of 7.
B)we can assume she will get a utility of 7.
C)we can assume she will get less than a utility of 7.
D)we can assume Nona's total utility will fall because of diminishing marginal utility.
A)we can assume she will get at least a utility of 7.
B)we can assume she will get a utility of 7.
C)we can assume she will get less than a utility of 7.
D)we can assume Nona's total utility will fall because of diminishing marginal utility.
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29
Katie just finished a bottle of Coke.Using the concept of marginal utility,we can say:
A)the utility she will gain if she drinks another will reduce her total utility.
B)the utility she will gain if she drinks another might reduce her total utility.
C)the utility she will gain if she drinks another will be the same as that of her first.
D)None of these is necessarily true.
A)the utility she will gain if she drinks another will reduce her total utility.
B)the utility she will gain if she drinks another might reduce her total utility.
C)the utility she will gain if she drinks another will be the same as that of her first.
D)None of these is necessarily true.
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30
Thinking about the total utility gained from the consumption of a typical good,we can say,in general,for normal goods:
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 total utility to fall.
C)total utility increases by decreasing amounts,until it is maximized.Then it declines.
D)All of these are true.
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 total utility to fall.
C)total utility increases by decreasing amounts,until it is maximized.Then it declines.
D)All of these are true.
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31
Claire has just eaten her second bowl of cereal.We can say:
A)her second bowl likely reduced her total utility.
B)her second bowl likely added less to her total utility than the first.
C)her third bowl will likely decrease her total utility.
D)her third bowl will likely increase her total utility by at least as much as the second.
A)her second bowl likely reduced her total utility.
B)her second bowl likely added less to her total utility than the first.
C)her third bowl will likely decrease her total utility.
D)her third bowl will likely increase her total utility by at least as much as the second.
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32
The concept of diminishing marginal utility:
A)explains why individuals rarely maximize their total utility.
B)is the change in total utility that comes from consuming one additional unit of a good or service.
C)is the principle that 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)is the principle that the additional utility gained from consuming different bundles of goods and services tend to be smaller than the utility gained from consuming just one bundle of goods and services.
A)explains why individuals rarely maximize their total utility.
B)is the change in total utility that comes from consuming one additional unit of a good or service.
C)is the principle that 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)is the principle that the additional utility gained from consuming different bundles of goods and services tend to be smaller than the utility gained from consuming just one bundle of goods and services.
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33
If Bob has one piece of gum in his mouth,he gains a utility of 12.If he adds a second piece to the first,it yields a marginal utility of 6;adding a third will bring marginal utility of 1.Adding a fourth piece will make Bob choke,yielding a marginal utility of -4.We can say:
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.
D)Bob's total utility decreases after the first piece of gum.
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.
D)Bob's total utility decreases after the first piece of gum.
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34
Grace has just eaten a slice of pizza and received a utility of 8.If she chooses to eat a second slice:
A)she will experience a drop in total utility.
B)she is not acting rationally.
C)she will derive less than a utility of 8 from it.
D)None of these is true.
A)she will experience a drop in total utility.
B)she is not acting rationally.
C)she will derive less than a utility of 8 from it.
D)None of these is true.
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35
Elijah has just eaten his second popsicle.Using the concept of marginal utility,we can say:
A)the utility he will gain from his third will reduce his total utility.
B)the utility he will gain from his third might reduce his total utility.
C)the utility he will gain from his third will likely be less than that of his second.
D)Both b and c are true.
A)the utility he will gain from his third will reduce his total utility.
B)the utility he will gain from his third might reduce his total utility.
C)the utility he will gain from his third will likely be less than that of his second.
D)Both b and c are true.
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36
The concept of 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)All of these are true.
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)All of these are true.
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37
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.
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.
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38
Alison is deciding how to spend the next hour.We ask her to rate the utility she would get from an hour of each activity.She would get utility of 4 from an hour of reading,utility of 2 from an hour of playing video games,and utility of 6 from shopping.Based on this information,economists could predict that Alison will:
A)read.
B)play video games.
C)go shopping.
D)do nothing,since none of the activities give her utility greater than 10.
A)read.
B)play video games.
C)go shopping.
D)do nothing,since none of the activities give her utility greater than 10.
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39
Johnny spends his day doing a variety of activities;he spends the morning exercising and doing yard work,reads in the afternoon,and hosts a dinner party in the evening.Economists would best explain his choice to do a variety of activities instead of a single activity using the concept of:
A)tastes and preferences
B)budget constraints
C)diminishing marginal utility
D)income effect
A)tastes and preferences
B)budget constraints
C)diminishing marginal utility
D)income effect
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40
Sadie has just eaten a donut and received a utility of 6.If she chooses to eat another donut:
A)we can assume she will get at least a utility of 6.
B)we can assume she will get a utility of 6.
C)we can assume she will get less than a utility of 6.
D)we can assume Sadie's total utility will fall because of diminishing marginal utility.
A)we can assume she will get at least a utility of 6.
B)we can assume she will get a utility of 6.
C)we can assume she will get less than a utility of 6.
D)we can assume Sadie's total utility will fall because of diminishing marginal utility.
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41
This graph shows three different budget constraints: A,B,andC.

If Bert has budget constraint A in the graph shown,what is his opportunity cost of three gallons of milk?
A)Twelve cases of soda
B)Eight cases of soda
C)Four cases of soda
D)It is impossible to say without knowing Bert's income.

If Bert has budget constraint A in the graph shown,what is his opportunity cost of three gallons of milk?
A)Twelve cases of soda
B)Eight cases of soda
C)Four cases of soda
D)It is impossible to say without knowing Bert's income.
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42
This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. 
Considering the information in the table shown,if Jack consumes 3 popsicles and 1 ice cream cone,then:
A)Jack 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 is true.

Considering the information in the table shown,if Jack consumes 3 popsicles and 1 ice cream cone,then:
A)Jack 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 is true.
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43
Zachary plays the piano for a half hour and gains utility of 7.He then watches TV for a half hour,then goes back to playing the piano again.Using the concept of utility to explain his choices,we can say:
A)the utility gained from watching TV was greater than playing the piano for a second half hour.
B)Zachary revealed his preference for TV over a second half hour of playing piano.
C)Zachary enjoys playing the piano for a half hour more than watching TV for a half hour.
D)All of these are true.
A)the utility gained from watching TV was greater than playing the piano for a second half hour.
B)Zachary revealed his preference for TV over a second half hour of playing piano.
C)Zachary enjoys playing the piano for a half hour more than watching TV for a half hour.
D)All of these are true.
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44
This graph shows three different budget constraints: A,B,andC.

If Gary has budget constraint A,and the price of milk is $3 a gallon,what is Gary's income?
A)$9
B)$27
C)$12
D)Cannot answer this without knowing the price of soda.

If Gary has budget constraint A,and the price of milk is $3 a gallon,what is Gary's income?
A)$9
B)$27
C)$12
D)Cannot answer this without knowing the price of soda.
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45
Dave and Buster play two games of tennis,then decide to go have lunch.Using the concept of utility to explain their choices,we can conclude that:
A)they each won one game of tennis.
B)the marginal utility from playing a third game must be negative for them.
C)the marginal utility from playing a third game must be less than the utility from having lunch.
D)All of these must be true.
A)they each won one game of tennis.
B)the marginal utility from playing a third game must be negative for them.
C)the marginal utility from playing a third game must be less than the utility from having lunch.
D)All of these must be true.
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46
A budget constraint is:
A)a line that is composed of all the possible combinations of goods and services that a consumer can buy with his or her income.
B)a line that is composed of all the possible combinations of goods and services that a consumer can choose to maximize his or her total utility.
C)a line that is composed of the additional utility gained from consuming possible combinations of goods and services that a consumer can buy with his or her income.
D)a line that is composed of the total utility gained from consuming all possible combinations of goods and services that a consumer can buy with his or her income.
A)a line that is composed of all the possible combinations of goods and services that a consumer can buy with his or her income.
B)a line that is composed of all the possible combinations of goods and services that a consumer can choose to maximize his or her total utility.
C)a line that is composed of the additional utility gained from consuming possible combinations of goods and services that a consumer can buy with his or her income.
D)a line that is composed of the total utility gained from consuming all possible combinations of goods and services that a consumer can buy with his or her income.
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47
This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. 
Considering the information in the table shown,Jack's total utility from consuming bundle D would be:
A)1,160.
B)1,300.
C)950.
D)2,220.

Considering the information in the table shown,Jack's total utility from consuming bundle D would be:
A)1,160.
B)1,300.
C)950.
D)2,220.
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48
This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. 
Considering the information in the table shown,if we assume Jack is a rational utility maximizer,then we can predict he will buy which bundle with his $10?
A)A
B)B
C)C
D)D

Considering the information in the table shown,if we assume Jack is a rational utility maximizer,then we can predict he will buy which bundle with his $10?
A)A
B)B
C)C
D)D
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49
This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. 
Considering the information in the table shown,if Jack decides to consume bundle D,we can conclude that Jack:
A)is not maximizing his utility.
B)still has money left to spend.
C)could consume more of both goods.
D)All of these are true.

Considering the information in the table shown,if Jack decides to consume bundle D,we can conclude that Jack:
A)is not maximizing his utility.
B)still has money left to spend.
C)could consume more of both goods.
D)All of these are true.
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50
This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. 
Considering the information in the table shown,if Jack's income to spend on these two items were to increase to $16:
A)he could afford to buy 16 popsicles and 8 ice cream cones.
B)he could afford to buy either 16 popsicles or 8 ice cream cones.
C)he could afford to buy 4 ice cream cones and 8 popsicles.
D)None of these is true.

Considering the information in the table shown,if Jack's income to spend on these two items were to increase to $16:
A)he could afford to buy 16 popsicles and 8 ice cream cones.
B)he could afford to buy either 16 popsicles or 8 ice cream cones.
C)he could afford to buy 4 ice cream cones and 8 popsicles.
D)None of these is true.
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51
This graph shows three different budget constraints: A,B,andC.

If Larry has budget constraint B in the graph shown,what is his opportunity cost of one gallon of milk?
A)It is the amount of soda he can't buy if he uses the money to buy a gallon of milk.
B)It is the amount of soda he could buy with the dollars it takes to buy one gallon of milk.
C)It is less than one case of soda.
D)All of these are true.

If Larry has budget constraint B in the graph shown,what is his opportunity cost of one gallon of milk?
A)It is the amount of soda he can't buy if he uses the money to buy a gallon of milk.
B)It is the amount of soda he could buy with the dollars it takes to buy one gallon of milk.
C)It is less than one case of soda.
D)All of these are true.
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52
Courtney goes for an hour bike ride and gains utility of 8.She stops and gets an ice cream cone,then rides for another hour.Using the concept of utility to explain her choice,we can say:
A)the utility gained from the ice cream was at least 8.
B)the utility gained from the ice cream was more than 8.
C)the utility gained from the ice cream was less than the second hour of bike riding.
D)the utility gained from the ice cream was more than the second hour of bike riding.
A)the utility gained from the ice cream was at least 8.
B)the utility gained from the ice cream was more than 8.
C)the utility gained from the ice cream was less than the second hour of bike riding.
D)the utility gained from the ice cream was more than the second hour of bike riding.
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53
This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. 
Considering the information in the table shown,the price of ice cream is:
A)$2 per cone.
B)$1 per cone.
C)decreases as Jack increases the amount consumed.
D)$5 per cone.

Considering the information in the table shown,the price of ice cream is:
A)$2 per cone.
B)$1 per cone.
C)decreases as Jack increases the amount consumed.
D)$5 per cone.
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54
When someone is served pizza and soda for dinner,it is typical behavior to eat some pizza,then drink some soda,then eat more pizza,and so on,until the person stops consuming both.How can this behavior be explained using economic concepts?
A)The individual is revealing that they can't decide whether they gain more utility from pizza or from soda.
B)People tend to act irrationally around food,and the concept of utility maximization cannot be applied.
C)The person eats pizza until his marginal utility for pizza is lower than it is for soda,then he switches to soda.
D)The concept of unlimited wants says he will never tire of eating pizza and soda.
A)The individual is revealing that they can't decide whether they gain more utility from pizza or from soda.
B)People tend to act irrationally around food,and the concept of utility maximization cannot be applied.
C)The person eats pizza until his marginal utility for pizza is lower than it is for soda,then he switches to soda.
D)The concept of unlimited wants says he will never tire of eating pizza and soda.
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55
A budget constraint:
A)is the same across all individuals with the same income constraints.
B)is different for each individual with the same income constraints.
C)is the same across all individuals with the same tastes and preferences.
D)is different for each individual with the same tastes and preferences.
A)is the same across all individuals with the same income constraints.
B)is different for each individual with the same income constraints.
C)is the same across all individuals with the same tastes and preferences.
D)is different for each individual with the same tastes and preferences.
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56
This graph shows three different budget constraints: A,B,andC.

If Don has budget constraint C in the graph shown,what is the trade-off he faces in terms of the 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 Don's tradeoff.

If Don has budget constraint C in the graph shown,what is the trade-off he faces in terms of the 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 Don's tradeoff.
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57
A budget constraint:
A)shows a constant dollar amount spent on different combinations of goods,and each bundle brings the same utility.
B)shows a constant dollar amount spent on different combinations of goods,and each bundle brings a different amount of utility.
C)shows a constant amount of utility gained by consuming different combinations of goods,and each bundle costs the same.
D)None of these is true.
A)shows a constant dollar amount spent on different combinations of goods,and each bundle brings the same utility.
B)shows a constant dollar amount spent on different combinations of goods,and each bundle brings a different amount of utility.
C)shows a constant amount of utility gained by consuming different combinations of goods,and each bundle costs the same.
D)None of these is true.
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58
This graph shows three different budget constraints: A,B,andC.

If Joe has budget constraint C in the graph shown,what is the relative price of three gallons of milk?
A)2 cases of soda
B)4 cases of soda
C)$12
D)$9

If Joe has budget constraint C in the graph shown,what is the relative price of three gallons of milk?
A)2 cases of soda
B)4 cases of soda
C)$12
D)$9
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59
A budget constraint:
A)shows different bundles of goods that all yield the same total utility.
B)shows different bundles of goods that all cost the same amount.
C)shows different bundles of goods that all maximize an individual's utility.
D)shows how much income is needed to maximize total utility.
A)shows different bundles of goods that all yield the same total utility.
B)shows different bundles of goods that all cost the same amount.
C)shows different bundles of goods that all maximize an individual's utility.
D)shows how much income is needed to maximize total utility.
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60
This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. 
Considering the information in the table shown,if Jack consumes 2 popsicles and 2 ice cream cones:
A)Jack still has $4 left to spend.
B)Jack still has $6 left to spend.
C)Jack still has $8 left to spend.
D)Jack still has $2 left to spend.

Considering the information in the table shown,if Jack consumes 2 popsicles and 2 ice cream cones:
A)Jack still has $4 left to spend.
B)Jack still has $6 left to spend.
C)Jack still has $8 left to spend.
D)Jack still has $2 left to spend.
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61
Nick has $300 a month to spend on detailing his sports car or buying bottles of good wine.It costs $100 to have his car detailed and $50 for a bottle of wine.He currently buys four bottles of wine and has his car detailed once a month.If the price of detailing his car decreased to $75,Nick's budget constraint:
A)would shift straight outward,because he is relatively wealthier.
B)would rotate and change slope because relative prices have changed.
C)would shift straight inward because he is relatively wealthier.
D)One cannot determine what would happen without knowing Nick's marginal utility of each good.
A)would shift straight outward,because he is relatively wealthier.
B)would rotate and change slope because relative prices have changed.
C)would shift straight inward because he is relatively wealthier.
D)One cannot determine what would happen without knowing Nick's marginal utility of each good.
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62
Sam has $200 a month to spend on either tanning sessions or rounds of golf.Tanning sessions are $20 each,and a round of golf is $40.Sam currently consumes six tanning sessions and two rounds of golf.Both tanning and golf are normal goods.If the price of a round of golf drops to $20,the income and substitution effects will cause Sam's consumption of tanning sessions:
A)to increase,since both effects predict an increase.
B)to decrease,since both effects predict a decrease.
C)to change,but the direction is dependent upon which effect is stronger.
D)It is impossible to say what will happen without more information.
A)to increase,since both effects predict an increase.
B)to decrease,since both effects predict a decrease.
C)to change,but the direction is dependent upon which effect is stronger.
D)It is impossible to say what will happen without more information.
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63
Sam has $400 a month to spend on either tanning sessions or rounds of golf.Tanning sessions are $20 each,and a round of golf is $50.A point on Sam's budget constraint would be:
A)20 tanning sessions and 8 rounds of golf.
B)10 tanning sessions and 5 rounds of golf.
C)10 tanning sessions and 4 rounds of golf.
D)10 tanning sessions and 2 rounds of golf.
A)20 tanning sessions and 8 rounds of golf.
B)10 tanning sessions and 5 rounds of golf.
C)10 tanning sessions and 4 rounds of golf.
D)10 tanning sessions and 2 rounds of golf.
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64
Sam has $200 a month to spend on either tanning sessions or rounds of golf.Tanning sessions are $20 each,and a round of golf is $40.What can we say about Sam's utility?
A)Sam will get more utility from each round of golf than each tanning session.
B)Sam will get the same utility from one round of golf as he would from two tanning sessions.
C)Sam will maximize his utility from 2 rounds of golf and 6 tanning sessions.
D)We cannot say anything about Sam's utility from the consumption of these goods without more information.
A)Sam will get more utility from each round of golf than each tanning session.
B)Sam will get the same utility from one round of golf as he would from two tanning sessions.
C)Sam will maximize his utility from 2 rounds of golf and 6 tanning sessions.
D)We cannot say anything about Sam's utility from the consumption of these goods without more information.
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65
This graph shows three different budget constraints: A,B,andC.

If Bart has budget constraint A in the graph shown,what would cause his budget constraint to shift to B?
A)Bart's income has decreased.
B)The price of soda has increased.
C)The price of soda has decreased.
D)The price of milk has increased.

If Bart has budget constraint A in the graph shown,what would cause his budget constraint to shift to B?
A)Bart's income has decreased.
B)The price of soda has increased.
C)The price of soda has decreased.
D)The price of milk has increased.
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66
Ethan enjoys buying books and going to the movies.He has income of $150 to spend on these two goods each month.The price of a book is $15 and the price of going to the movies is also $15.He currently consumes four books and six movies a month.If the price of a book increases to $20,then:
A)the substitution and income effects would both predict Ethan would consume more of both goods.
B)the substitution and income effects would both predict Ethan would consume less of both goods.
C)the substitution effect would predict Ethan would consume more books and less movies,and the income effect would predict he would consume less of both.
D)the substitution effect would predict Ethan would consume less books and more movies and the income effect would predict he would consume less of both.
A)the substitution and income effects would both predict Ethan would consume more of both goods.
B)the substitution and income effects would both predict Ethan would consume less of both goods.
C)the substitution effect would predict Ethan would consume more books and less movies,and the income effect would predict he would consume less of both.
D)the substitution effect would predict Ethan would consume less books and more movies and the income effect would predict he would consume less of both.
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67
The substitution effect can be defined as:
A)the change in consumption that results from a change in the relative price of goods.
B)the change in consumption that results from increased effective wealth due to lower prices.
C)the change in consumption that results from increased effective wealth due to getting a raise.
D)the change in income that results from increased effective consumption due to lower prices
A)the change in consumption that results from a change in the relative price of goods.
B)the change in consumption that results from increased effective wealth due to lower prices.
C)the change in consumption that results from increased effective wealth due to getting a raise.
D)the change in income that results from increased effective consumption due to lower prices
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68
In general,changes in the price of a good:
A)causes a substitution effect only.
B)causes an income effect only.
C)causes both an income and substitution effect.
D)usually has no effect.
A)causes a substitution effect only.
B)causes an income effect only.
C)causes both an income and substitution effect.
D)usually has no effect.
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69
In general,the income effect of an increase in the price of a normal good:
A)will cause the individual to buy more of that good because they have relatively more income.
B)will cause the individual to buy less of that good because they have relatively less income.
C)will cause the individual to buy more of that good because they have relatively less income.
D)will cause the individual to buy less of that good because they have relatively more income.
A)will cause the individual to buy more of that good because they have relatively more income.
B)will cause the individual to buy less of that good because they have relatively less income.
C)will cause the individual to buy more of that good because they have relatively less income.
D)will cause the individual to buy less of that good because they have relatively more income.
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70
Quinn's income to spend each month on two normal goods,bowling or eating out,is $100.It costs $10 to bowl for the night,and it costs $20 for Quinn to eat at a restaurant.Quinn currently consumes four nights of bowling and three meals at a restaurant.If the price of bowling increased to $15,the income effect would predict:
A)Quinn would consume less of each good.
B)Quinn would consume more of each good.
C)Quinn would consume more bowling and less meals out.
D)Quinn would consume less bowling and more meals out.
A)Quinn would consume less of each good.
B)Quinn would consume more of each good.
C)Quinn would consume more bowling and less meals out.
D)Quinn would consume less bowling and more meals out.
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71
When a person's income decreases,the slope of the individual's budget constraint stays the same because:
A)everything is relatively more expensive now.
B)everything is relatively less expensive now.
C)the relative prices of the goods haven't changed.
D)the prices of the goods change in the same proportion.
A)everything is relatively more expensive now.
B)everything is relatively less expensive now.
C)the relative prices of the goods haven't changed.
D)the prices of the goods change in the same proportion.
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72
Rational utility maximizers tend to:
A)buy the same bundle of goods regardless of changing prices.
B)choose the bundle of goods that maximizes their utility regardless of their income.
C)change their consumption choices when either prices or income changes.
D)change their consumption choices only when both prices and income changes simultaneously.
A)buy the same bundle of goods regardless of changing prices.
B)choose the bundle of goods that maximizes their utility regardless of their income.
C)change their consumption choices when either prices or income changes.
D)change their consumption choices only when both prices and income changes simultaneously.
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73
This graph shows three different budget constraints: A,B,andC.

If Ted's budget constraint is shown by line A in the graph shown,and Ted's income for these two items is $36,what are the prices of the two goods?
A)Soda costs $3 per case,and milk costs $4 a gallon.
B)Soda costs $4 per case,and milk costs $3 a gallon.
C)Soda costs $12 per case and milk costs $9 a gallon.
D)Soda costs $6 per case and milk costs $3 a gallon.

If Ted's budget constraint is shown by line A in the graph shown,and Ted's income for these two items is $36,what are the prices of the two goods?
A)Soda costs $3 per case,and milk costs $4 a gallon.
B)Soda costs $4 per case,and milk costs $3 a gallon.
C)Soda costs $12 per case and milk costs $9 a gallon.
D)Soda costs $6 per case and milk costs $3 a gallon.
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74
In general,the substitution effect of an increase in the price of a normal good:
A)will cause the individual to buy more of that good because they have relatively more income.
B)will cause the individual to buy less of that good because they have relatively less income.
C)will cause the individual to buy more of that good and less of others because it is relatively less expensive.
D)will cause the individual to buy less of that good and more of others because it is relatively more expensive.
A)will cause the individual to buy more of that good because they have relatively more income.
B)will cause the individual to buy less of that good because they have relatively less income.
C)will cause the individual to buy more of that good and less of others because it is relatively less expensive.
D)will cause the individual to buy less of that good and more of others because it is relatively more expensive.
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75
When a person's income increases:
A)the individual's budget constraint shifts straight out,maintaining the same slope.
B)the individual's budget constraint shifts straight in,maintaining the same slope.
C)the individual's budget constraint rotates out and becomes flatter.
D)the individual's budget constraint rotates in and becomes steeper.
A)the individual's budget constraint shifts straight out,maintaining the same slope.
B)the individual's budget constraint shifts straight in,maintaining the same slope.
C)the individual's budget constraint rotates out and becomes flatter.
D)the individual's budget constraint rotates in and becomes steeper.
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76
Quinn's income to spend on either bowling or eating out each month is $100.It costs $10 to bowl for the night and it costs $20 for Quinn to eat at a restaurant.A point on Quinn's budget constraint would be:
A)10 nights of bowling and 5 trips to the restaurant.
B)4 nights of bowling and 3 trips to the restaurant.
C)3 nights of bowling and 4 trips to the restaurant.
D)2 nights of bowling and 5 trips to the restaurant.
A)10 nights of bowling and 5 trips to the restaurant.
B)4 nights of bowling and 3 trips to the restaurant.
C)3 nights of bowling and 4 trips to the restaurant.
D)2 nights of bowling and 5 trips to the restaurant.
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77
In general,an increase in the price of a good:
A)will cause the substitution effect to be bigger than the income effect.
B)will cause the income effect to be bigger than the substitution effect.
C)will cause both an income and substitution effect.
D)usually will have no effect.
A)will cause the substitution effect to be bigger than the income effect.
B)will cause the income effect to be bigger than the substitution effect.
C)will cause both an income and substitution effect.
D)usually will have no effect.
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78
When a person's income increases:
A)more bundles of goods and services become affordable.
B)less bundles of goods and services become affordable.
C)the bundles of goods and services that become affordable doesn't change.
D)the bundles of goods and services that become affordable must include more expensive goods and services.
A)more bundles of goods and services become affordable.
B)less bundles of goods and services become affordable.
C)the bundles of goods and services that become affordable doesn't change.
D)the bundles of goods and services that become affordable must include more expensive goods and services.
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79
Ethan enjoys buying books and going to the movies.He has income of $150 to spend on these two goods each month.The price of a book is $15 and the price of going to the movies is also $15.He currently consumes four books and six movies a month.If the price of a book drops to $10,the substitution effect would predict:
A)Ethan would consume more of each good.
B)Ethan would consume less of each good.
C)Ethan would consume more books and fewer movies.
D)Ethan would consume fewer books and more movies.
A)Ethan would consume more of each good.
B)Ethan would consume less of each good.
C)Ethan would consume more books and fewer movies.
D)Ethan would consume fewer books and more movies.
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80
Sam has $200 a month to spend on two normal goods-tanning sessions or rounds of golf.Tanning sessions are $20 each,and a round of golf is $40.Sam currently consumes six tanning sessions and two rounds of golf.If the price of a round of golf drops to $20,the income effect:
A)predicts Sam will increase his consumption of both golf and tanning sessions.
B)predicts Sam will double his consumption of golf.
C)predicts Sam will consume more golf and less tanning sessions.
D)predicts Sam will consume less golf and more tanning sessions.
A)predicts Sam will increase his consumption of both golf and tanning sessions.
B)predicts Sam will double his consumption of golf.
C)predicts Sam will consume more golf and less tanning sessions.
D)predicts Sam will consume less golf and more tanning sessions.
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