Deck 10: Consumer Choice and Behavioral Economics

Question 1

Which of the following is explained by the law of diminishing marginal utility?

A)The marginal utility of Isabel's second bottle of Coca-Cola is greater than the marginal utility of her third bottle of Coca-Cola.
B)The marginal utility of Isabel's second bottle of Coca-Cola is greater than the marginal utility of her third pretzel.
C)The marginal utility of Isabel's second bottle of Coca-Cola is greater than the marginal utility of her friend Margie's third pretzel.
D)The total utility of one bottle of Coca-Cola is greater than the total utility of two bottles of Coca-Cola.

Answer 1

The marginal utility of Isabel's second bottle of Coca-Cola is greater than the marginal utility of her third bottle of Coca-Cola.

Question 2

If Paul decides to buy a $60 ticket to a Cirque du Soleil show rather than a $45 ticket for a Blue Man Group performance,we can conclude that

A)the marginal utility per dollar spent on Cirque du Soleil is lower than the marginal utility per dollar spent on Blue Man Group.
B)Paul's demand for a ticket to see Cirque du Soleil is more elastic than his demand for a ticket to see Blue Man Group.
C)Paul is not making a rational choice.
D)the marginal utility per dollar spent on Cirque du Soleil is higher than the marginal utility per dollar spent on Blue Man Group.

Answer 2

the marginal utility per dollar spent on Cirque du Soleil is higher than the marginal utility per dollar spent on Blue Man Group.

Question 3

A budget constraint

A)represents the bundles of consumption that make a consumer equally happy.
B)refers to the limited amount of income available to consumers to spend on good and services.
C)reflects the desire by consumers to increase their income.
D)shows the prices that a consumer chooses to pay for products he consumes.

Answer 3

refers to the limited amount of income available to consumers to spend on good and services.

Question 4

The economic model of consumer behavior predicts that

A)consumers will try to earn as much income as they can over their lifetimes.
B)consumers will choose to buy the combination of goods and services that make them as well off as possible from those combinations that their budgets allow them to buy.
C)consumers will try to accumulate as many goods and services as they can before they die.
D)consumers divide their time between consumption and leisure activities in order to maximize social welfare.

Question 5

If Joey Kobayashi experiences diminishing marginal utility from eating hot dogs then

A)his total utility from eating hot dogs is negative.
B)the marginal utility from the next hot dog Joey eats will be negative.
C)the additional satisfaction he receives from eating another hot dog will be less then the satisfaction he received from his eating his last hot dog.
D)Joey is maximizing the marginal utility per dollar he receives from eating hot dogs.

Question 6

The word "util" has been used by economists in the past as an objective measure of utility.Today economists believe that

A)utility cannot be measured objectively.
B)utility can be measured objectively because people can use prices of different goods to measure utility.
C)all of the important conclusions of the economic model of consumer behavior depend on utility being measured objectively.
D)the util truly is an objective,rather than a subjective,measure of utility.

Question 7

In making decisions about what to consume,a person's goal is to

A)allocate her limited income among all the products she wishes to buy so that she receives the highest total utility.
B)buy low-priced goods rather than high-priced goods.
C)maximize her marginal utility from the goods and services she wishes to buy using her limited income.
D)consume as many necessities as possible and then,if there is money left over,to buy luxuries.

Question 8

The satisfaction a person receives from consuming goods and services is called

A)contentment.
B)psychic income.
C)wealth.
D)utility.

Question 9

If the marginal utility Ida Mae receives from eating chicken wings is negative then

A)her total utility from eating chicken wings has fallen.
B)her total utility from eating chicken wings is negative as well.
C)Ida Mae definitely does not like chicken wings.
D)her total utility has risen,but by less from the last chicken wing than from the next to last chicken wing.

Question 10

Economists usually assume that people act in a rational,self-interested way.In explaining how consumers make choices this means that economists believe

A)consumers will always buy goods and services at the lowest possible prices.
B)consumers spend their incomes to order to accumulate the most goods and services.
C)consumers make choices that will leave them as satisfied as possible given their incomes,tastes and the prices of goods and services available to them.
D)consumers will spend their incomes and time on activities that benefit themselves as much as possible,without regard to the welfare of others.

Question 11

The amount of income a consumer has to spend on goods and services is known as

A)purchasing power.
B)effective demand.
C)a budget constraint.
D)wealth.

Question 12

An economist observes two consumers in a supermarket.One of the consumers buys a case of Coca-Cola and the other buys a case of Pepsi-Cola.Both colas sell for the same price and the ages and incomes of the consumers are also the same.Based on this information,how would the economist explain the consumers' choices?

A)One of the consumers made the wrong choice,but it is impossible to say which one.
B)Both consumers should have considered buying other colas that had lower prices.
C)Both consumers should have purchased less than a case because they would be able to buy more later.
D)Apparently,the consumers had different tastes.

Question 13

The restriction that a consumer's total expenditure on goods and services purchased cannot exceed the income available is referred to as

A)maximizing behavior.
B)economizing behavior.
C)the price constraint.
D)the budget constraint.

Question 14

If marginal utility of apples is diminishing and is a positive amount,consuming one more apple will cause

A)total utility to decrease.
B)a consumer to get no satisfaction from consuming apples.
C)a consumer's total utility to increase.
D)a consumer to go beyond her optimal consumption of apples.

Question 15

Total utility is maximized in the consumption of two goods by

A)equating the marginal utility for each good consumed.
B)equating the marginal utility per dollar for each good consumed.
C)equating the total utility of each good divided by its price.
D)maximizing expenditure on each good.

Question 16

Optimal decisions are made

A)in the marketplace.
B)if information about prices and marginal utilities is known.
C)when marginal utility is minimized.
D)at the margin.

Question 17

Marginal utility is

A)the change in total utility divided by the price of the last unit of a good or service consumed.
B)the change in total utility a person receives from consuming an additional unit of a good or service.
C)the utility from consuming a given quantity of a good or service.
D)the decrease in total utility from consuming more and more units of a good or service.

Question 18

The additional utility that George receives from consuming one more slice of pizza is called

A)average utility.
B)marginal utility.
C)total utility.
D)diminishing utility.

Question 19

Marv Pilson has $50 worth of groceries in a shopping cart at his local Shop 'n Save.Assume that the marginal utility per dollar of the liter bottles of soft drink in Marv's cart equals 50.The marginal utility per dollar of the boxes of cereal in Marv's cart equals 20.Marv has only $50 to spend,but has not yet paid for his groceries.How can Marv increase his total utility without spending more than $50?

A)Marv should substitute his favorite soft drink or the cereal in his cart for generic brands that have lower prices.
B)Marv should buy more boxes of cereal and fewer bottles of soft drink.
C)Marv should buy fewer boxes of cereal and more bottles of soft drink.
D)Marv should buy fewer boxes of cereal and fewer bottles of soft drink.He can then spend more on other items.

Question 20

Suppose the marginal utilities for the first three cans of soda are 100,80 and 60,respectively.The total utility received from consuming 2 cans is

A)20.
B)80.
C)90.
D)180.

Question 21

The marginal utility per dollar that Harold Stratton receives from oranges is greater than the marginal utility per dollar Harold receives from pears.To maximize his utility,what should Harold do?

A)He should acquire more income so that he can afford to buy more oranges and pears.
B)He should reduce his consumption of both oranges and pears so that he can buy a greater variety of goods.
C)He should buy fewer pears and more oranges.
D)He should buy fewer oranges and more pears.

Question 22

Table 10-5
Table 10-5 lists Jay's marginal utilities for burgers and Pepsi.Jay has $7 to spend on these two goods.The price of a burger is $2 and the price of a can of Pepsi is $1.
Refer to Table 10-5.If Jay can eat all the burgers he wants for free,how many burgers will he consume?

A)7 burgers
B)6 burgers
C)5 burgers
D)3 burgers

Question 23

Table 10-4

Refer to Table 10-4,which lists the values of Harry Taber's marginal utility and marginal utility per dollar for Italian submarine (sub)sandwiches and tacos.Assume that the price of the sub sandwiches is $4 and the price of tacos is $2.When Harry's income is $14 he buys two Italian sub sandwiches and three tacos.The last column lists the values of the marginal utility per dollar for tacos when the price of tacos decreases to $1.Complete this statement: As a result of the change in price

A)Harry's purchasing power has increased.He will reduce his consumption of tacos so he can buy one more sub.This is an example of the substitution effect of a price change.
B)Harry's purchasing power has increased.If tacos are a normal good for Harry he will buy fewer tacos.This is an example of the income effect of a price change.
C)Harry's purchasing power has increased.If tacos are a normal good for Harry he will buy more tacos.This is an example of the income effect of a price change.
D)Harry's purchasing power has increased.Harry buys fewer tacos.This is an example of the substitution effect of a price change

Question 24

If Lisa spends her income on veggie burgers and pints of soy milk and the price of veggie burgers is three times the price of a pint of soy milk,then when Lisa maximizes her utility she will buy

A)both goods until the marginal utility of veggie burgers is three times the marginal utility of soy milk.
B)three times as many veggie burgers as pints of soy milk.
C)three times as many pints of soy milk as veggie burgers.
D)both goods until the marginal utility of a pint of soy milk is three times the marginal utility of veggie burgers.

Question 25

Table 10-4

Refer to Table 10-4,which lists the values of Harry Taber's marginal utility and marginal utility per dollar for Italian submarine (sub)sandwiches and tacos.Assume that the price of the sub sandwiches is $4 and the price of tacos is $2.When Harry's income is $14 he buys two Italian sub sandwiches and three tacos.The last column lists the values of the marginal utility per dollar for tacos when the price of tacos decreases to $1.Complete this statement: As a result of the change in price,the marginal utility of each taco Harry consumes increases and

A)the substitution effect of the price change will cause Harry to buy more tacos and fewer subs.
B)the substitution effect of the price change will cause Harry to buy more tacos if they are a normal good,and fewer tacos if they are an inferior good.
C)the substitution effect will cause Harry to buy another sub because his purchasing power has increased.
D)the substitution effect will cause Harry to buy fewer tacos.

Question 26

Table 10-6
Table 10-6 shows Antonio's utility from beer and pizza.
Refer to Table 10-6.Suppose Antonio has $10 to spend and the price of beer = $2 per glass and the price of pizza = $2 per slice.How many of each good will he consume when he maximizes his utility?

A)2 glasses of beer,1 slice of pizza
B)2 glasses of beer,3 slices of pizza
C)3 glasses of beer,2 slices of pizza
D)4 glasses of beer,5 slices of pizza

Question 27

Table 10-1

Refer to Table 10-1.The table above shows Lee's marginal utility per dollar from consuming ice cream cones and cans of Lime Fizz Soda.The price of an ice cream cone is $2 and the price of Lime Fizz Soda is $1.Use this information to select the correct statement.

A)We cannot determine how many ice cream cones and cans of Lime Fizz Soda Lee will consume without knowing what his income is.
B)To maximize his utility Lee should consume 1 ice cream cone and 5 cans of Lime Fizz Soda.
C)We cannot determine how many ice cream cones and cans of Lime Fizz Soda will maximize Lee's utility because we are given only the marginal utility per dollar values.We also need to know the marginal utility for each quantity.
D)If Lee has an unlimited budget he will maximize his utility by buying only Lime Fizz Soda.

Question 28

The income effect of a price change refers to

A)the change in demand that occurs when consumer income changes.
B)the change in the quantity demanded that results from a change in price,making the good more or less expensive relative to other goods,holding everything else constant.
C)the change in demand that occurs when both income and price change.
D)the change in the quantity demanded of a good that results from the effect of a change in price on consumer purchasing power,holding everything else constant.

Question 29

Table 10-5
Table 10-5 lists Jay's marginal utilities for burgers and Pepsi.Jay has $7 to spend on these two goods.The price of a burger is $2 and the price of a can of Pepsi is $1.
Refer to Table 10-5.What is Jay's optimal consumption bundle?

A)1 burger and 2 Pepsis
B)2 burgers and 3 Pepsis
C)3 burgers and 1 Pepsi
D)3 burgers and 2 Pepsis

Question 30

Marge buys 5 CDs and 7 DVDs.The marginal utility of the 5th CD and the marginal utility of the 7th DVD are both equal to 30 utils.Can we say that this is the optimal combination of CDs and DVDs for Marge?

A)No.We need to know her preferences for CDs and DVDs.
B)Yes.
C)No.We need to know the prices of the CDs and DVDs.
D)No.If this was the optimal combination,the marginal utility per dollar of the 5th CD and the 7th DVD would be equal.

Question 31

Suppose Renee can increase her total utility from consuming video rentals and books by buying one more book and renting one fewer video.Which of the following is true?

A)The marginal utility of video rentals is negative.
B)The marginal utility per dollar spent on books exceeds that of video rentals.
C)The marginal utility of the last book consumed exceeds the marginal utility of the last video rental consumed.
D)The marginal utility of the last video rental consumed exceeds the marginal utility of the last book consumed.

Question 32

Table 10-2

Refer to Table 10-2.The table above shows Lee's marginal utility from consuming ice cream cones and cans of Lime Fizz Soda.Select the phrase that completes the following statement."We can determine the number of ice cream cones and cans of Lime Fizz Soda Lee should consume to maximize his utility

A)if we know what Lee's income is."
B)if we know what Lee's income is and the price of an ice cream cone and the price of a can Lime Fizz Soda."
C)by adding up the marginal utilities for ice cream cones and Lime Fizz Soda."
D)if we know the values of the marginal utility per dollar for ice cream cones and Lime Fizz Soda."

Question 33

During a study session for an economics exam with three other students,Peter Daltry commented on an example of a consumer who had to decide the on number of slices of pizza and cups of Coca-Cola he would consume.Peter explained that "To maximize his utility this consumer must equate the marginal utility per dollar for pizza and Coca-Cola." Was Peter's analysis correct?

A)Peter described one of the conditions necessary for utility maximization.The consumer also must equate the marginal utility of pizza and the marginal utility of cups of Coca-Cola.
B)Peter's statement is correct.
C)Peter's statement is correct but we must also assume that the consumer is rational.
D)Peter describes one of the conditions necessary for utility maximization.The second condition is that total spending on both goods must equal the amount available to be spent.

Question 34

There are two conditions necessary for a consumer to maximize her utility.One is that the marginal utilities per dollar spent on each good and service consumed are equal.What is the other condition?

A)Total spending on all goods and services must equal the amount available to be spent.
B)The consumer must be satisfied with the choices she makes.
C)The total spent on each good and service is the same.
D)The prices of each good and service consumed must not be too high.

Question 35

Terence has $50 per week to spend on Subway sandwiches and milkshakes.The price of a Subway sandwich is $5 and the price of a milkshake is $4.He buys 6 sandwiches and 5 milkshakes.The marginal utility of the 6th sandwich = 25 and the marginal utility of the 5th milkshake = 24.Which of the following is true?

A)He is not maximizing his utility and should buy more milkshakes.
B)He is maximizing his utility.
C)He is not maximizing his utility and should buy more Subway sandwiches.
D)He is not maximizing his utility because he is not spending all of his income.

Question 36

Suppose Barry is maximizing his utility from consuming used paperback novels and audio books.The price of a used novel = $4 and the price of an audio book = $8.If the marginal utility of the last novel was 32 units of utility (utils)what was the marginal utility of the last audio book purchased?

A)2 utils
B)12 utils
C)16 utils
D)64 utils

Question 37

Table 10-3

Refer to Table 10-3.For steak and cheese and grilled chicken sandwiches,the table contains the values of the marginal utility (MU)and marginal utility per dollar (MU/P)for Mabel Jarvis.Mabel has $14 to spend on steak and cheese and grilled chicken sandwiches.Which of the following statements is false?

A)The price of steak and cheese sandwiches is $4.The price of grilled chicken sandwiches is $2.
B)If Mabel maximizes her utility she will buy three grilled chicken sandwiches.
C)If Mable maximizes her utility she will buy two steak and cheese sandwiches.
D)We do not have enough information to determine how many sandwiches Mabel will buy to maximize her utility.

Question 38

Table 10-3

Refer to Table 10-3.For steak and cheese and grilled chicken sandwiches,the table contains the values of the marginal utility (MU)and marginal utility per dollar (MU/P)for Mabel Jarvis.Mabel has $14 to spend on steak and cheese and grilled chicken sandwiches.Which of the following statements is true?

A)If Mabel maximizes her utility she will buy three steak and cheese sandwiches and two grilled chicken sandwiches.
B)If Mabel was maximizing her utility when spending $14 and then received an additional $4,she would receive the most marginal utility per dollar if her next purchase was another grilled chicken sandwich.
C)Mabel will first buy two steak and cheese sandwiches; then with her remaining $6 she will buy three grilled chicken sandwiches.
D)To maximize her utility,Mabel will need a total of $36,the income needed to buy 6 steak and cheese sandwiches and 6 grilled chicken sandwiches.

Question 39

Which of the following describes the substitution effect of a price change?

A)The change in demand that results from a change in price,making the good more or less expensive relative to other goods,holding constant the effect of the price change on consumer purchasing power.
B)The change in quantity demanded of a good that results from the effect of a change in price on consumer purchasing power,holding everything else constant.
C)The change in quantity demanded of a good that results from the change in the price of a substitute for the good.
D)The change in quantity demanded of a good that results from a change in price,making the good more or less expensive relative to other goods,holding constant the effect of the price change on consumer purchasing power.

Question 40

Table 10-6
Table 10-6 shows Antonio's utility from beer and pizza.
Refer to Table 10-6.What is Antonio's marginal utility from consuming the fifth beer?

A)4 utils
B)13.6 utils
C)69 utils
D)134 utils

Question 41

To maximize utility consumers should buy goods and services to the point where the marginal utility of each item consumed is equal.

Question 42

Lilly Davis has $5 per week to spend on any combination of ice cream and candy.The price of an ice cream cone is $2 and the price of a candy bar is $1.The table below shows Lilly's utility values.Use the table to answer the questions that follow the table.
a.Complete the table by filling in the blank spaces.
b.Suppose Lilly purchases 2 ice cream cones and 1 candy bar.Is she consuming the optimal consumption bundle? If so,explain why.If not,what combination should she buy and why?

Question 43

The income effect of an increase in the price of peaches is

A)the change in the quantity demanded of peaches that results from the price increase making peaches more expensive than other fruit,holding constant the effect of the price change on consumer purchasing power.
B)the change in the demand for peaches as a result of the change in the price of peaches,holding all other factors constant.
C)the change in the quantity demanded of other fruit that results from the impact of the price change on purchasing power,holding all other factors constant.
D)the change in the quantity demanded of peaches that results from the effect of the change in price on consumer purchasing power,holding all other factors constant.

Question 44

Which of the following correctly describes the result of a price increase for an inferior good?

A)Both the substitution effect and the income effect cause the consumer to buy less of the good.
B)The substitution effect causes the consumer to buy less of the good and the income effect causes the consumer to buy more of the good.
C)The substitution effect causes the demand for the good to decrease; the income effect causes the demand for the good to increase.
D)The substitution effect causes the demand for the good to increase; the income effect causes the demand for the good to decrease.

Question 45

If by purchasing more apples and fewer oranges you increase your total utility,then apples must be cheaper than oranges.

Question 46

A change in the price of a good has two effects on the quantity consumed.What are these effects?

A)the income effect and the substitution effect
B)the utility effect and the budget effect
C)the total utility effect and marginal utility effect
D)the consumption effect and expenditure effect

Question 47

In explaining consumer behavior economists explain how consumer tastes and preferences are formed.

Question 48

Economists do not think it is possible to compare the relative utility that two people get from consuming an additional unit of a particular good.

Question 49

The Wong family consumes 3 pounds of fish and 5 pounds of chicken per month.The price of fish is $8 per pound and chicken is $4 per pound.
a.What is the amount of income allocated to fish and chicken consumption?
b.What is the price ratio (the price of fish relative to the price of chicken)?
c.Explain the meaning of the price ratio you computed.
d.If the Wongs maximize utility,what is the ratio of the marginal utility of fish to the marginal utility of chicken?
e.If the price of chicken rises,will the Wong family consume more chicken,less chicken or the same amount of chicken? Explain your answer using the rule of equal marginal utility per dollar.

Question 50

The substitution effect of a decrease in the price of movie tickets results in

A)an increase in the quantity demanded of movie tickets.
B)a decrease in the quantity demanded of movie tickets.
C)an increase in the demand for movie tickets.
D)a decrease in the demand for movie tickets.

Question 51

You wish to buy only one CD.Use the rule of equal marginal utility per dollar to determine which one to purchase: (a)Usher's latest CD for $15 which gives you 75 units of utility,or (b)Tom Petty and the Heartbreakers' Greatest Hits for $10 that gives you 100 units of utility?

Question 52

The substitution effect of a change in the price of cauliflower is the portion of the change in the quantity of cauliflower demanded that can be attributed to the change in the price of a substitute vegetable such as asparagus.

Question 53

The increase in consumption of a good when its price falls is caused by two effects.What are these two effects? Explain the difference between these effects.

Question 54

The substitution effect of an increase in the price of peaches is

A)the change in the quantity demanded that results from a change in the price of peaches making peaches more expensive relative to other goods,holding constant the effect of the price change on consumer purchasing power.
B)the change in the demand for nectarines (a substitute good)that results when peaches become more expensive relative to nectarines,holding constant the effect of the price change on consumer purchasing power.
C)the change in the quantity demanded of peaches that results from the effect of the change in the price of peaches on the consumer's purchasing power.
D)the change in the demand for peaches that results when the price of peaches increases.

Question 55

You participate in a taste test for a new protein supplement called "Boost." You are given five consecutive one ounce vials of the supplement and after consuming each vial you are asked to note your reaction.You consume the first vial and your response is: "Hmmm,quite good!" After the second,you say,"Not bad at all." After the third,you note,"It's alright." and after the fourth you wince,"No more,the after-taste is getting to me.I need water." What economic principle does this scenario illustrate? Define the principle.

Question 56

The income effect of a decrease in the price of macaroni and cheese (assume this is an inferior good)results in

A)a decrease in the demand for macaroni and cheese.
B)an increase in the quantity demanded of macaroni and cheese.
C)a decrease in the quantity demanded of macaroni and cheese.
D)an increase in the demand for macaroni and cheese.

Question 57

Economists assume people's tastes are identical.

Question 58

We can derive the market demand curve for gold earrings

A)only if the tastes of all gold earring consumers are similar.
B)by adding horizontally the individual demand curves of each gold earring consumer.
C)by adding vertically the quantity demanded of each gold earring consumed at each price.
D)by adding the prices each gold earring consumer is willing to pay for each quantity.

Question 59

The income effect of a decrease in the price of legal services,a normal good,results in

A)a decrease in the demand for legal services.
B)a decrease in the quantity demanded of legal services.
C)an increase in the quantity demanded of legal services.
D)an increase in the demand for legal services.

Question 60

The French Bakery ran a special which decreased the price of its croissants from $1.50 to $1.00.Although her money income had not changed,Toni decided to buy 2 croissants instead of her usual 1 bagel and 1 croissant.Toni's actions are explained by which of the following?

A)income effect only or substitution effect only but not both effects
B)income and substitution effects
C)price effect
D)consumption effect

Question 61

Tom Brady endorses Movado watches and Under Armour athletic wear.One reason Under Armour pays Tom Brady for his endorsement is that consumers believe he is more knowledgeable about athletic wear than they are.Why would the makers of Movado watches pay Tom Brady to endorse their products?

A)Many consumers believe Tom Brady is more knowledgeable about watches than they are.
B)More people watch football than any other sport.
C)Some consumers believe that buying products endorsed by Tom Brady makes them appear to be more fashionable.
D)Movado receives free publicity whenever Tom Brady wins a football game.

Question 62

The income effect due to a price decrease will result in an increase in the quantity demanded for

A)a Giffen good.
B)an inferior good.
C)a public good.
D)a normal good.

Question 63

Goods with upward sloping demand curves are referred to as

A)Marshall goods.
B)Giffen goods.
C)substitute goods.
D)luxury goods.

Question 64

The only Giffen goods that have been identified so far in the real world are luxury goods.

Question 65

Economists Gary Becker and Kevin Murphy are associated with which of the following?

A)the discovery of the first example of a Giffen good
B)They have argued that social factors are not important in explaining the choices consumers make.
C)Consumers appear to receive utility from consuming goods they believe are popular.
D)They discovered that price changes have both income and substitution effects.

Question 66

An advantage of Microsoft windows is its compatibility with the widest range of hardware and software.The dominance of Windows is self-reinforcing: hardware and software manufacturers ensure that their products are compatible with Windows in order to have access to the large number of Windows users.Which principle best describes this scenario?

A)endowment effects
B)endorsement effects
C)economies of scale
D)network externalities

Question 67

Which of the following refers to the increase in the usefulness of a product as the number of consumers who use it increases?

A)positive externalities
B)network externalities
C)external marginal utility
D)the impact of celebrity endorsements

Question 68

The income effect results in consumers increasing the quantity of normal goods demanded when the price falls.

Question 69

Traditionally,economists have considered culture,customs,and religion as

A)very important influences on the choices consumers make.
B)relatively unimportant factors in explaining the choices consumers make.
C)important influences in explaining consumer choices in command economies but less important in market economies.
D)subject to normative economic analysis rather than positive economic analysis.

Question 70

Which of the following is used to explain why a consumer's willingness to buy a cell phone increases as the number of other people who own and use cell phones increases?

A)network externalities
B)market failure
C)diminishing marginal utility
D)the income effect of a price change

Question 71

During the 2011 Super Bowl,Best Buy ran a commercial featuring Justin Bieber and Ozzy Osbourne.If the endorsements of Justin Bieber and Ozzy Osbourne resulted in a subsequent increase in sales at Best Buy,this would be an example of ________ on decision making.

A)the income effect
B)a social influence
C)the substitution effect
D)a scientific influence

Question 72

For a demand curve to be upward sloping,the good would have to be an inferior good,and

A)the income effect would have to be larger than the substitution effect.
B)the income effect would have to be smaller than the substitution effect.
C)the income effect would have to be equal to the substitution effect.
D)the income effect and the substitution effect would have to be nonexistent.

Question 73

What did economists Robert Jensen and Nolan Miller determine must be true for a good to be a Giffen good,where the income effect is larger than its substitution effect?

Question 74

Describe the demand curve for a Giffen good.

Question 75

Figure 10-1 Figure 10-1 represents the demand for ice cream cones.
Refer to Figure 10-1.Which of the following statements is true?

A)Points a and b are the utility-maximizing quantities of ice-cream cones at two different prices of ice-cream.
B)Points a and b may not necessarily be the utility-maximizing quantities of ice-cream cones at two different prices because we have no information on the consumer's budget or the price of other goods.
C)Point a could be a utility-maximizing choice if the price is $3 but point b may not be because we have no information on the marginal utility per dollar when price changes.
D)Points a and b are derived independently of the utility-maximizing model.

Question 76

Which of the following is not a reason why companies such as Under Armour and Movado pay Tom Brady to endorse their products?

A)Many consumers feel more fashionable if they use the same products that Tom Brady uses.
B)Some consumers will buy a product endorsed by Tom Brady because they believe he is particularly knowledgeable about the product.
C)Some consumers want to feel closer to a celebrity who endorses a product.
D)Some consumers believe that Tom Brady is more rational than the average consumer.

Question 77

The demand for a Giffen good slopes upward.

Question 78

Figure 10-1 Figure 10-1 represents the demand for ice cream cones.
Refer to Figure 10-1.When the price of ice cream cones increases from $2 to $3,quantity demanded decreases from 4 ice cream cones to 3 ice cream cones.This change in quantity demanded is due to

A)the price and output effects.
B)the income and substitution effects.
C)the law of diminishing marginal utility.
D)the fact that marginal willingness to pay falls.

Question 79

Which of the following statements describes economists' attitudes regarding the influence of social factors on the choices consumers make?

A)Economists formerly believed they were very important but now they believe they are not important.
B)Economists believe social factors affect consumer choice in markets for public goods but not in markets for private goods.
C)Liberal economists believe social factors are very important; conservative economists do not believe social factors have any influence on consumers.
D)Economists traditionally believed they were unimportant,but many economists now believe social factors are important.

Question 80

The order of the letters along the rows of computer keyboards could be changed to allow users to type faster,but this would inconvenience the vast majority of people who learned to type with the current keyboard layout.The costs of switching to a new layout make this change unlikely.This is an example of

A)path dependency.
B)how social influences overwhelm the substitution effect of a price change.
C)how the elasticity of demand for typewriters has been affected by externalities.
D)how consumers sometimes do not behave rationally.