Deck 34: Consumer Preferences and Consumer Choice

Question 1

A(n) _____ is a curve that shows all of the consumption bundles that yield the same level of total utility for an individual.

A) budget line
B) indifference curve
C) utility function
D) marginal rate of substitution

Answer 1

indifference curve

Question 2

Consumption bundles that yield equal levels of total utility are shown on the same:

A) budget line.
B) marginal utility curve.
C) indifference curve.
D) utility maximizing curve.

Answer 2

indifference curve.

Question 3

Higher total utility is represented by _____ indifference curve.

A) a higher
B) a lower
C) movement leftward along an
D) movement rightward along an

Answer 3

a higher

Question 4

If a consumer moves upward along an indifference curve, his or her total utility:

A) remains constant.
B) first decreases, then increases.
C) increases.
D) first increases, then decreases.

Question 5

Use the following to answer questions :
(Table: Bundles of X and Y) Look at the table Bundles of X and Y. According to the table:

A) bundle D is preferred to bundles A and B.
B) the consumer is indifferent among bundles A, B, and C.
C) bundles C and D are both preferred to bundles A and B.
D) bundle C is preferred to all other bundles.

Question 6

Use the following to answer questions :
(Table: Bundles of X and Y) Look at the table Bundles of X and Y. Bundle(s):

A) A and B are on the same indifference curve.
B) A and C are on the same indifference curve.
C) D is on the highest indifference curve.
D) C is on the highest indifference curve, and bundles A and B are on the lowest indifference curve.

Question 7

An indifference curve shows combinations of two goods that yield:

A) equal prices.
B) equal money income.
C) equal satisfaction.
D) increasing prices.

Question 8

If combination A lies on a higher indifference curve than combination B and combination B lies on a higher indifference curve than combination C, it must be that the total utility associated with combination A is _____ the total utility associated with combination C.

A) less than
B) more than
C) equal to
D) more than or equal to

Question 9

An indifference curve is a line showing all of the consumption bundles that:

A) an individual can purchase with a given income.
B) yield the same total utility for an individual.
C) yield the same marginal utility.
D) have the same marginal rate of substitution.

Question 10

If a consumer moves downward along an indifference curve, his or her total utility:

A) remains constant.
B) first decreases, then increases.
C) decreases.
D) first increases, then decreases.

Question 11

Combinations of two goods that yield equal levels of utility are shown on a(n) _____ curve.

A) indifference
B) budget
C) marginal utility
D) utility-maximizing

Question 12

Use the following to answer question
Figure and Table: An Indifference Curve Map
(Figure and Table: Indifference Curve Map) Look at the figure and table An Indifference Curve Map. Combination _____ is preferred to combination _____.

A) A; B
B) B; D
C) C; A
D) B; C

Question 13

Higher indifference curves represent:

A) less utility than lower indifference curves.
B) more utility than lower indifference curves.
C) the same level of utility as lower indifference curves.
D) unknown levels of utility compared to lower indifference curves.

Question 14

In terms of indifference curves, an increase in total utility is represented by a _____ indifference curve.

A) shift to the right to a higher
B) shift to the left to a lower
C) movement upward along an
D) movement downward along an

Question 15

Higher indifference curves represent _____ lower curves.

A) less utility than
B) more utility than
C) the same utility as
D) either more or less utility than

Question 16

Assume that two combinations of two goods yield the same level of satisfaction. We can conclude that these combinations are always on:

A) the same price line.
B) the same budget constraint.
C) the same indifference curve.
D) different indifference curves.

Question 17

If two combinations of two goods yield the same level of satisfaction, then they are on:

A) the same price line.
B) the same budget constraint.
C) the same indifference curve.
D) different indifference curves.

Question 18

When Laurie asks Matt if he wants a large popcorn and small soda or a large soda and small popcorn, Matt says, "Oh, I'm indifferent." This means Matt:

A) doesn't want popcorn and soda.
B) thinks both bundles give him the same utility.
C) thinks neither bundle gives him utility.
D) thinks the utility he gained from popcorn and soda exactly equals their cost.

Question 19

A curve that represents combinations of two goods that yield equal levels of satisfaction is a(n):

A) indifference curve.
B) budget curve.
C) marginal utility curve.
D) price-consumption curve.

Question 20

The slope of a(n) _____ curve shows the rate at which two goods can be exchanged _____ the consumer's _____.

A) marginal utility; by increasing; marginal utility
B) indifference; without affecting; total utility
C) utility; without affecting; budget
D) indifference; without affecting; budget

Question 21

For most goods, indifference curves:

A) may intersect.
B) slope upward.
C) are concave from the origin.
D) slope downward.

Question 22

At the optimal consumption bundle, which of the following conditions does NOT hold?

A) The ratio of marginal utility of any two goods is equal to the ratio of their prices.
B) The indifference curve is tangent to the budget line.
C) The marginal utility per dollar spent is equal for all goods consumed.
D) The prices of the goods in the optimal bundle are equal.

Question 23

Use the following to answer question
Figure: A Budget Constraint for CDs and Movies
(Figure: A Budget Constraint for CDs and Movies) Look at the figure A Budget Constraint for CDs and Movies. Chantal likes to spend her weekly income on new CDs and tickets to see movies. The price of a CD is $12 and the movie ticket price is $10. The graph shows Chantal's budget line. What is her weekly income?

A) $240
B) $100
C) $120
D) $22

Question 24

One point on a standard indifference curve is 8 cookies and 2 brownies; another is 6 cookies and 4 brownies. Which of the following combinations of cookies and brownies could lie on this indifference curve?

A) 6 cookies and 10 brownies
B) 7 cookies and 6 brownies
C) 4 cookies and 4 brownies
D) 4 cookies and 8 brownies

Question 25

Manny consumes only bananas and DVDs, and he is on his highest possible indifference curve. Two bundles on this indifference curve are bundle A (5 bananas and 2 DVDs), and bundle B (3 bananas and 3 DVDs). Between points A and B, what is Manny's marginal rate of substitution of bananas for DVDs?

A) 1
B) 2
C) 0.5
D) 1.33

Question 26

Greater levels of utility are represented by:

A) indifference curves that are farther from the origin.
B) indifference curves that are closer to the origin.
C) moving up to the left on the same indifference curve.
D) moving down to the right on the same indifference curve.

Question 27

The slope of a(n) _____ curve shows the rate at which two goods can be exchanged _____.

A) indifference; without changing the total budget
B) utility; without changing the total budget
C) indifference; without changing total utility
D) marginal utility; to increase the consumer's marginal utility

Question 28

After learning about indifference curves, Sandy realizes that her marginal rate of substitution of grapes for cheese is 2. Since the price of cheese is $3 and the price of grapes is $1, Sandy:

A) should buy more grapes and less cheese.
B) should buy more cheese and fewer grapes.
C) is maximizing her utility.
D) is on her highest possible indifference curve.

Question 29

If the marginal rate of substitution of cookies for brownies equals the price of cookies in terms of brownies when the consumer is on the budget line, the consumer:

A) is maximizing total utility.
B) should consume more cookies and fewer brownies to maximize total utility.
C) should consume fewer cookies and more brownies to maximize total utility.
D) may or may not be maximizing total utility.

Question 30

One point on an indifference curve that displays a diminishing marginal rate of substitution between apples and oranges is 10 apples and 2 oranges; another is 8 apples and 4 oranges. Which of the following combinations of apples and oranges could also lie on this indifference curve?

A) 10 apples and 6 oranges
B) 6 apples and 7 oranges
C) 9 apples and 4 oranges
D) 8 apples and 3 oranges

Question 31

Use the following to answer question
Figure: The Optimal Choice of CDs and Movies
(Figure: The Optimal Choice of CDs and Movies) Look at the figure The Optimal Choice of CDs and Movies. Nina likes to spend her income on new CDs (CD) and tickets to see movies (M). The graph shows Nina's budget line and the optimal consumption bundle E. What is the price of movies in terms of CDs at point E?

A) 0.33
B) 1.33
C) MU_CD / MU_M
D) P_CD / P_M

Question 32

For most goods, as we move down an indifference curve:

A) the slope gets flatter.
B) the slope gets steeper.
C) the slope stays the same.
D) total utility decreases.

Question 33

An indifference curve typically:

A) slopes downward.
B) shows combinations of two goods that yield equal money income.
C) slopes upward.
D) is concave.

Question 34

Use the following to answer questions
Figure: Indifference Curve Map I
(Figure: Indifference Curve Map I) Look at the figure Indifference Curve Map I. It shows that:

A) at point A utility is higher than it is at point B.
B) utility is diminishing on I₁, constant on I₂, and increasing on I₃.
C) utility is higher at point D than at point A.
D) the marginal utility of e-books is positive, while the marginal utility of cell phone apps is negative.

Question 35

While at the grocery store, Sidney sees that the price of Grape-Nuts is twice that of Cheerios. If Sidney buys both goods, then Sidney must:

A) get twice as much marginal utility from Grape-Nuts as from Cheerios.
B) get twice as much marginal utility from Cheerios as from Grape-Nuts.
C) not be maximizing utility.
D) buy twice as much Cheerios.

Question 36

The relative price rule says that at the optimal consumption bundle the marginal rate of substitution between two goods must be equal to their relative price. This is equivalent to saying that:

A) the marginal utility per dollar is the same for both goods.
B) the marginal utility of each good consumed must be the same.
C) goods should be consumed in the same ratio as their relative price.
D) the marginal rate of substitution is not equal to the ratio of marginal utilities.

Question 37

Max consumes only yogurt and almonds, and he is on his highest possible indifference curve. Bundle A (4 yogurts and 2 almonds) and bundle B (3 yogurts and 3 almonds) are on this indifference curve. Between points A and B, what is Max's marginal rate of substitution of yogurt for almonds?

A) 1
B) 2
C) 3
D) 1.33

Question 38

According to the relative price rule, the optimal consumption bundle between hot dogs and beer takes place when the _____ rate of substitution is _____ their relative price.

A) total; equal to
B) marginal; equal to
C) marginal; higher than
D) total; lower than

Question 39

Which of the following is NOT TRUE of indifference curves for ordinary goods?

A) They never cross.
B) They slope downward.
C) They are convex from the origin.
D) Indifference curves farther from the origin have lower levels of utility.

Question 40

Use the following to answer questions
Figure: Indifference Curve Map I
(Figure: Indifference Curve Map I) Look at the figure Indifference Curve Map I. It shows that:

A) bundles B and D provide the same level of utility.
B) bundle A is preferred to bundle B.
C) bundle D is preferred to bundle C, which is preferred to bundles A and B.
D) bundle C provides the highest level of utility.

Question 41

Gillian is consuming her optimal consumption bundle of peanuts and raisins. The marginal utility associated with the last peanut she consumes is 4 utils, and the marginal utility associated with the last raisin is 2 utils. What must be the price of peanuts relative to that of raisins?

A) 0.5
B) 1
C) 2
D) The relative price is undefined.

Question 42

Luis is consuming his optimal consumption bundle of pizza and tacos. The marginal utility associated with the last pizza he consumes is 1 util, and the marginal utility associated with the last taco is 3 utils. What must be the relative price of pizza in terms of tacos?

A) 0.33
B) 1
C) 3
D) The relative price is undefined.

Question 43

Use the following to answer questions
Figure: The Indifference Curve Map II
(Figure: The Indifference Curve Map II) Look at the figure The Indifference Curve Map II. Sara enjoys attending Chicago Cubs baseball games and eating baby back rib dinners. The figure shows two of her indifference curves for Cubs tickets and baby back rib dinners. Which of the following combinations gives Sara the highest level of utility?

A) 40 baby back rib dinners and 2 Cubs tickets
B) 20 baby back rib dinners and 4 Cubs tickets
C) 12 baby back rib dinners and 10 Cubs tickets
D) All combinations give the same level of utility.

Question 44

Use the following to answer questions
Figure: Consumer Equilibrium I
The figure shows three of Owen's indifference curves for pizza and soda per week. Owen has $180 per month to spend on the two goods. The price of a pizza is $20, and the price of a soda is $1.50.
(Figure: Consumer Equilibrium I) Look at the figure Consumer Equilibrium I. If Owen consumes 1.5 pizzas and 100 sodas, he:

A) is maximizing his total utility.
B) should consume more pizza and less soda to maximize his total utility.
C) should consume less pizza and more soda to maximize his total utility.
D) should consume more pizza and more soda to maximize his total utility.

Question 45

LaToya sees honey and sugar as perfect substitutes. She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar. If honey is twice as expensive as sugar, LaToya will:

A) use only honey.
B) use only sugar.
C) use a lot of honey and a little sugar.
D) be willing to purchase either sugar or honey.

Question 46

If Coke and Pepsi are perfect substitutes for Lynn, her indifference curves are:

A) right angles.
B) concave from the origin.
C) downward-sloping straight lines.
D) vertical lines.

Question 47

Use the following to answer questions
Figure: The Indifference Curve Map II
(Figure: The Indifference Curve Map II) Look at the figure The Indifference Curve Map II. Sara enjoys attending Chicago Cubs baseball games and eating baby back rib dinners. The figure shows two of her indifference curves for Cubs tickets and baby back rib dinners. If she consumes 20 baby back rib dinners and 4 tickets to Cubs games, she would be equally happy to give up 8 dinners for _____ more ticket(s) to Cubs games.

A) 1
B) 0.5
C) 2
D) 4

Question 48

Use the following to answer questions
Figure: The Indifference Curve Map II
(Figure: The Indifference Curve Map II) Look at the figure The Indifference Curve Map II. Sara enjoys attending Chicago Cubs baseball games and eating baby back rib dinners. The figure shows two of her indifference curves for Cubs tickets and baby back rib dinners. If she consumes 20 baby back rib dinners and 6 tickets to Cubs games, she would be equally happy to give up 8 dinners for _____ more ticket(s) to Cubs games.

A) 1
B) 0.5
C) 3
D) 4

Question 49

LaToya sees honey and sugar as perfect substitutes. She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar. If honey is three times as expensive as sugar, LaToya will use:

A) only honey.
B) only sugar.
C) some honey and some sugar.
D) a lot of sugar and a little honey.

Question 50

Joseph chooses a combination of apples and oranges along his budget line. The marginal rate of substitution of apples for oranges is 2, the price of an apple is $0.50, and the price of an orange is $0.25. Joseph:

A) is maximizing total utility.
B) should consume more apples and fewer oranges to maximize total utility.
C) should consume fewer apples and more oranges to maximize total utility.
D) may or may not be maximizing total utility.

Question 51

Joseph chooses a combination of apples and oranges along his budget line. The marginal rate of substitution of apples for oranges is 2, the price of an apple is $0.50, and the price of an orange is $0.10. Joseph:

A) is maximizing total utility.
B) should consume more apples and fewer oranges to maximize total utility.
C) should consume fewer apples and more oranges to maximize total utility.
D) may or may not be maximizing total utility.

Question 52

Use the following to answer questions
Figure: Consumer Equilibrium I
The figure shows three of Owen's indifference curves for pizza and soda per week. Owen has $180 per month to spend on the two goods. The price of a pizza is $20, and the price of a soda is $1.50.
(Figure: Consumer Equilibrium I) Look at the figure Consumer Equilibrium I. What is Owen's marginal rate of substitution of pizza for soda when he is consuming his optimal consumption bundle?

A) 0.75
B) 1.5
C) 13.3
D) 20

Question 53

Use the following to answer questions
Figure: The Indifference Curve Map II
(Figure: The Indifference Curve Map II) Look at the figure The Indifference Curve Map II. Sara enjoys attending Chicago Cubs baseball games and eating baby back rib dinners. The figure shows two of her indifference curves for Cubs tickets and baby back rib dinners. If a new health report is released stating that there is a connection between baby back rib dinners and heart attacks and this concerns Sara, each combination of Cubs tickets and baby back ribs will now yield _____ for Sara.

A) less utility
B) more utility
C) the same level of utility
D) It is impossible to determine how Sara's utility will be affected.

Question 54

Margo has a monthly income of $60 to spend on coffee or bagels. Each cup of coffee costs $3 and each bagel costs $4. Margo spends all of her income, and at her consumption bundle, she is willing to forgo 1 bagel to get the next cup of coffee to achieve the same level of utility. To maximize her utility, Margo should:

A) increase coffee consumption and decrease bagel consumption.
B) increase bagel consumption and decrease coffee consumption.
C) do nothing.
D) decrease both coffee and bagel consumption.

Question 55

Joseph chooses a combination of apples and oranges along his budget line. The marginal rate of substitution of apples for oranges is 2, the price of an apple is $0.50, and the price of an orange is $1.50. Joseph:

A) is maximizing total utility.
B) should consume more apples and fewer oranges to maximize total utility.
C) should consume fewer apples and more oranges to maximize total utility.
D) may or may not be maximizing total utility.

Question 56

Use the following to answer questions
Figure: Consumer Equilibrium I
The figure shows three of Owen's indifference curves for pizza and soda per week. Owen has $180 per month to spend on the two goods. The price of a pizza is $20, and the price of a soda is $1.50.
(Figure: Consumer Equilibrium I) Look at the figure Consumer Equilibrium I. If in equilibrium Owen receives marginal utility of 10 utils from the last pizza he consumes, his marginal utility from the last soda must be _____ utils.

A) 0.50
B) 0.75
C) 1.5
D) 13.3

Question 57

Joseph chooses a combination of apples and oranges along his budget line. The marginal rate of substitution of apples for oranges is 2, the price of an apple is $0.50, and the price of an orange is $0.50. Joseph:

A) is maximizing total utility.
B) should consume more apples and fewer oranges to maximize total utility.
C) should consume fewer apples and more oranges to maximize total utility.
D) may or may not be maximizing total utility.

Question 58

LaToya sees honey and sugar as perfect substitutes. She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar. If the price of honey is half that of sugar, LaToya will use:

A) only honey.
B) only sugar.
C) a lot of honey and a little sugar.
D) a lot of sugar and a little honey.

Question 59

Use the following to answer questions
Figure: Consumer Equilibrium I
The figure shows three of Owen's indifference curves for pizza and soda per week. Owen has $180 per month to spend on the two goods. The price of a pizza is $20, and the price of a soda is $1.50.
(Figure: Consumer Equilibrium I) Look at the figure Consumer Equilibrium I. If Owen consumes 1.5 pizzas and 100 sodas, which of the following describes the relationship between his marginal rate of substitution of pizza for soda and the price of pizza in terms of soda?

A) The marginal rate of substitution equals the relative price.
B) The marginal rate of substitution is greater than the relative price.
C) The marginal rate of substitution is less than the relative price.
D) It is impossible to determine, given the information available.

Question 60

Use the following to answer questions
Figure: Consumer Equilibrium I
The figure shows three of Owen's indifference curves for pizza and soda per week. Owen has $180 per month to spend on the two goods. The price of a pizza is $20, and the price of a soda is $1.50.
(Figure: Consumer Equilibrium I) Look at the figure Consumer Equilibrium I. What is Owen's optimal consumption bundle?

A) 4 pizzas and 150 sodas
B) 8 pizzas and 40 sodas
C) 6 pizzas and 40 sodas
D) 14 pizzas and 20 sodas

Question 61

Mario sees popcorn and pretzels as perfect substitutes. He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels. His indifference curves for popcorn and pretzels are _____, and at the optimal consumption bundle his marginal rate of substitution of popcorn for pretzels is _____.

A) right angles; 3
B) right angles; 0.33
C) straight lines; 3
D) straight lines; 0.33

Question 62

Jake considers fries and onion rings perfect substitutes. The indifference curve between fries and onion rings must be:

A) a right angle.
B) concave.
C) perfectly vertical.
D) a straight line.