Deck 22: Consumer Preferences and Consumer Choice

Question 1

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.

Answer 1

remains constant.

Question 2

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.

Answer 2

indifference curve.

Question 3

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.

Answer 3

the same indifference curve.

Question 4

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 5

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

Question 6

Use the following to answer question:
(Table: Bundles of X and Y)Use 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

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 8

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 9

An indifference curve shows combinations of two goods that yield:

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

Question 10

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 11

Use the following to answer question:
(Table: Bundles of X and Y)Use 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 12

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 13

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.

Question 14

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 15

(Figure and Table: Indifference Curve Map)Use 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 16

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 17

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 18

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 19

Higher total utility is represented by _____ indifference curve.

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

Question 20

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 21

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 22

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 23

Use the following to answer question:
(Figure: Indifference Curves and Consumption Bundles)Use Figure Indifference Curves and Consumption Bundles.In the figure,the initial optimum is at a.The price of hot dogs increases,and the new equilibrium point is c.The change in hot dog consumption due to the income effect of the price change is:

A)H₃ to H_2.
B)H₃ to H_1.
C)H₂ to H_1.
D)H₁ to H_2.

Question 24

Use the following to answer question:
(Figure: Indifference Curve Map I)Use 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 25

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 26

Use the following to answer question:
(Figure: Indifference Curves and Consumption Bundles)Use Figure Indifference Curves and Consumption Bundles.For this consumer pizza is a(n)_____ good and hot dogs are a(n)_____ good.

A)normal;inferior
B)inferior;normal
C)normal;normal
D)inferior;inferior

Question 27

Use the following to answer question:
(Figure: Indifference Curves and Consumption Bundles)Use Figure Indifference Curves and Consumption Bundles.The lines AA and BC are parallel.The optimal consumption point could shift from b to c as a result of any of the following EXCEPT:

A)an equal percentage increase in the prices of hot dogs and pizza while income is unchanged.
B)a decrease in income with prices constant.
C)a change in tastes.
D)an equal percentage increase in the prices of hot dogs and pizza while income is unchanged or a decrease in income with prices constant.

Question 28

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 29

Suppose peanut butter is an inferior good for Ilya and the price of peanut butter rises.What will happen to Ilya's consumption of peanut butter?

A)The substitution effect will cause an increase in the consumption of peanut butter.
B)The substitution effect will cause a decrease in the consumption of peanut butter and the income effect will cause an increase in the consumption of peanut butter.
C)The substitution effect will cause a decrease in the consumption of peanut butter.
D)The income effect will cause an increase in the consumption of peanut butter.

Question 30

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 31

Use the following to answer question:
(Figure: Indifference Curve Map I)Use 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 32

In terms of indifference curves,a demand curve is generated by changes in:

A)the income effect.
B)the substitution effect.
C)the price of one good.
D)the price of both goods simultaneously.

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

A _____ can be generated from indifference curves by changing _____.

A)supply curve;the price of both goods simultaneously
B)demand curve;the price of one good
C)demand curve;income
D)budget line;utility

Question 35

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 36

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 37

Consumers buy both alcoholic and nonalcoholic beverages.If the government tries to discourage people from drinking alcoholic beverages by imposing an excise tax on them but gives consumers an income subsidy to keep the consumers on their original indifference curves:

A)the same amount of both goods will be consumed.
B)fewer alcoholic and more nonalcoholic beverages will be consumed.
C)more alcoholic and fewer nonalcoholic beverages will be consumed.
D)it is impossible to determine what will happen to the consumption of alcoholic and more nonalcoholic beverages.

Question 38

Javon is consuming his optimal utility-maximizing consumption bundle of lobster and macaroni-and-cheese dinners.Call this bundle A.His income is $100,the price of a macaroni-and-cheese dinner is $5,and the price of a lobster is $20.Put lobsters on the vertical axis and put macaroni-and-cheese dinners on the horizontal axis.His income increases to $500 and the prices of macaroni-and-cheese dinners and lobster remain constant.With the increase in income,Javon changes his consumption of the two goods and now maximizes utility at bundle B.If macaroni-and-cheese dinners are an inferior good for Javon:

A)at bundle B,Javon consumes more macaroni-and-cheese dinners.
B)at bundle B,Javon consumes less lobster.
C)at bundle A and bundle B,the marginal utility of lobster is 5.
D)at bundle B,Javon consumes more lobster.

Question 39

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 40

For most goods,indifference curves:

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

Question 41

Use the following to answer question:
(Figure: Harold's Indifference Curves)Use Figure Harold's Indifference Curves.Given that the price of bread is $1 per loaf and the price of cheese is $2 per pound,as Harold's income increases from $10 to $14,we can determine that bread is a(n)_____ good and cheese is a(n)_____ good.

A)inferior;inferior
B)normal;inferior
C)inferior;normal
D)normal;normal

Question 42

Use the following to answer question:
(Figure: The Consumption of Video Games and E-Books)Use Figure The Consumption of Video Games and E-Books.Which chart shows the effects of a decrease in income when video games are an inferior good and e-books are a normal good?

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

Question 43

Use the following to answer question:
(Figure: The Optimal Consumption Bundle)Use Figure The Optimal Consumption Bundle.Which of the following could lead to an optimal consumption bundle on indifference curve I₁?

A)an increase in income
B)a decrease in the price of restaurant meals
C)a decrease in the price of rooms
D)a decrease in income

Question 44

Use the following to answer question:
(Figure: Harold's Indifference Curves)Use Figure Harold's Indifference Curves.If the price of bread is $1 per loaf,the price of cheese is $2 per pound,and Harold has $10 to spend on bread and cheese,Harold's optimal consumption bundle is _____ loaves of bread and _____ pounds of cheese.

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

Question 45

Use the following to answer question:
(Figure: Harold's Indifference Curves)Use Figure Harold's Indifference Curves.The price of cheese is $2 per pound and Harold has $10 to spend on bread and cheese.As the price of bread rises from $1 to $2 per loaf,his consumption of bread: change?

A)increases from 2 to 3 loaves.
B)decreases from 3 to 2 loaves.
C)increases from 3 to 4 loaves.
D)decreases from 4 to 3 loaves.

Question 46

Use the following to answer question:
(Figure: Harold's Indifference Curves)Use Figure Harold's Indifference Curves.If the price of bread is $2 per loaf,the price of cheese is $2 per pound,and Harold has $10 to spend on bread and cheese,Harold's optimal consumption bundle is _____ loaves of bread and _____ pounds of cheese.

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

Question 47

Use the following to answer question:
(Figure: The Optimal Consumption Bundle)Use Figure The Optimal Consumption Bundle.Which of the following could lead to an optimal consumption bundle on indifference curve I₁?

A)an increase in income
B)an increase in the price of restaurant meals
C)a decrease in the price of rooms
D)a decrease in the price of restaurant meals

Question 48

Use the following to answer question:
(Figure: Harold's Indifference Curves)Use Figure Harold's Indifference Curves.If the price of bread is $1 per loaf,the price of cheese is $2 per pound,and Harold has $14 to spend on bread and cheese,Harold's optimal consumption bundle is _____ loaves of bread and _____ pounds of cheese.

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

Question 49

Use the following to answer question:
(Figure: Consumer Equilibrium II)Use Figure Consumer Equilibrium II.The HIGHEST level of total utility is associated with point _____ on indifference curve _____.

A)H;C
B)I;B
C)G;B
D)J;A

Question 50

Use the following to answer question:
(Figure: The Optimal Consumption Bundle)Use Figure The Optimal Consumption Bundle.Which of the following could lead to an optimal consumption bundle on indifference curve I₃?

A)an increase in income
B)an increase in the price of restaurant meals
C)an increase in the price of rooms
D)a decrease in income

Question 51

Use the following to answer question:
(Figure: The Consumption of Video Games and E-Books)Use Figure The Consumption of Video Games and E-Books.Which chart in the figure shows the effects of an increase in the price of video games when video games and e-books are complements but not perfect complements?

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

Question 52

Use the following to answer question:
(Figure: Indifference Curves and Consumption Bundles)Use Figure Indifference Curves and Consumption Bundles.In the figure,the initial optimum is at a.The price of hot dogs now increases.The change in hot dog consumption due to the substitution effect is:

A)H₃ to H_2.
B)H₃ to H_1.
C)H₂ to H_1.
D)H₁ to H_2.

Question 53

Use the following to answer question:
(Figure: The Consumption of Video Games and E-Books)Use Figure The Consumption of Video Games and E-Books.Which chart shows the effects of an increase in the price of video games when video games and e-books are substitutes but not perfect substitutes?

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

Question 54

Use the following to answer question:
(Figure: The Optimal Consumption Bundle)Use Figure The Optimal Consumption Bundle.If the price of restaurant meals _____,then the optimal consumption bundle will be on _____ indifference curve.

A)increases;a higher
B)decreases;a higher
C)decreases;a lower
D)increases;the same

Question 55

Use the following to answer question:
(Figure: The Optimal Consumption Bundle)Use Figure The Optimal Consumption Bundle.Which of the following could lead to an optimal consumption bundle on indifference curve I₃?

A)a decrease in income
B)an increase in the price of restaurant meals
C)a decrease in the price of rooms
D)an increase in the price of rooms

Question 56

Use the following to answer question:
(Figure: Harold's Indifference Curves)Use Figure Harold's Indifference Curves.If the price of cheese is $2 per pound and Harold has $10 to spend on bread and cheese,Harold _____ his consumption of cheese as the price of bread rises from $1 per loaf to $2 per loaf,indicating that bread and cheese are _____.

A)increases;substitutes
B)increases;complements
C)decreases;substitutes
D)decreases;complements

Question 57

Use the following to answer question:
(Figure: The Consumption of Video Games and E-Books)Use Figure The Consumption of Video Games and E-Books.Which chart shows the effect of a decrease in income when both video games and e-books are normal goods?

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

Question 58

Use the following to answer question:
(Figure: Harold's Indifference Curves)Use Figure Harold's Indifference Curves.If the price of bread is $0.50 per loaf,the price of cheese is $1 per pound,and Harold has $7 to spend on bread and cheese,Harold's optimal consumption bundle is _____ loaves of bread and _____ pounds of cheese.

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

Question 59

Use the following to answer question:
(Figure: The Optimal Consumption Bundle)Use Figure The Optimal Consumption Bundle.Which of the following could lead to an optimal consumption bundle on indifference curve I₃?

A)a decrease in income
B)a decrease in the price of restaurant meals
C)an increase in the price of rooms
D)an increase in the price of restaurant meals

Question 60

Use the following to answer question:
(Figure: Harold's Indifference Curves)Use Figure Harold's Indifference Curves.If the price of bread is $2 per loaf,the price of cheese is $4 per pound,and Harold has $28 to spend on bread and cheese,Harold's optimal consumption bundle is _____ loaves of bread and _____ pounds of cheese.

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

Question 61

Use the following to answer question:
(Figure: Consumer Equilibrium II)Use Figure Consumer Equilibrium II.Ashyra would maximize her utility at point _____ with the consumption of _____ olive oil and _____ dish soap.

A)J;S;P
B)I;S;P
C)J;N;F
D)I;N;M

Question 62

Use the following to answer question:
(Figure: Consumer Equilibrium IV)Use Figure Consumer Equilibrium IV.The lowest level of utility shown in the figure is associated with indifference curve:

A)X.
B)Y.
C)Z.
D)X or Y.

Question 63

Use the following to answer question:
(Figure: Consumer Equilibrium II)Use Figure Consumer Equilibrium II.A level of total utility NOT attainable is at point:

A)G.
B)K.
C)I.
D)J.

Question 64

Use the following to answer question:
(Figure: Consumer Equilibrium III)Use Figure Consumer Equilibrium III.Which of the following statements is TRUE?

A)Q₄ indicates the price of placemats.
B)Q₈ indicates the price of tamales.
C)Points A and E represent the same level of total utility.
D)Kurt is better off at point E than at point A.

Question 65

Use the following to answer question:
(Figure: Consumer Equilibrium II)Use Figure Consumer Equilibrium II.The LOWEST level of total utility shown in the figure is associated with point _____ on curve _____.

A)H;A
B)I;B
C)G;C
D)J;A

Question 66

Use the following to answer question:
(Figure: Consumer Equilibrium III)Use Figure Consumer Equilibrium III.The lowest level of total utility at which Ivan still spends all of his income is associated with point _____ on _____.

A)A;I₃
B)C;I₃
C)E;I₂
D)B;I₁

Question 67

Use the following to answer question:
(Figure: Consumer Equilibrium IV)Use Figure Consumer Equilibrium IV.The highest level of utility shown in the figure is associated with indifference curve:

A)X.
B)Y.
C)Z.
D)Y or Z.

Question 68

Use the following to answer question:
(Figure: Consumer Equilibrium III)Use Figure Consumer Equilibrium III.Given the figure,which of the following statements is TRUE?

A)At the point of utility maximization,the rate at which Kurt is willing to exchange one good for another is less than the rate at which the goods can be exchanged in the market.
B)An increase in the prices of tamales and placemats would allow Kurt to attain point B.
C)At point E,P_x = P_y.
D)Point E is the point of utility maximization under current budget constraints.

Question 69

Use the following to answer question:
(Figure: Consumer Equilibrium III)Use Figure Consumer Equilibrium III.Kurt consumes at point C.If income remains unchanged,Kurt could gain more utility by choosing point:

A)B.
B)A.
C)F.
D)E.

Question 70

Use the following to answer question:
(Figure: Consumer Equilibrium II)Use Figure Consumer Equilibrium II.Ashyra consumes at point I.Ashyra could gain more utility by choosing point _____,all other things held equal.

A)J
B)G
C)K
D)The consumer doesn't have enough income to gain more utility.

Question 71

Use the following to answer question:
(Figure: Consumer Equilibrium III)Use Figure Consumer Equilibrium III.Kurt consumes at point A.Other things held equal,Kurt would be able to realize more total utility by choosing point:

A)E.
B)B.
C)C.
D)F.

Question 72

Use the following to answer question:
(Figure: Consumer Equilibrium III)Use Figure Consumer Equilibrium III.A level of total utility NOT attainable is at point:

A)A.
B)F.
C)E.
D)B.

Question 73

Use the following to answer question:
(Figure: Consumer Equilibrium II)Use Figure Consumer Equilibrium II.Which of the following is TRUE?

A)To increase utility beyond that received at point I requires an increase in the price of olive oil.
B)Point J could be attained with an increase in Ashyra's income.
C)An increase in the prices of olive oil and dish soap would allow Ashyra to attain point J.
D)To increase utility beyond that received at point I requires an increase in the price of dish soap.

Question 74

Use the following to answer question:
(Figure: Consumer Equilibrium IV)Use Figure Consumer Equilibrium IV.The highest attainable level of utility,given budget constraint FL,is at point:

A)G.
B)H.
C)I.
D)J.

Question 75

Use the following to answer question:
(Figure: Consumer Equilibrium II)Use Figure Consumer Equilibrium II.Ashyra consumes at point G.Ashyra would be able to realize more total utility by choosing point _____,all other things held equal.

A)J
B)K
C)I
D)H

Question 76

Use the following to answer question:
(Figure: Consumer Equilibrium III)Use Figure Consumer Equilibrium III.Given the figure,which of the following is TRUE?

A)Point C is preferable to point E.
B)At point E,P_x = P_y
C)Point B could be attained with an increase in the consumer's income.
D)To increase utility beyond that received at point E requires a change in the preferences of the consumer.

Question 77

Use the following to answer question:
(Figure: Consumer Equilibrium IV)Use Figure Consumer Equilibrium IV.The highest level of utility is at point:

A)G.
B)H.
C)I.
D)J.

Question 78

Use the following to answer question:
(Figure: Consumer Equilibrium II)Use Figure Consumer Equilibrium II.Which of the following statements is TRUE?

A)Point I is the point of utility maximization.
B)At the point of utility maximization,the rate at which Ashyra is willing to exchange one good for another is less than the rate at which the goods can be exchanged in the market.
C)At point I,P_y.= P_x.
D)At point I,Ashyra has some income left for saving.

Question 79

Use the following to answer question:
(Figure: Consumer Equilibrium III)Use Figure Consumer Equilibrium III.Kurt would maximize his utility at point _____ with the consumption of _____.

A)B;Q₆ and Q₃
B)E;Q₁ and Q₇
C)F;Q₅ and Q₄
D)E;Q₅ and Q₂

Question 80

Use the following to answer question:
(Figure: Consumer Equilibrium III)Use Figure Consumer Equilibrium III.The highest level of total utility attainable is associated with point _____ on _____.

A)C;I₃
B)E;I₂
C)A;I₂
D)B;I₁