Question 1

A Giffen good is an inferior good for which the income effect dominates the substitution effect.

Accepted Answer

A) True 
 B)False

Question 2

Suppose Joe derives 327 utils from consuming 1 dozen crab cakes and 11 pairs of socks.If he also derives 327 utils from 2 dozen crab cakes and 5 pairs of socks,Joe is indifferent between those combinations of crab cakes and socks.

Accepted Answer

A) True 
 B)False

Question 3

(Scenario: Music Downloads and Streamed Movies)Read the scenario Music Downloads and Streamed Movies.The slope of Phillip's budget line is equal to: Scenario: Music Downloads and Streamed Movies
Phillip has an income of $300 per month,which he uses to purchase music downloads (MD)and streamed movies (SM).Each music download costs $1 and each streamed movie costs $5.

Accepted Answer

A) -0.2. 
B) -5. 
C) -0.4. 
D) -2.5.

Question 4

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?

Accepted Answer

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,Px = Py. 
D) Point E is the point of utility maximization under current budget constraints.

Question 5

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.

Accepted Answer

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

Question 6

Ms.Stardoe gets utility from coffee and cream,but only if they are consumed in the precise ratio of 8 ounces of coffee to 2 ounces of cream.This implies that coffee and cream are ordinary goods for Ms.Stardoe.

Accepted Answer

A) True 
 B)False

Question 7

The following bundles can all be on the same indifference curve.Bundle A: 4 enchiladas,1 burrito;bundle B: 3 enchiladas,3 burritos;bundle C: 2 enchiladas,2 burritos.

Accepted Answer

A) True 
 B)False

Question 8

Since indifference curves depend on the _____ for individuals,this means that two consumers with the same income _____.

Accepted Answer

A) utility function;must consume different amounts of the two goods 
B) utility function;may consume different amounts of the two goods 
C) optimal utility rule;must consume different amounts of the two goods 
D) marginal utility function;have the same marginal utility for two goods.

Question 9

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?

Accepted Answer

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 10

The ratio of the prices of two goods is equal to the ratio of the marginal utilities of the two goods at:

Accepted Answer

A) the vertical intercept of the budget line. 
B) the optimal consumption bundle. 
C) the horizontal intercept of the budget line. 
D) the intersection of the budget line with the highest indifference curve.

Question 11

Use the following to answer question: 
-(Figure: Oreos and Apples)Use Figure Oreos and Apples,which provides an indifference curve map for Diego.As Diego moves along an indifference curve from point F to point E,he buys _____ Oreos to obtain _____ apples.

Accepted Answer

A) fewer;more 
B) more;more 
C) the same number of;more 
D) no;more

Question 12

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

Accepted Answer

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

Question 13

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

Accepted Answer

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

Question 14

Use the following to answer question: 
-(Table: Madeline's Preferences for T-Shirts and Coffee)Use Table Madeline's Preferences for T-Shirts and Coffee.Assume each consumption bundle provides the same level of utility.As Madeline moves from bundle A to bundle E,her total utility:

Accepted Answer

A) decreases. 
B) increases. 
C) stays the same. 
D) is zero regardless of which bundle she chooses.

Question 15

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.

Accepted Answer

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

Question 16

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:

Accepted Answer

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

Question 17

An indifference curve typically:

Accepted Answer

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

Question 18

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?

Accepted Answer

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

Question 19

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

Accepted Answer

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 20

Use the following to answer question: 
-(Figure: Indifference Curve Map I)Use Figure Indifference Curve Map I.It shows that:

Accepted Answer

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.

Exam 22: Consumer Preferences and Consumer Choice

A Giffen good is an inferior good for which the income effect dominates the substitution effect.

Suppose Joe derives 327 utils from consuming 1 dozen crab cakes and 11 pairs of socks.If he also derives 327 utils from 2 dozen crab cakes and 5 pairs of socks,Joe is indifferent between those combinations of crab cakes and socks.

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?

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.

Ms.Stardoe gets utility from coffee and cream,but only if they are consumed in the precise ratio of 8 ounces of coffee to 2 ounces of cream.This implies that coffee and cream are ordinary goods for Ms.Stardoe.

The following bundles can all be on the same indifference curve.Bundle A: 4 enchiladas,1 burrito;bundle B: 3 enchiladas,3 burritos;bundle C: 2 enchiladas,2 burritos.

Since indifference curves depend on the _ for individuals,this means that two consumers with the same income _.

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?

The ratio of the prices of two goods is equal to the ratio of the marginal utilities of the two goods at:

Use the following to answer question: -(Figure: Oreos and Apples) Use Figure Oreos and Apples,which provides an indifference curve map for Diego.As Diego moves along an indifference curve from point F to point E,he buys _ Oreos to obtain _ apples.

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

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

Use the following to answer question: -(Table: Madeline's Preferences for T-Shirts and Coffee) Use Table Madeline's Preferences for T-Shirts and Coffee.Assume each consumption bundle provides the same level of utility.As Madeline moves from bundle A to bundle E,her total utility:

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.

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:

An indifference curve typically:

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

Use the following to answer question: -(Figure: Indifference Curve Map I) Use Figure Indifference Curve Map I.It shows that:

Exam 22: Consumer Preferences and Consumer Choice

A Giffen good is an inferior good for which the income effect dominates the substitution effect.

Suppose Joe derives 327 utils from consuming 1 dozen crab cakes and 11 pairs of socks.If he also derives 327 utils from 2 dozen crab cakes and 5 pairs of socks,Joe is indifferent between those combinations of crab cakes and socks.

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?

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.

Ms.Stardoe gets utility from coffee and cream,but only if they are consumed in the precise ratio of 8 ounces of coffee to 2 ounces of cream.This implies that coffee and cream are ordinary goods for Ms.Stardoe.

The following bundles can all be on the same indifference curve.Bundle A: 4 enchiladas,1 burrito;bundle B: 3 enchiladas,3 burritos;bundle C: 2 enchiladas,2 burritos.

Since indifference curves depend on the _____ for individuals,this means that two consumers with the same income _____.

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?

The ratio of the prices of two goods is equal to the ratio of the marginal utilities of the two goods at:

Use the following to answer question: -(Figure: Oreos and Apples) Use Figure Oreos and Apples,which provides an indifference curve map for Diego.As Diego moves along an indifference curve from point F to point E,he buys _____ Oreos to obtain _____ apples.

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

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

Use the following to answer question: -(Table: Madeline's Preferences for T-Shirts and Coffee) Use Table Madeline's Preferences for T-Shirts and Coffee.Assume each consumption bundle provides the same level of utility.As Madeline moves from bundle A to bundle E,her total utility:

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.

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:

An indifference curve typically:

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

Use the following to answer question: -(Figure: Indifference Curve Map I) Use Figure Indifference Curve Map I.It shows that:

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.

Since indifference curves depend on the _ for individuals,this means that two consumers with the same income _.

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?

Use the following to answer question: -(Figure: Oreos and Apples) Use Figure Oreos and Apples,which provides an indifference curve map for Diego.As Diego moves along an indifference curve from point F to point E,he buys _ Oreos to obtain _ apples.

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

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 _ can be generated from indifference curves by changing _.