Question 1

The budget line and the demand curve are both similar in the way that both show the price of a good that a consumer can buy.

Accepted Answer

A) True 
 B)False

Question 2

Holding real income constant,the change in quantity consumed that is caused by a change in the relative price of the good describes the:

Accepted Answer

A) law of diminishing returns. 
B) substitution effect. 
C) income effect. 
D) law of supply.

Question 3

Suppose that  /  <  /  .This implies that:

Accepted Answer

A) spending a dollar less on Y and spending a dollar more on X increases utility. 
B) spending a dollar less on X,and spending a dollar more on Y increases utility. 
C) X is more expensive than Y. 
D) Y is more expensive than X.

Question 4

Table 7.8
-Refer to Table 7.8.Jessy spends no more than $75 per month on movies and eating out.The price of a movie is $8 and the price of a meal out is $15.If Jessy watches two movies per month,what is her marginal utility per dollar?

Accepted Answer

A) 80 
B) 12 
C) 10 
D) 9

Question 5

The utility-maximizing rule says that a person will maximize utility by choosing goods so that the marginal utility for each good is equal.

Accepted Answer

A) True 
 B)False

Question 6

Table 7.6
-Refer to Table 7.6.Pete has $10 to spend.He buys four cookies and three candies.Using the equimarginal rule which of the following is true?

Accepted Answer

A) Pete is maximizing his utility. 
B) Pete is not spending the entire $10. 
C) Pete could make himself better off by buying less candy and more cookies. 
D) Pete could make himself better off by buying less cookies and more candy.

Question 7

Which of the following have economists and psychologists identified as types of puzzling consumer behavior?

Accepted Answer

A) Spending choices sometimes depend on the source of income. 
B) The willingness to pay for a product sometimes is affected by irrelevant information. 
C) Product choices are sometimes influenced by irrelevant alternatives. 
D) all of the above

Question 8

Table 7.2
-Refer to Table 7.2.Diminishing marginal utility sets in after the ________ slice of pie per day.

Accepted Answer

A) fourth 
B) third 
C) second 
D) first

Question 9

-Refer to Figure 7.3.The total utility from consuming 4 slices of pie is:

Accepted Answer

A) 8. 
B) 2. 
C) 15. 
D) 17.

Question 10

The principle of opportunity cost is:

Accepted Answer

A) the opportunity cost of something is what someone sacrifices to get it. 
B) is the satisfaction of obtaining the best next alternative 
C) is the choice someone has to make between two different goods. 
D) the cost of paying for something someone needs.

Question 11

Table 7.7
-Refer to Table 7.7.If the price of a soda is $2,the price of a hamburger is $6,and George has $20 of income,George's utility maximizing combination of sodas and hamburgers per day is:

Accepted Answer

A) 4 soda and 2 hamburgers. 
B) 1 sodas and 3 hamburger. 
C) 4 sodas and 1 hamburgers. 
D) 3 sodas and 4 hamburgers.

Question 12

-Refer to Figure 7.2.The marginal utility of the third video game rental is:

Accepted Answer

A) 1. 
B) 3. 
C) 4. 
D) 22.

Question 13

A change in the price of a good purchased by a consumer would affect that consumer's:

Accepted Answer

A) nominal income. 
B) real income. 
C) demand curve. 
D) marginal utility.

Question 14

Suppose that Erin spends all of her income on two goods,pizza and fiction novels.If the price of pizza rises then:

Accepted Answer

A) the current marginal utility per dollar spent on pizza will rise. 
B) the current marginal utility per dollar spent on pizza will fall. 
C) the current marginal utility per dollar spent on fiction novels will rise. 
D) the current marginal utility per dollar spent on fiction novels will fall.

Question 15

The equimarginal rule says that a person will maximize utility by choosing the good for which the marginal utility is the greatest.

Accepted Answer

A) True 
 B)False

Question 16

Table 7.3
-Refer to Table 7.3.The marginal utility of the first book is:

Accepted Answer

A) 20. 
B) 22. 
C) 1.10. 
D) 21.

Question 17

The budget line shows:

Accepted Answer

A) the different combinations of two goods that a consumer can buy. 
B) the quantity of a single good that a consumer is willing to buy at different prices. 
C) the maximized utility from a good. 
D) none of the above

Question 18

If the results of the study are correct,a typical consumer using the equimarginal rule would be expected to:

Accepted Answer

A) purchase fewer consultations and more surgeries. 
B) purchase the same number of both services. 
C) purchase more consultations and fewer surgeries. 
D) purchase less of both services.

Question 19

Why are humans subject to present bias?

Accepted Answer

A) They overestimate their future consequences. 
B) They ignore the gut feeling. 
C) They underestimate their future consequences. 
D) They do a good job imagining the strength of future gut feeling.

Question 20

Paul is consuming X and Y so that  /  = 18 and  /  = 14.Using the equimarginal rule,Paul should:

Accepted Answer

A) continue to consume the same amount of X and Y,as he is already maximizing utility. 
B) consume less of both X and Y. 
C) consume more X and less Y. 
D) consume less X and more Y.

Exam 7: Consumer Choice: Utility Theory and Insights From Neuroscience

The budget line and the demand curve are both similar in the way that both show the price of a good that a consumer can buy.

Holding real income constant,the change in quantity consumed that is caused by a change in the relative price of the good describes the:

Suppose that / < / .This implies that:

Table 7.8 -Refer to Table 7.8.Jessy spends no more than $75 per month on movies and eating out.The price of a movie is $8 and the price of a meal out is $15.If Jessy watches two movies per month,what is her marginal utility per dollar?

The utility-maximizing rule says that a person will maximize utility by choosing goods so that the marginal utility for each good is equal.

Table 7.6 -Refer to Table 7.6.Pete has $10 to spend.He buys four cookies and three candies.Using the equimarginal rule which of the following is true?

Which of the following have economists and psychologists identified as types of puzzling consumer behavior?

Table 7.2 -Refer to Table 7.2.Diminishing marginal utility sets in after the ________ slice of pie per day.

-Refer to Figure 7.3.The total utility from consuming 4 slices of pie is:

The principle of opportunity cost is:

Table 7.7 -Refer to Table 7.7.If the price of a soda is $2,the price of a hamburger is $6,and George has $20 of income,George's utility maximizing combination of sodas and hamburgers per day is:

-Refer to Figure 7.2.The marginal utility of the third video game rental is:

A change in the price of a good purchased by a consumer would affect that consumer's:

Suppose that Erin spends all of her income on two goods,pizza and fiction novels.If the price of pizza rises then:

The equimarginal rule says that a person will maximize utility by choosing the good for which the marginal utility is the greatest.

Table 7.3 -Refer to Table 7.3.The marginal utility of the first book is:

The budget line shows:

If the results of the study are correct,a typical consumer using the equimarginal rule would be expected to:

Why are humans subject to present bias?

Paul is consuming X and Y so that / = 18 and / = 14.Using the equimarginal rule,Paul should: