Question 1

A budget line shows the

Accepted Answer

A)  alternative combinations of two goods that a consumer can purchase with a given money income.
B)  alternative combinations of two goods that will yield the same level of total utility to a consumer.
C)  quantities of a particular good that a consumer will buy at various prices.
D)  ratio of money income to product price.E) C) and D)
F) B) and D)

Question 2

When a consumer has maximized total utility, he or she cannot increase total utility by reallocating expenditures among different products.

Accepted Answer

A) True 
 B)False

Question 3

Many people do not steal or commit fraud because to them, the resulting feelings of guilt and uneasiness make the

Accepted Answer

A)  marginal utility of the act increase.
B)  marginal utility of the act decrease.
C)  marginal cost of the act increase.
D)  marginal cost of the act decrease.E) C) and D)
F) B) and D)

Question 4

When diminishing marginal utility starts happening as a person consumes more and more of a given good,

Accepted Answer

A)  total utility will diminish.
B)  total utility will increase at a diminishing rate.
C)  marginal utility will become negative.
D)  total utility will become negative.E) C) and D)
F) None of the above

Question 5

A consumer is making purchases of products Alpha and Beta such that the marginal utility of product Alpha is 30 and the marginal utility of product Beta is 40.The price of product Alpha is $5, and the price of product Beta is $10.The utility-maximizing rule suggests that, to stay within a given budget constraint, this consumer should

Accepted Answer

A)  increase consumption of product Beta and decrease consumption of product Alpha.
B)  increase consumption of product Beta and increase consumption of product Alpha.
C)  increase consumption of product Alpha and decrease consumption of product Beta.
D)  makeno change in the consumption of Alpha or Beta.E) A) and B)
F) B) and C)

Question 6

With a fixed money income, an increase in the price of one good and a decrease in the price of the other will cause the new budget line to intersect the original budget line.

Accepted Answer

A) True 
 B)False

Question 7

The fact that most medical care purchases are financed through insurance

Accepted Answer

A)  has no effect on health care consumption because aggregate costs are the same regardless of payment method.
B)  reduces the amount of health care consumed by raising the price of additional units of care.
C)  has decreased health care costs and therefore reduced aggregate health care expenditures.
D)  increases the amount of health care consumed by reducing the price of additional units of care.E) A) and B)
F) None of the above

Question 8

If the price of a good increases, it will tend to make the MU to P ratio for the good rise and the good becomes more attractive to the buyer.

Accepted Answer

A) True 
 B)False

Question 9

From the viewpoint of potential criminals, the probability of being fined or imprisoned

Accepted Answer

A)  raises the marginal utility of criminal behavior.
B)  lowers the marginal utility of criminal behavior.
C)  raises the marginal cost or "price" of criminal behavior.
D)  lowers the marginal cost or "price" of criminal behavior.E) B) and C)
F) B) and D)

Question 10

Why do people tend to eat more at all-you-can-eat buffet restaurants than at restaurants where each item is purchased separately?

Accepted Answer

A)  Once the all-you-can-eat meal is purchased, consumers view additional trips back to the buffet as having a price of zero.
B)  MU/P is consistently greater at all-you-can-eat restaurants.
C)  People who eat at all-you-can-eat restaurants do not experience diminishing marginal utility.
D)  Food at all-you-can-eat restaurants tends to have fewer calories, so consumers feel the need to consume a greater volume of food.E) A) and B)
F) None of the above

Question 11

Prashanth decides to buy a $75 ticket to a particular New York professional hockey game rather than a $50 ticket for a particular Broadway play.We can conclude that Prashanth

Accepted Answer

A)  is relatively unappreciative of the arts.
B)  obtains more marginal utility from the play than from the hockey game.
C)  has a higher "marginal utility-to-price ratio" for the hockey game than for the play.
D)  has recently attended several other Broadway plays.E) C) and D)
F) B) and D)

Question 12

(Consider This)  A topographical map shows successively higher equal-elevation lines, whereas an indifference map shows successively higher levels of total

Accepted Answer

A)  utility.
B)  revenue.
C)  profit.
D)  cost.E) C) and D)
F) A) and D)

Question 13

If the quantity of X is measured on the horizontal axis and the quantity of Y on the vertical, then the slope of the budget line is equal to the price of X divided by the price of Y.

Accepted Answer

A) True 
 B)False

Question 14

Noncash gift-giving involves value loss when the marginal utility of the gift to the receiver is less than the product price.

Accepted Answer

A) True 
 B)False

Question 15

In 2015 the federal government started requiring restaurants to print calorie counts next to menu items.The intent was to persuade consumers to

Accepted Answer

A)  control and reduce their total calorie intake.
B)  minimize total utility out of their spending.
C)  maximize the calories per dollar spent.
D)  compare marginal utility against calorie counts.E) A) and B)
F) All of the above

Question 16

(Last Word)  Most people do not steal, because

Accepted Answer

A)  stolen goods are subject to the law of diminishing marginal utility.
B)  the marginal utilities of stolen goods are negative.
C)  their marginal costs, including guilt costs, are too high.
D)  stolen goods can only be sold at deep discounts.E) All of the above
F) B) and C)

Question 17

If a consumer is initially in equilibrium, an increase in money income will

Accepted Answer

A)  move the consumer to a new equilibrium on a lower indifference curve.
B)  move the consumer to a new equilibrium on a higher indifference curve.
C)  make the slope of the consumer's indifference curves steeper.
D)  have no effect on the equilibrium position.E) B) and C)
F) A) and B)

Question 18

"Essential" water is cheaper than "nonessential" diamonds because

Accepted Answer

A)  new industrial uses for diamonds have been discovered.
B)  the supply of water is great relative to demand and the supply of diamonds is small relative to demand.
C)  although the total utility of diamonds is greater, their marginal utility is small.
D)  the supply of diamonds is great relative to demand and the supply of water is small relative to demand.E) A) and D)
F) A) and C)

Question 19

(Consider This)  When the federal government started requiring restaurants to print calorie counts next to menu items,

Accepted Answer

A)  restaurants changed their prices, systematically lowering prices for healthier items and raising prices for high-calorie entrees.
B)  there was no meaningful change in consumption behavior, indicating that marginal utility is driven solely by tastes for the food items and not by health information.
C)  consumption of higher calorie items decreased, suggesting consumers' marginal utility for these items dropped.
D)  consumption of higher-calorie items increased, contrary to the law's objective.E) A) and B)
F) B) and D)

Question 20

Suppose that MUx/Px exceeds MUy/Py.To maximize utility, the consumer who is spending all her money income should buy

Accepted Answer

A)  less of X only if its price rises.
B)  more of Y only if its price rises.
C)  more of Y and/or less of X.
D)  more of X and/or less of Y.E) C) and D)
F) A) and B)

Exam 7: Utility Maximization

(Last Word) Most people do not steal, because

Correct Answer
verified

Noncash gift-giving involves value loss when the marginal utility of the gift to the receiver is less than the product price.

Correct Answer
verified

Correct Answer
verified

If a consumer is initially in equilibrium, an increase in money income will

Correct Answer
verified

Suppose that MUx/Px exceeds MUy/Py.To maximize utility, the consumer who is spending all her money income should buy

Correct Answer
verified

(Consider This) When the federal government started requiring restaurants to print calorie counts next to menu items,

Correct Answer
verified

When a consumer has maximized total utility, he or she cannot increase total utility by reallocating expenditures among different products.

Correct Answer
verified

Why do people tend to eat more at all-you-can-eat buffet restaurants than at restaurants where each item is purchased separately?

Correct Answer
verified

In 2015 the federal government started requiring restaurants to print calorie counts next to menu items.The intent was to persuade consumers to

Correct Answer
verified

From the viewpoint of potential criminals, the probability of being fined or imprisoned

Correct Answer
verified

Prashanth decides to buy a $75 ticket to a particular New York professional hockey game rather than a $50 ticket for a particular Broadway play.We can conclude that Prashanth

Correct Answer
verified

A budget line shows the

Correct Answer
verified

When diminishing marginal utility starts happening as a person consumes more and more of a given good,

Correct Answer
verified

"Essential" water is cheaper than "nonessential" diamonds because

Correct Answer
verified

If the price of a good increases, it will tend to make the MU to P ratio for the good rise and the good becomes more attractive to the buyer.

Correct Answer
verified

Many people do not steal or commit fraud because to them, the resulting feelings of guilt and uneasiness make the

Correct Answer
verified

(Consider This) A topographical map shows successively higher equal-elevation lines, whereas an indifference map shows successively higher levels of total

Correct Answer
verified

If the quantity of X is measured on the horizontal axis and the quantity of Y on the vertical, then the slope of the budget line is equal to the price of X divided by the price of Y.

Correct Answer
verified

The fact that most medical care purchases are financed through insurance

Correct Answer
verified

With a fixed money income, an increase in the price of one good and a decrease in the price of the other will cause the new budget line to intersect the original budget line.

Correct Answer
verified

Exam 7: Utility Maximization

(Last Word) Most people do not steal, because

Correct AnswerverifiedShow Answer

Noncash gift-giving involves value loss when the marginal utility of the gift to the receiver is less than the product price.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a consumer is initially in equilibrium, an increase in money income will

Correct AnswerverifiedShow Answer

Suppose that MUx/Px exceeds MUy/Py.To maximize utility, the consumer who is spending all her money income should buy

Correct AnswerverifiedShow Answer

(Consider This) When the federal government started requiring restaurants to print calorie counts next to menu items,

Correct AnswerverifiedShow Answer

When a consumer has maximized total utility, he or she cannot increase total utility by reallocating expenditures among different products.

Correct AnswerverifiedShow Answer

Why do people tend to eat more at all-you-can-eat buffet restaurants than at restaurants where each item is purchased separately?

Correct AnswerverifiedShow Answer

In 2015 the federal government started requiring restaurants to print calorie counts next to menu items.The intent was to persuade consumers to

Correct AnswerverifiedShow Answer

From the viewpoint of potential criminals, the probability of being fined or imprisoned

Correct AnswerverifiedShow Answer

Prashanth decides to buy a $75 ticket to a particular New York professional hockey game rather than a $50 ticket for a particular Broadway play.We can conclude that Prashanth

Correct AnswerverifiedShow Answer

A budget line shows the

Correct AnswerverifiedShow Answer

When diminishing marginal utility starts happening as a person consumes more and more of a given good,

Correct AnswerverifiedShow Answer

"Essential" water is cheaper than "nonessential" diamonds because

Correct AnswerverifiedShow Answer

If the price of a good increases, it will tend to make the MU to P ratio for the good rise and the good becomes more attractive to the buyer.

Correct AnswerverifiedShow Answer

Many people do not steal or commit fraud because to them, the resulting feelings of guilt and uneasiness make the

Correct AnswerverifiedShow Answer

(Consider This) A topographical map shows successively higher equal-elevation lines, whereas an indifference map shows successively higher levels of total

Correct AnswerverifiedShow Answer

If the quantity of X is measured on the horizontal axis and the quantity of Y on the vertical, then the slope of the budget line is equal to the price of X divided by the price of Y.

Correct AnswerverifiedShow Answer

The fact that most medical care purchases are financed through insurance

Correct AnswerverifiedShow Answer

With a fixed money income, an increase in the price of one good and a decrease in the price of the other will cause the new budget line to intersect the original budget line.

Correct AnswerverifiedShow Answer

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