Question 1

Edith is buying products X and Y with her money income.Suppose her budget line shifts rightward (outward) .This might be the result of

Accepted Answer

A)  the prices of X and Y increasing while her money income remains constant.
B)  her money income decreasing while the prices of X and Y remain constant.
C)  her money income increasing more than increases in the prices of X and Y.
D)  none of these.E) A) and C)
F) C) and D)

Question 2

As a consumer moves down a given indifference curve, his or her total utility will diminish.

Accepted Answer

A) True 
 B)False

Question 3

The marginal utility of the last unit of apples consumed is 12, and the marginal utility of the last unit of bananas consumed is 8.What set of prices for apples and bananas, respectively, would be consistent with consumer equilibrium?

Accepted Answer

A)  $4 and $6
B)  $6 and $4
C)  $8 and $12
D)  $16 and $9E) C) and D)
F) B) and D)

Question 4

If you receive a gift whose market price is $20, but you consider it to be worth only $10, then

Accepted Answer

A)  there is a $10, or 50 percent, value gain.
B)  there may or may not be a value loss.
C)  there is a $10, or 50 percent, value loss.
D)  you can be relatively certain the giver was a sibling or other close relative.E) A) and B)
F) A) and C)

Question 5

The slope of a budget line reflects the

Accepted Answer

A)  elasticity of demand for the two products.
B)  price ratio of the two products.
C)  amount of the consumer's income.
D)  utility ratio of the two products.E) B) and C)
F) A) and D)

Question 6

A downward-sloping demand curve can be derived for a normal product by increasing its price in the consumer-behavior model and noting

Accepted Answer

A)  the increase in the utility-maximizing quantity of that product demanded.
B)  the decrease in the utility-maximizing quantity of that product demanded.
C)  a substitution effect that encourages more consumption of that product.
D)  an income effect that encourages more consumption of that product.E) B) and C)
F) A) and B)

Question 7

Which of the following is an assumption of the theory of consumer behavior described in this chapter?

Accepted Answer

A)  The consumer's income increases as prices of goods increase
B)  Each good that a consumer consumes has a price
C)  The consumer oftentimes is not sure about her preferences
D)  Marginal utility increases as more units of a good is consumedE) A) and D)
F) A) and C)

Question 8

The limited money income of consumers results in a so-called budget constraint.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is correct?

Accepted Answer

A)  Both cash and noncash gift-giving cause value losses.
B)  Neither cash nor noncash gift-giving causes value losses.
C)  Noncash gift-giving creates a value loss, but cash gifts do not.
D)  Cash gifts create a value loss, but noncash gifts do not.E) A) and D)
F) A) and B)

Question 10

Assume initially that the price of X (the quantity of which is measured on the horizontal axis)  is $9 and the price of Y (the quantity of which is measured on the vertical axis)  is $4.If the price of X now declines to $6, the budget line will

Accepted Answer

A)  be unaffected.
B)  shift outward on the vertical axis.
C)  shift inward on the horizontal axis.
D)  shift outward on the horizontal axis.E) None of the above
F) A) and D)

Question 11

An indifference curve shows all

Accepted Answer

A)  possible equilibrium positions on an indifference map.
B)  equilibrium combinations of two products that are obtainable with a given money income.
C)  combinations of two products yielding the same total utility to a consumer.
D)  possible combinations of two products that a consumer can purchase, given her income and the prices of the products.E) None of the above
F) A) and D)

Question 12

The income effect explains an exception to the law of demand.

Accepted Answer

A) True 
 B)False

Question 13

A consumer has two basic choices: rent a DVD movie for $4.00 and spend 2 hours watching it, or spend $13 for a miniature golf game that takes 1 hour.If the marginal utilities of the movie and the miniature golf game are equal, and the consumer values time at $12 an hour, the rational consumer will most likely

Accepted Answer

A)  rent the movie instead of playing miniature golf.
B)  play miniature golf instead of renting the movie.
C)  be indifferent between the movie and the miniature golf game.
D)  not have enough basis for making a utility-maximizing decision.E) All of the above
F) C) and D)

Question 14

The price of chicken = $5, while the price of pork = $9.If, after spending her entire budget, the consumer has MU of chicken = 6, while the MU of pork = 12, then the consumer should have bought more chicken and less pork in order to increase her total utility.

Accepted Answer

A) True 
 B)False

Question 15

Total utility may be determined by

Accepted Answer

A)  multiplying the marginal utility of the last unit consumed by the number of units consumed.
B)  summing the marginal utilities of each unit consumed.
C)  multiplying the marginal utility of the last unit consumed by product price.
D)  multiplying the marginal utility of the first unit consumed by the number of units consumed.E) A) and B)
F) A) and C)

Question 16

If marginal utility is diminishing, total utility must also be declining.

Accepted Answer

A) True 
 B)False

Question 17

If the total utility from consuming five units of a product is 245 and the marginal utility of a sixth unit is 5, then the total utility from consuming six units would be

Accepted Answer

A)  240.
B)  250.
C)  49.
D)  1,225.E) A) and D)
F) A) and C)

Question 18

A decrease in the prices of two products that a consumer buys out of a constant budget would cause the consumer's

Accepted Answer

A)  indifference curves to shift outward from the origin.
B)  indifference curves to shift inward to the origin.
C)  budget line to shift outward from the origin.
D)  budget line to shift inward to the origin.E) A) and B)
F) None of the above

Question 19

If total utility increases as consumption of a good increases, then marginal utility must be increasing also.

Accepted Answer

A) True 
 B)False

Question 20

The marginal rate of substitution

Accepted Answer

A)  may increase or decrease on a given indifference curve, depending on whether the substitution or the income effect is dominant.
B)  increases as one moves southeast along an indifference curve.
C)  is constant at all points on the budget line.
D)  declines as one moves southeast along an indifference curve.E) All of the above
F) A) and D)

Exam 7: Utility Maximization

If the total utility from consuming five units of a product is 245 and the marginal utility of a sixth unit is 5, then the total utility from consuming six units would be

Correct Answer
verified

An indifference curve shows all

Correct Answer
verified

The income effect explains an exception to the law of demand.

Correct Answer
verified

The slope of a budget line reflects the

Correct Answer
verified

The marginal utility of the last unit of apples consumed is 12, and the marginal utility of the last unit of bananas consumed is 8.What set of prices for apples and bananas, respectively, would be consistent with consumer equilibrium?

Correct Answer
verified

If marginal utility is diminishing, total utility must also be declining.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

As a consumer moves down a given indifference curve, his or her total utility will diminish.

Correct Answer
verified

The price of chicken = $5, while the price of pork = $9.If, after spending her entire budget, the consumer has MU of chicken = 6, while the MU of pork = 12, then the consumer should have bought more chicken and less pork in order to increase her total utility.

Correct Answer
verified

Edith is buying products X and Y with her money income.Suppose her budget line shifts rightward (outward) .This might be the result of

Correct Answer
verified

A decrease in the prices of two products that a consumer buys out of a constant budget would cause the consumer's

Correct Answer
verified

Correct Answer
verified

If you receive a gift whose market price is $20, but you consider it to be worth only $10, then

Correct Answer
verified

Which of the following is an assumption of the theory of consumer behavior described in this chapter?

Correct Answer
verified

Total utility may be determined by

Correct Answer
verified

The marginal rate of substitution

Correct Answer
verified

Assume initially that the price of X (the quantity of which is measured on the horizontal axis) is $9 and the price of Y (the quantity of which is measured on the vertical axis) is $4.If the price of X now declines to $6, the budget line will

Correct Answer
verified

The limited money income of consumers results in a so-called budget constraint.

Correct Answer
verified

If total utility increases as consumption of a good increases, then marginal utility must be increasing also.

Correct Answer
verified

A downward-sloping demand curve can be derived for a normal product by increasing its price in the consumer-behavior model and noting

Correct Answer
verified

Exam 7: Utility Maximization

If the total utility from consuming five units of a product is 245 and the marginal utility of a sixth unit is 5, then the total utility from consuming six units would be

Correct AnswerverifiedShow Answer

An indifference curve shows all

Correct AnswerverifiedShow Answer

The income effect explains an exception to the law of demand.

Correct AnswerverifiedShow Answer

The slope of a budget line reflects the

Correct AnswerverifiedShow Answer

The marginal utility of the last unit of apples consumed is 12, and the marginal utility of the last unit of bananas consumed is 8.What set of prices for apples and bananas, respectively, would be consistent with consumer equilibrium?

Correct AnswerverifiedShow Answer

If marginal utility is diminishing, total utility must also be declining.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

As a consumer moves down a given indifference curve, his or her total utility will diminish.

Correct AnswerverifiedShow Answer

The price of chicken = $5, while the price of pork = $9.If, after spending her entire budget, the consumer has MU of chicken = 6, while the MU of pork = 12, then the consumer should have bought more chicken and less pork in order to increase her total utility.

Correct AnswerverifiedShow Answer

Edith is buying products X and Y with her money income.Suppose her budget line shifts rightward (outward) .This might be the result of

Correct AnswerverifiedShow Answer

A decrease in the prices of two products that a consumer buys out of a constant budget would cause the consumer's

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If you receive a gift whose market price is $20, but you consider it to be worth only $10, then

Correct AnswerverifiedShow Answer

Which of the following is an assumption of the theory of consumer behavior described in this chapter?

Correct AnswerverifiedShow Answer

Total utility may be determined by

Correct AnswerverifiedShow Answer

The marginal rate of substitution

Correct AnswerverifiedShow Answer

Assume initially that the price of X (the quantity of which is measured on the horizontal axis) is $9 and the price of Y (the quantity of which is measured on the vertical axis) is $4.If the price of X now declines to $6, the budget line will

Correct AnswerverifiedShow Answer

The limited money income of consumers results in a so-called budget constraint.

Correct AnswerverifiedShow Answer

If total utility increases as consumption of a good increases, then marginal utility must be increasing also.

Correct AnswerverifiedShow Answer

A downward-sloping demand curve can be derived for a normal product by increasing its price in the consumer-behavior model and noting

Correct AnswerverifiedShow Answer

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