Question 1

Use the following to answer questions: Figure: Budget Constraint 4 
-(Figure: Budget Constraint 4)  Refer to the figure. This figure represents the budget constraint of a consumer who purchases flip-flops and sneakers. The slope of the budget constraint is equal to:

Accepted Answer

A)   the price of sneakers divided by the price of flip-flops.
B)   the price of flip-flops divided by the price of sneakers.
C)   the consumer's income.
D)   the quantity of flip-flops divided by the quantity of sneakers.E) A) and B)
F) All of the above

Question 2

To shop at places such as Costco, one does not have to pay a membership fee.

Accepted Answer

A) True 
 B)False

Question 3

When the price of a good changes, ______ influence(s)  the change in consumption.

Accepted Answer

A)   the income effect alone
B)   the substitution effect alone
C)   both the income effect and the substitution effect
D)   neither the income effect nor the substitution effectE) A) and B)
F) A) and C)

Question 4

Which statement best illustrates the concept of diminishing marginal utility?

Accepted Answer

A)   Gladys is hungry and the first piece of pizza she eats tastes wonderful! The second tastes great, the third good, the fourth okay, and the fifth piece of pizza she eats makes her sick.
B)   Thomas likes tomatoes more than Janice, and thus gets more utility from tomatoes than Janice does.
C)   High Fly is a new low-cost airline. Initially it is very expensive for High Fly to offer flights to customers because of the high start-up costs, but after fixed costs are covered the additional cost of adding one more consumer falls significantly.
D)   Sarah likes hamburgers, but the price she is willing to pay for them is low as compared to another good.E) None of the above
F) A) and D)

Question 5

As one moves down along an indifference curve, the slope of the indifference curve typically:

Accepted Answer

A)   increases.
B)   decreases.
C)   remains constant.
D)   changes in an indeterminate direction.E) None of the above
F) B) and C)

Question 6

A worker might respond to a higher wage by working less.

Accepted Answer

A) True 
 B)False

Question 7

Use the following to answer questions: Figure: Indifference Curve 
-(Figure: Indifference Curve)  Refer to the figure. This figure represents the indifference curve of a consumer who purchases flip-flops and sneakers. Which statement is TRUE?

Accepted Answer

A)   The consumer would prefer bundle C to bundle A.
B)   A consumer is indifferent between bundle B and bundle A.
C)   Bundle E is not utility maximizing.
D)   Bundle B generates the highest utility out of all the points shown.E) All of the above
F) None of the above

Question 8

If the budget constraint shifts northeast or away from the origin, the consumer can afford:

Accepted Answer

A)   fewer bundles.
B)   the same set of bundles.
C)   more bundles.
D)   sometimes fewer bundles, sometimes more bundles, and sometimes the same number of bundles.E) B) and D)
F) B) and C)

Question 9

Use the following to answer questions: Figure: Optimal Choice 2 
-(Figure: Optimal Choice 2)  Refer to the figure. This figure represents indifference curves for a consumer who purchases flip-flops and sneakers. If the dotted line represents this consumer's budget constraint, then the utility maximizing bundle for this consumer is:

Accepted Answer

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

Question 10

Consumption Bundle A contains 6 donuts and 2 cups of coffee, and consumption Bundle B contains 4 donuts and 1.5 cups of coffee. Bundle A and Bundle B could lie on the same indifference curve.

Accepted Answer

A) True 
 B)False

Question 11

Use the following to answer questions: Figure: Water vs. Soda 
-(Figure: Water vs. Soda)  Refer to the figure. The figure represents the marginal utility Janet receives when she consumes bottled water and soda. The prices of bottled water and sodas are both $1 each. Janet has $5 to spend. What mix of bottled water and soda will maximize Janet's utility?

Accepted Answer

A)   five bottles of water
B)   four bottles of water and one soda
C)   three bottles of water and two sodas
D)   2.5 bottles of water and 2.5 sodasE) B) and C)
F) None of the above

Question 12

If the price of apples rises, oranges become relatively less expensive. The increase in the orange consumption resulting from this price change is an example of the income effect.

Accepted Answer

A) True 
 B)False

Question 13

At the consumer's optimal consumption bundle, the MRSXY is 4, and the marginal utility of good X is 8. What is the marginal utility of good Y?

Accepted Answer

A)   1/2
B)   2
C)   24
D)   16E) All of the above
F) A) and D)

Question 14

Figure: Marginal Rate of Substitution  Refer to the figure. What is the marginal rate of substitution (MRS)  between Bundle A and Bundle B?

Accepted Answer

A)   4.5; the consumer is willing to trade 4.5 movie downloads for one music download.
B)   three; the consumer is willing to give up three movie downloads for an additional music download.
C)   1.5; the consumer will buy 1.5 times as many music downloads as movie downloads.
D)   one; the consumer faces a one-to-one trade-off.E) A) and C)
F) B) and D)

Question 15

Consumers maximize their utility when:

Accepted Answer

A)   the total benefits are greater than total costs.
B)   the marginal utility per dollar is equal across all goods consumed and all income is spent.
C)   they consume the good on which they place the highest overall value.
D)   they diversify their consumption across goods.E) B) and C)
F) C) and D)

Question 16

If the price of good X is $10 and price of good Y is $15, the slope of the budget constraint is -1.5.

Accepted Answer

A) True 
 B)False

Question 17

Countries in Western Europe tend to have more generous unemployment benefits for their workers than the United States. All else equal, you would expect workers in Western Europe to:

Accepted Answer

A)   work more hours on average.
B)   work fewer hours on average.
C)   have higher wages.
D)   have lower wages.E) C) and D)
F) A) and B)

Question 18

Marginal utility is the change in utility from consuming an additional unit.

Accepted Answer

A) True 
 B)False

Question 19

Increasing marginal utility means that marginal utility ______ as consumption ______.

Accepted Answer

A)   decreases; decreases
B)   decreases; increases
C)   increases; decreases
D)   increases; increasesE) B) and C)
F) A) and C)

Question 20

The slope of the indifference curve is equal to the marginal rate of substitution.

Accepted Answer

A) True 
 B)False

Exam 25: Consumer Choice

Use the following to answer questions: Figure: Budget Constraint 4 -(Figure: Budget Constraint 4) Refer to the figure. This figure represents the budget constraint of a consumer who purchases flip-flops and sneakers. The slope of the budget constraint is equal to:

Correct Answer
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A worker might respond to a higher wage by working less.

Correct Answer
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Increasing marginal utility means that marginal utility as consumption .

Correct Answer
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At the consumer's optimal consumption bundle, the MRS_XY is 4, and the marginal utility of good X is 8. What is the marginal utility of good Y?

Correct Answer
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If the budget constraint shifts northeast or away from the origin, the consumer can afford:

Correct Answer
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As one moves down along an indifference curve, the slope of the indifference curve typically:

Correct Answer
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The slope of the indifference curve is equal to the marginal rate of substitution.

Correct Answer
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Consumption Bundle A contains 6 donuts and 2 cups of coffee, and consumption Bundle B contains 4 donuts and 1.5 cups of coffee. Bundle A and Bundle B could lie on the same indifference curve.

Correct Answer
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Consumers maximize their utility when:

Correct Answer
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If the price of apples rises, oranges become relatively less expensive. The increase in the orange consumption resulting from this price change is an example of the income effect.

Correct Answer
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To shop at places such as Costco, one does not have to pay a membership fee.

Correct Answer
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Figure: Marginal Rate of Substitution Refer to the figure. What is the marginal rate of substitution (MRS) between Bundle A and Bundle B?

Correct Answer
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Which statement best illustrates the concept of diminishing marginal utility?

Correct Answer
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Use the following to answer questions: Figure: Indifference Curve -(Figure: Indifference Curve) Refer to the figure. This figure represents the indifference curve of a consumer who purchases flip-flops and sneakers. Which statement is TRUE?

Correct Answer
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Correct Answer
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Marginal utility is the change in utility from consuming an additional unit.

Correct Answer
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Correct Answer
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Countries in Western Europe tend to have more generous unemployment benefits for their workers than the United States. All else equal, you would expect workers in Western Europe to:

Correct Answer
verified

When the price of a good changes, ______ influence(s) the change in consumption.

Correct Answer
verified

If the price of good X is $10 and price of good Y is $15, the slope of the budget constraint is -1.5.

Correct Answer
verified

Exam 25: Consumer Choice

Use the following to answer questions: Figure: Budget Constraint 4 -(Figure: Budget Constraint 4) Refer to the figure. This figure represents the budget constraint of a consumer who purchases flip-flops and sneakers. The slope of the budget constraint is equal to:

Correct AnswerverifiedShow Answer

A worker might respond to a higher wage by working less.

Correct AnswerverifiedShow Answer

Increasing marginal utility means that marginal utility ______ as consumption ______.

Correct AnswerverifiedShow Answer

At the consumer's optimal consumption bundle, the MRSXY is 4, and the marginal utility of good X is 8. What is the marginal utility of good Y?

Correct AnswerverifiedShow Answer

If the budget constraint shifts northeast or away from the origin, the consumer can afford:

Correct AnswerverifiedShow Answer

As one moves down along an indifference curve, the slope of the indifference curve typically:

Correct AnswerverifiedShow Answer

The slope of the indifference curve is equal to the marginal rate of substitution.

Correct AnswerverifiedShow Answer

Consumption Bundle A contains 6 donuts and 2 cups of coffee, and consumption Bundle B contains 4 donuts and 1.5 cups of coffee. Bundle A and Bundle B could lie on the same indifference curve.

Correct AnswerverifiedShow Answer

Consumers maximize their utility when:

Correct AnswerverifiedShow Answer

If the price of apples rises, oranges become relatively less expensive. The increase in the orange consumption resulting from this price change is an example of the income effect.

Correct AnswerverifiedShow Answer

To shop at places such as Costco, one does not have to pay a membership fee.

Correct AnswerverifiedShow Answer

Figure: Marginal Rate of Substitution Refer to the figure. What is the marginal rate of substitution (MRS) between Bundle A and Bundle B?

Correct AnswerverifiedShow Answer

Which statement best illustrates the concept of diminishing marginal utility?

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Indifference Curve -(Figure: Indifference Curve) Refer to the figure. This figure represents the indifference curve of a consumer who purchases flip-flops and sneakers. Which statement is TRUE?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Marginal utility is the change in utility from consuming an additional unit.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Countries in Western Europe tend to have more generous unemployment benefits for their workers than the United States. All else equal, you would expect workers in Western Europe to:

Correct AnswerverifiedShow Answer

When the price of a good changes, ______ influence(s) the change in consumption.

Correct AnswerverifiedShow Answer

If the price of good X is $10 and price of good Y is $15, the slope of the budget constraint is -1.5.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Increasing marginal utility means that marginal utility as consumption .

Correct Answer
verified

At the consumer's optimal consumption bundle, the MRS_XY is 4, and the marginal utility of good X is 8. What is the marginal utility of good Y?

Correct Answer
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