Question 1

Exhibit 21-5
 
-Refer to Exhibit 21-5. What value goes in blank (D) ?

Accepted Answer

A)   47
B)   15
C)   35
D)   60
E)   There is not enough information to answer this question.

Question 2

If a person's income and the prices of both goods all rise by the same percentage,then her budget constraint

Accepted Answer

A)   moves inward toward the origin, and its slope remains the same.
B)   moves outward away from the origin, and its slope changes.
C)   moves outward away from the origin, and its slope remains the same.
D)   does not change in any way.

Question 3

This is the solution to the diamond-water paradox: Those things that have high value in use sometimes have low prices because they are consumed at low __________ utility; those things that have low value in use sometimes have high prices because they are consumed at high __________utility.

Accepted Answer

A)   marginal; total
B)   total; total
C)   total; marginal
D)   marginal; marginal
E)   none of the above

Question 4

Which of the following statements is true?

Accepted Answer

A)   If a consumer is in equilibrium, it does not necessarily follow that he or she is also achieving the greatest total utility.
B)   If a consumer is in equilibrium, it necessarily follows that he or she is also achieving the greatest total utility.
C)   If a consumer is attaining the greatest marginal utility, then it necessarily follows that he or she is also achieving the greatest total utility.
D)   If a consumer is attaining the greatest total utility, then it necessarily follows that he or she is also achieving the greatest marginal utility.

Question 5

We take one dollar from a pauper and give it to a millionaire.Assuming a diminishing marginal utility of money,

Accepted Answer

A)   total utility in the economy must rise.
B)   total utility in the economy must fall.
C)   total utility in the economy must remain the same.
D)   we cannot say whether or not total utility changes.

Question 6

Marginal utility is defined as the

Accepted Answer

A)   change in marginal utility a person derives from the consumption of a good.
B)   change in total utility a person derives from the consumption of a good divided by the price of that good.
C)   change in total utility a person derives from the consumption of a good divided by the change in the quantity of the good consumed.
D)   sum of the amounts of satisfaction a person receives from consuming a good.
E)   change in total utility a person derives from the consumption of a good divided by the value in use of that good.

Question 7

The law of diminishing marginal utility helps to explain

Accepted Answer

A)   why people trade.
B)   the law of demand.
C)   why the production possibilities frontier is typically bowed-out.
D)   a and b
E)   all of the above

Question 8

If the marginal utility of X is negative,then the last unit of X is

Accepted Answer

A)   a bad
B)   a normal good
C)   an inferior good
D)   not subject to the law of diminishing marginal utility

Question 9

Suppose Alice receives 250 utils from consuming one hamburger and 90 utils from consuming a second hamburger.What is the marginal utility of the second hamburger?

Accepted Answer

A)   340 utils
B)   170 utils
C)   90 utils
D)   0 utils
E)   none of the above

Question 10

Suppose that in the year 2050,one gallon of water is more expensive than a one-carat diamond.What could explain this?

Accepted Answer

A)   There is much less water in the world of 2050 than today.
B)   There are many more diamonds in the world of 2050 than today.
C)   The diamond-water paradox does not hold for any pair of goods.
D)   The law of diminishing marginal utility no longer holds.
E)   a or b

Question 11

For economists,framing refers to the

Accepted Answer

A)   manner in which a problem is presented.
B)   degree of competition present in a given market.
C)   total satisfaction a consumer derives from consuming a good.
D)   level of total utility derived from consuming a good.
E)   c and d

Question 12

Exhibit 21-8
 
-Refer to Exhibit 21-8.If the price of good X rises,the budget constraint moves from budget constraint

Accepted Answer

A)   1 to 2.
B)   2 to 3.
C)   3 to 1.
D)   1 to 3.
E)   a or c

Question 13

Which of the following statements is true?

Accepted Answer

A)   The less you have of any one good, the less you would be willing to pay for one more unit of it.
B)   The less you have of any one good, the more you would be willing to pay for one more unit of it.
C)   The amount you have of any one good does not influence the price you would be willing to pay for it, but it does affect the marginal utility received from consuming a particular unit.
D)   none of the above

Question 14

Which of the following is true?

Accepted Answer

A)   It is possible for total utility to rise as marginal utility falls.
B)   Marginal utility is the same as total utility.
C)   As marginal utility falls, total utility always falls.
D)   a and c

Question 15

In order for an individual to achieve consumer equilibrium through the consumption of two goods,A and B,that individual must fulfill the condition

Accepted Answer

A)   TUA = TUB.
B)   TUA/PA = TUB/PB.
C)   MUA = MUB.
D)   MUA/PA = MUB/PB.
E)   MUB/PA = MUA/PB.

Question 16

There are two goods,X and Y,and the absolute price of good Y falls.It follows that

Accepted Answer

A)   a person can buy more of good Y.
B)   a person cannot buy more of good Y.
C)   the slope of the budget constraint changes.
D)   the indifference curve between X and Y changes.
E)   a and c

Question 17

Given the choice between a sure-thing option and a gamble option with the same expected payoff,a____________ person will choose gamble.

Accepted Answer

A)   risk averse
B)   risk loving
C)   risk neutral
D)   risk avoiding
E)   none of the above

Question 18

The two white rats in the "buying" behavior study conducted at Texas A & M acted in a manner that supported the law of demand and the concept of consumer equilibrium.

Accepted Answer

A) True 
 B)False

Question 19

Consumer equilibrium exists when an individual

Accepted Answer

A)   can be made better off by buying more of a normal good and less of an inferior good.
B)   is receiving the same total utility from each of the goods he or she purchases.
C)   is receiving the same marginal utility from each of the goods he or she purchases.
D)   has the same MU/P ratio for each of the goods he or she purchases.
E)   none of the above

Question 20

Indifference curves are generally downward sloping and concave to the origin.

Accepted Answer

A) True 
 B)False

Exam 21: Consumer Choice: Maximizing Utility and Behavioral Economics

Consumer equilibrium exists when an individual

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Suppose Alice receives 250 utils from consuming one hamburger and 90 utils from consuming a second hamburger.What is the marginal utility of the second hamburger?

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Which of the following statements is true?

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Marginal utility is defined as the

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Which of the following is true?

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The law of diminishing marginal utility helps to explain

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Which of the following statements is true?

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Exhibit 21-8 -Refer to Exhibit 21-8.If the price of good X rises,the budget constraint moves from budget constraint

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There are two goods,X and Y,and the absolute price of good Y falls.It follows that

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In order for an individual to achieve consumer equilibrium through the consumption of two goods,A and B,that individual must fulfill the condition

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This is the solution to the diamond-water paradox: Those things that have high value in use sometimes have low prices because they are consumed at low __________ utility; those things that have low value in use sometimes have high prices because they are consumed at high __________utility.

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If the marginal utility of X is negative,then the last unit of X is

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Given the choice between a sure-thing option and a gamble option with the same expected payoff,a____________ person will choose gamble.

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Exhibit 21-5 -Refer to Exhibit 21-5. What value goes in blank (D) ?

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Suppose that in the year 2050,one gallon of water is more expensive than a one-carat diamond.What could explain this?

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The two white rats in the "buying" behavior study conducted at Texas A & M acted in a manner that supported the law of demand and the concept of consumer equilibrium.

Correct AnswerverifiedShow Answer

Indifference curves are generally downward sloping and concave to the origin.

Correct AnswerverifiedShow Answer

For economists,framing refers to the

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If a person's income and the prices of both goods all rise by the same percentage,then her budget constraint

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We take one dollar from a pauper and give it to a millionaire.Assuming a diminishing marginal utility of money,

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This is the solution to the diamond-water paradox: Those things that have high value in use sometimes have low prices because they are consumed at low utility; those things that have low value in use sometimes have high prices because they are consumed at high utility.

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