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Exam 7: Consumer Behavior

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Question 21

Multiple Choice

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Alison is deciding how to spend the next hour.We ask her to rate the utility she would get from an hour of each activity.She would get utility of 4 from an hour of reading,utility of 2 from an hour of playing video games,and utility of 6 from shopping.Based on this information,economists could predict that Alison will:

A) read.
B) play video games.
C) go shopping.
D) do nothing,since none of the activities give her utility greater than 10.

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Question 22

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After watching a movie,Alan chooses not to watch a second and goes for a walk instead.Economists could explain his choices using the concept of:

A) budget constraints.
B) diminishing marginal utility.
C) income effect.
D) substitution effect.

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Question 23

Multiple Choice

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A utility function is:

Howard has just smoked a cigarette.If he chooses to smoke a second one:

Dave and Buster play two games of tennis,then decide to go have lunch.This type of decision making can be explained using the concept of:

In general,the income effect of an increase in the price of a normal good:

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. Considering the information in the table shown,if Jack decides to consume bundle D,we can conclude that Jack:

Sam has $200 a month to spend on either tanning sessions or rounds of golf.Tanning sessions are $20 each,and a round of golf is $40.Sam currently consumes six tanning sessions and two rounds of golf.Both tanning and golf are normal goods.If the price of a round of golf drops to $20,the income and substitution effects will cause Sam's consumption of tanning sessions:

Bart is seen standing in front of the cooler that contains containers of iced tea and lemonade.Moments later,we see Bart drinking iced tea,and we conclude Bart is getting more utility from that drink than lemonade.We drew that conclusion based on what economic concept?

This graph shows three different budget constraints: A,B,andC. If Bert has budget constraint A in the graph shown,what is his opportunity cost of three gallons of milk?

The marginal utility gained from the consumption of successive units of a normal good:

If Bob has one piece of gum in his mouth,he gains a utility of 12.If he adds a second piece to the first,it yields a marginal utility of 6;adding a third will bring marginal utility of 1.Adding a fourth piece will make Bob choke,yielding a marginal utility of -4.We can say:

This graph shows three different budget constraints: A,B,andC. If Joe has budget constraint C in the graph shown,what is the relative price of three gallons of milk?

When a person's income increases:

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. Considering the information in the table shown,Jack's total utility from consuming bundle D would be:

You decide to buy your friend lunch after she helped you study for your exam.This is an example of the economic concept of:

Linus has just watched two hours of TV.We can say:

This graph shows three different budget constraints: A,B,andC. If Don has budget constraint C in the graph shown,what is the trade-off he faces in terms of the two goods?

Elijah has just eaten his second popsicle.Using the concept of marginal utility,we can say:

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. Considering the information in the table shown,the price of ice cream is: