Question 1

If MU a/ Pₐ = 100/$35 = MU b/ Pᵦ = 300/? = MU c/ Pc = 400/?, the prices of products B and C in consumer equilibrium

Accepted Answer

A)  cannot be determined from the information given.
B)  are $105 and $140, respectively.
C)  are $105 and $175, respectively.
D)  are $100 and $200, respectively.E) A) and D)
F) A) and C)

Question 2

Can marginal utility be negative? Briefly explain.

Accepted Answer

Yes, marginal utility becomes ...

Question 3

Which of the following defines marginal utility?

Accepted Answer

A)  the change in total utility divided by the price of a product
B)  the maximum amount of satisfaction from consuming a product
C)  the total satisfaction derived from a certain amount of the product
D)  the additional satisfaction from consuming one more unit of a productE) A) and B)
F) A) and C)

Question 4

The theory of consumer behavior assumes that

Accepted Answer

A)  consumers behave rationally, attempting to maximize their satisfaction.
B)  consumers have unlimited money incomes.
C)  consumers do not know how much marginal utility they obtain from successive units of various products.
D)  marginal utility is constant.E) A) and D)
F) A) and C)

Question 5

If you purchase a gift worth $12 for your sister, but your sister would be willing to pay only $8 if she bought the item for herself, then the

Accepted Answer

A)  total utility of the gift is $20.
B)  total utility of the gift is $4.
C)  marginal utility of the gift is $4.
D)  loss of value in the gift is $4.E) B) and D)
F) A) and B)

Question 6

The budget line shift from ab to cd in the figure is consistent with

Accepted Answer

A)  decreases in the prices of both M and N.
B)  an increase in the price of M and a decrease in the price of N.
C)  a decrease in money income.
D)  an increase in money income and decrease in the price of N.E) B) and C)
F) A) and B)

Question 7

Which of the following statements is correct?

Accepted Answer

A)  Marginal utility is the accumulation or summation of total utility.
B)  Total utility is the accumulation or summation of marginal utility.
C)  Total utility is the product of multiplying price times marginal utility.
D)  Total utility is the change in marginal utility as quantity consumed increases.E) C) and D)
F) B) and C)

Question 8

Refer to the graph. What could cause the consumer equilibrium point to shift from point a to point b?

Accepted Answer

A)  The consumer's income increased.
B)  The price of good 1 decreased.
C)  The price of good 1 increased.
D)  The consumer's income decreased.E) C) and D)
F) B) and C)

Question 9

The shift of the budget line from cd to ab in the figure is consistent with

Accepted Answer

A)  decreases in the prices of both M and N.
B)  an increase in the price of M and a decrease in the price of N.
C)  a decrease in money income.
D)  an increase in money income.E) B) and C)
F) A) and D)

Question 10

If the price of product X rises, then the resulting decline in the amount purchased will

Accepted Answer

A)  necessarily increase the consumer's total utility from his total purchases.
B)  increase the marginal utility of the last unit consumed of this good.
C)  increase the total utility from purchases of this good.
D)  reduce the marginal utility of the last unit consumed of this good.E) A) and B)
F) C) and D)

Question 11

Refer to the diagram, where xy is the relevant budget line and I₁, I₂, and I₃ are indifference curves. The equilibrium position for the consumer is at

Accepted Answer

A)  any point on xy.
B)  point M.
C)  point K.
D)  point J.E) A) and D)
F) C) and D)

Question 12

If you purchase a gift worth $25 for your sister, but your sister would be willing to pay only $10 if she bought the item for herself, then the

Accepted Answer

A)  total utility of the gift is $35.
B)  total utility of the gift is $15.
C)  marginal utility of the gift is $15.
D)  loss of value in the gift is $15.E) B) and D)
F) A) and D)

Question 13

Refer to the given graph. Suppose you had tastes as described by the indifference curves above. If your income was $100, Pₓ = 20 and Pᵧ = 25, which combination of X and Y would maximize your utility?

Accepted Answer

A)  5X and 0Y
B)  0X and 4Y
C)  3X and 1Y
D)  5X and 4YE) B) and D)
F) A) and C)

Question 14

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18.  How many units of the two products will the consumer buy to get maximum utility?

Accepted Answer

A)  1 of X and 4 of Y
B)  2 of X and 2 of Y
C)  2 of X and 3 of Y
D)  3 of X and 4 of YE) A) and B)
F) B) and D)

Question 15

What is shown by the indifference map for two goods? Which indifference curve would a consumer want to be on?

Accepted Answer

An indifference map is a set of indiffer...

Question 16

A parallel shift in a budget line is caused by changes in a consumer's level of satisfaction.

Accepted Answer

A) True 
 B)False

Question 17

The diamond-water paradox occurs because

Accepted Answer

A)  the price of a product is related to its total utility, not its marginal utility.
B)  the price of a product is related to its marginal utility, not its total utility.
C)  water is, in fact, very scarce in certain regions of the world.
D)  diamonds are more useful than water.E) All of the above
F) C) and D)

Question 18

Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K.  If the consumer has money income of $36 and the prices of J and K are $4 and $4 respectively, the consumer will maximize her utility by purchasing

Accepted Answer

A)  2 units of J and 7 units of K.
B)  6 units of J and 3 units of K.
C)  5 units of J and 4 units of K.
D)  4 units of J and 5 units of K.E) B) and C)
F) A) and D)

Question 19

Refer to the data. The value for X is

Accepted Answer

A)  15.
B)  5.
C)  55.
D)  10.E) B) and D)
F) C) and D)

Question 20

Most economists contend that

Accepted Answer

A)  noncash gifts are more efficient than cash gifts.
B)  noncash gifts are less efficient than cash gifts.
C)  noncash and cash gifts are equally efficient.
D)  government can assess consumer preferences better than consumers can themselves.E) B) and C)
F) A) and C)

Exam 7: Utility Maximization

If you purchase a gift worth $12 for your sister, but your sister would be willing to pay only $8 if she bought the item for herself, then the

Correct Answer
verified

If the price of product X rises, then the resulting decline in the amount purchased will

Correct Answer
verified

Most economists contend that

Correct Answer
verified

Can marginal utility be negative? Briefly explain.

Correct Answer
verified
Yes, marginal utility becomes ...
View Answer

Which of the following defines marginal utility?

Correct Answer
verified

Correct Answer
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The diamond-water paradox occurs because

Correct Answer
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Refer to the data. The value for X is

Correct Answer
verified

Refer to the given graph. Suppose you had tastes as described by the indifference curves above. If your income was $100, Pₓ = 20 and Pᵧ = 25, which combination of X and Y would maximize your utility?

Correct Answer
verified

The theory of consumer behavior assumes that

Correct Answer
verified

Refer to the graph. What could cause the consumer equilibrium point to shift from point a to point b?

Correct Answer
verified

A parallel shift in a budget line is caused by changes in a consumer's level of satisfaction.

Correct Answer
verified

If MU a/ Pₐ = 100/$35 = MU b/ Pᵦ = 300/? = MU c/ P_c = 400/?, the prices of products B and C in consumer equilibrium

Correct Answer
verified

The shift of the budget line from cd to ab in the figure is consistent with

Correct Answer
verified

What is shown by the indifference map for two goods? Which indifference curve would a consumer want to be on?

Correct Answer
verified
An indifference map is a set of indiffer...
View Answer

If you purchase a gift worth $25 for your sister, but your sister would be willing to pay only $10 if she bought the item for herself, then the

Correct Answer
verified

Refer to the diagram, where xy is the relevant budget line and I₁, I₂, and I₃ are indifference curves. The equilibrium position for the consumer is at

Correct Answer
verified

The budget line shift from ab to cd in the figure is consistent with

Correct Answer
verified

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18. How many units of the two products will the consumer buy to get maximum utility?

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Exam 7: Utility Maximization

If you purchase a gift worth $12 for your sister, but your sister would be willing to pay only $8 if she bought the item for herself, then the

Correct AnswerverifiedShow Answer

If the price of product X rises, then the resulting decline in the amount purchased will

Correct AnswerverifiedShow Answer

Most economists contend that

Correct AnswerverifiedShow Answer

Can marginal utility be negative? Briefly explain.

Correct AnswerverifiedYes, marginal utility becomes ...View AnswerShow Answer

Which of the following defines marginal utility?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The diamond-water paradox occurs because

Correct AnswerverifiedShow Answer

Refer to the data. The value for X is

Correct AnswerverifiedShow Answer

Refer to the given graph. Suppose you had tastes as described by the indifference curves above. If your income was $100, Pₓ = 20 and Pᵧ = 25, which combination of X and Y would maximize your utility?

Correct AnswerverifiedShow Answer

The theory of consumer behavior assumes that

Correct AnswerverifiedShow Answer

Refer to the graph. What could cause the consumer equilibrium point to shift from point a to point b?

Correct AnswerverifiedShow Answer

A parallel shift in a budget line is caused by changes in a consumer's level of satisfaction.

Correct AnswerverifiedShow Answer

If MU a/ Pₐ = 100/$35 = MU b/ Pᵦ = 300/? = MU c/ Pc = 400/?, the prices of products B and C in consumer equilibrium

Correct AnswerverifiedShow Answer

The shift of the budget line from cd to ab in the figure is consistent with

Correct AnswerverifiedShow Answer

What is shown by the indifference map for two goods? Which indifference curve would a consumer want to be on?

Correct AnswerverifiedAn indifference map is a set of indiffer...View AnswerShow Answer

If you purchase a gift worth $25 for your sister, but your sister would be willing to pay only $10 if she bought the item for herself, then the

Correct AnswerverifiedShow Answer

Refer to the diagram, where xy is the relevant budget line and I₁, I₂, and I₃ are indifference curves. The equilibrium position for the consumer is at

Correct AnswerverifiedShow Answer

The budget line shift from ab to cd in the figure is consistent with

Correct AnswerverifiedShow Answer

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18. How many units of the two products will the consumer buy to get maximum utility?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Yes, marginal utility becomes ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

If MU a/ Pₐ = 100/$35 = MU b/ Pᵦ = 300/? = MU c/ P_c = 400/?, the prices of products B and C in consumer equilibrium

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
An indifference map is a set of indiffer...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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