Question 1

Mrs.Arnold is spending all her money income by buying bottles of soda and bags of pretzels in such amounts that the marginal utility of the last bottle is 60 utils and the marginal utility of the last bag is 30 utils.The prices of soda and pretzels are $.60 per bottle and $.40 per bag respectively.It can be concluded that:

Accepted Answer

A)   the two commodities are substitute goods.
B)   Mrs.Arnold should spend more on pretzels and less on soda.
C)   Mrs.Arnold should spend more on soda and less on pretzels.
D)   Mrs.Arnold is buying soda and pretzels in the utility-maximizing amounts.E) A) and D)
F) A) and C)

Question 2

Which of the following is correct?

Accepted Answer

A)   Budget lines are linear and upsloping;indifference curves are downsloping and concave to the origin.
B)   Budget lines are linear and downsloping;indifference curves are downsloping and concave to the origin.
C)   Budget lines are linear and downsloping;indifference curves are downsloping and convex to the origin.
D)   Budget lines are downsloping and convex to the origin;indifference curves are linear and downsloping.E) A) and D)
F) B) and C)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

(Last Word) Theft and burglary:

Accepted Answer

A)   can be viewed as attempts to maximize utility,given certain marginal costs and marginal benefits.
B)   are examples of irrational behavior.
C)   are applications of the law of increasing opportunity cost.
D)   are less economically rational than crimes of passion and violence.E) None of the above
F) A) and B)

Question 5

The law of diminishing marginal utility states that:

Accepted Answer

A)   total utility is maximized when consumers obtain the same amount of utility per unit of each product consumed.
B)   beyond some point,additional units of a product will yield less and less extra satisfaction to a consumer.
C)   price must be lowered to induce firms to supply more of a product.
D)   it will take larger and larger amounts of resources beyond some point to produce successive units of a product.E) None of the above
F) C) and D)

Question 6

Assume initially that the price of X (measured on the horizontal axis) is $9 and the price of Y (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) B) and C)
F) None of the above

Question 7

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 can consumers themselves.E) B) and D)
F) None of the above B

Question 8

A rational consumer will try to achieve the highest indifference curve that his or her income will allow.

Accepted Answer

A) True 
 B)False

Question 9

When a consumer is maximizing total utility,he or she cannot increase total utility by reallocating expenditures among different products.

Accepted Answer

A) True 
 B)False

Question 10

The marginal rate of substitution measures the:

Accepted Answer

A)   magnitude of the substitution effect.
B)   total utility received by a consumer when equilibrium is achieved.
C)   extra utility that a consumer derives from successive units of a product.
D)   consumer's willingness to substitute one product for another so that total utility will remain constant.E) B) and D)
F) A) and B)

Question 11

Each point on a single indifference curve reflects the same level of total utility for a consumer.

Accepted Answer

A) True 
 B)False

Question 12

When a consumer shifts purchases from product X to product Y,the marginal utility of:

Accepted Answer

A)   X falls and the marginal utility of Y rises.
B)   X rises and the marginal utility of Y falls.
C)   both X and Y rises.
D)   both X and Y falls.E) None of the above
F) All of the above

Question 13

Noncash gift-giving involves value loss when the marginal utility of the gift to the receiver is less than the product price.

Accepted Answer

A) True 
 B)False  True

Question 14

Answer the question on the basis of the following marginal utility data for products X and Y.Assume that the prices of X and Y are $4 and $2 respectively and that the consumer's income is $18.  Unitsof X ‾123456MarginalUtility, X‾201612864Unitsof Y ‾123456MarginalUtility, Y‾1614121086\begin{array}{c}\begin{array}{c}	ext {Units}\\underline{	ext {of  X }}\1\2\3\4\5\6\end{array}\begin{array}{c}	ext {Marginal}\\underline{	ext {Utility, X}}\20\16\12\8\6\4\end{array}\begin{array}{c}	ext {Units}\\underline{	ext {of  Y }}\1\2\3\4\5\6\end{array}\begin{array}{c}	ext {Marginal}\\underline{	ext {Utility, Y}}\16\14\12\10\8\6\end{array}\end{array}Unitsof X ​123456​MarginalUtility, X​201612864​Unitsof Y ​123456​MarginalUtility, Y​1614121086​​ 
 Refer to the data.What level of total utility will the utility-maximizing consumer realize?

Accepted Answer

A)   96 utils.
B)   108 utils.
C)   72 utils.
D)   142 utils. E) All of the above
F) A) and D)

Question 15

Assume a diagram in which a budget line is imposed on an indifference map.A consumer will maximize her utility:

Accepted Answer

A)   at any point where the budget line and an indifference curve intersect.
B)   at either point where the budget line intersects the horizontal and vertical axes.
C)   where the budget line is tangent to an indifference curve.
D)   where the ratio of the two product prices equals the reciprocal of the consumer's income.E) C) and D)
F) All of the above

Question 16

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) All of the above
F) A) and B)

Question 17

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.  Unit of JMUj156248332424520616712Unit of KMUk13222832442051261078\begin{array}{c}\begin{array}{ccc}Unit&&\	ext { of } J & & M U_{j} \\hline1 & & 56 \2 & & 48 \3 & & 32 \4 & & 24 \5 & & 20 \6 & & 16 \7 & & 12\end{array}\begin{array}{ccc}Unit&&\	ext { of } K & & M U_{k} \\hline1 & & 32 \2 & & 28\3 & & 24\4 & & 20\5 & & 12\6 & & 10\7 & & 8\end{array}\end{array}Unit of J1234567​​MUj​56483224201612​​Unit of K1234567​​MUk​3228242012108​​​  Refer to the data.If the consumer's money income were cut from $52 to $28,and the prices of J and K remain at $8 and $4 respectively,she would maximize her satisfaction by purchasing:

Accepted Answer

A)   3 units of J and 3 units of K.
B)   1 unit of J and 3 units of K.
C)   4 units of J and 1 unit of K.
D)   2 units of J and 3 units of K. E) A) and B)
F) A) and C)

Question 18

Which of the following has been a significant factor in the ability of iPads to compete effectively against laptop and desktop computers?

Accepted Answer

A)   iPads are often superior to laptop and desktop computers in their ability to create content.
B)   A scarcity of production capacity has curtailed the manufacture of laptop and desktop computers.
C)   Many consumers perceive that iPads are superior to laptops and desktop computers for the consumption of digital media.
D)   The prices of laptops and desktop computers have increased dramatically.E) A) and B)
F) A) and C)

Question 19

The consumer demand curve for a product is downsloping because marginal utility is constant when price declines.

Accepted Answer

A) True 
 B)False  False

Question 20

Mary says,"You would have to pay me $50 to attend that pro wrestling event." For Mary,the marginal utility of the event is:

Accepted Answer

A)   zero.
B)   positive,but declines rapidly.
C)   negative.
D)   positive,but less than the ticket price.E) A) and B)
F) A) and C)

Exam 7: Utility Maximization

Correct Answer
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Which of the following is correct?

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

Correct Answer
verified

(Last Word) Theft and burglary:

Correct Answer
verified

The law of diminishing marginal utility states that:

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

Correct Answer
verified

Most economists contend that:

Correct Answer
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B

A rational consumer will try to achieve the highest indifference curve that his or her income will allow.

Correct Answer
verified

When a consumer is maximizing total utility,he or she cannot increase total utility by reallocating expenditures among different products.

Correct Answer
verified

The marginal rate of substitution measures the:

Correct Answer
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Each point on a single indifference curve reflects the same level of total utility for a consumer.

Correct Answer
verified

When a consumer shifts purchases from product X to product Y,the marginal utility of:

Correct Answer
verified

Noncash gift-giving involves value loss when the marginal utility of the gift to the receiver is less than the product price.

Correct Answer
verified
True

Correct Answer
verified

Assume a diagram in which a budget line is imposed on an indifference map.A consumer will maximize her utility:

Correct Answer
verified

Total utility may be determined by:

Correct Answer
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Correct Answer
verified

Which of the following has been a significant factor in the ability of iPads to compete effectively against laptop and desktop computers?

Correct Answer
verified

The consumer demand curve for a product is downsloping because marginal utility is constant when price declines.

Correct Answer
verified
False

Mary says,"You would have to pay me $50 to attend that pro wrestling event." For Mary,the marginal utility of the event is:

Correct Answer
verified

Exam 7: Utility Maximization

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

(Last Word) Theft and burglary:

Correct AnswerverifiedShow Answer

The law of diminishing marginal utility states that:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Most economists contend that:

Correct AnswerverifiedB

A rational consumer will try to achieve the highest indifference curve that his or her income will allow.

Correct AnswerverifiedShow Answer

When a consumer is maximizing total utility,he or she cannot increase total utility by reallocating expenditures among different products.

Correct AnswerverifiedShow Answer

The marginal rate of substitution measures the:

Correct AnswerverifiedShow Answer

Each point on a single indifference curve reflects the same level of total utility for a consumer.

Correct AnswerverifiedShow Answer

When a consumer shifts purchases from product X to product Y,the marginal utility of:

Correct AnswerverifiedShow Answer

Noncash gift-giving involves value loss when the marginal utility of the gift to the receiver is less than the product price.

Correct AnswerverifiedTrue

Correct AnswerverifiedShow Answer

Assume a diagram in which a budget line is imposed on an indifference map.A consumer will maximize her utility:

Correct AnswerverifiedShow Answer

Total utility may be determined by:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following has been a significant factor in the ability of iPads to compete effectively against laptop and desktop computers?

Correct AnswerverifiedShow Answer

The consumer demand curve for a product is downsloping because marginal utility is constant when price declines.

Correct AnswerverifiedFalse

Mary says,"You would have to pay me $50 to attend that pro wrestling event." For Mary,the marginal utility of the event is:

Correct AnswerverifiedShow Answer

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B

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True

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False

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