Question 1

Susie buys two goods: rounds of golf and massages.Suppose that the price of a round of golf is $20 and the price of a massage is $30.In a typical week,Susie will play two rounds of golf,getting 20 units of satisfaction from the second round.She normally buys three massages each week,with the third giving her 30 units of satisfaction.If she were to buy a fourth massage in a week,it would give her 20 units of satisfaction.If the price of massages is reduced to $15,which of the following outcomes might we expect to occur?

Accepted Answer

A)   Susie would leave her consumption choices unchanged because of diminishing marginal utility in the consumption of massages.
B)   Susie would buy more massages and fewer rounds of golf,as predicted by the income effect.
C)   Susie would buy more massages and more rounds of golf,as predicted by the substitution effect.
D)   Susie would buy more massages and fewer rounds of golf,as predicted by the substitution effect.

Question 2

A consumer is maximizing her utility with a particular money income when:

Accepted Answer

A)   the total utility derived from each product consumed is the same.
B)   MUa/Pa = MUb/Pb = MUc/Pc = ...= MUn/Pn.
C)   MUa = MUb = MUc = ...= MUn.
D)   Pa = Pb = Pc = ...= Pn.

Question 3

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.

Question 4

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.What level of total utility is realized from the equilibrium combination of J and K,if the consumer has a money income of $52 and the prices of J and K are $8 and $4 respectively?

Accepted Answer

A)   156 utils
B)   124 utils
C)   276 utils
D)   36 utils

Question 5

When a consumer shifts purchases from X to Y,the marginal utility of X falls and the marginal utility of Y rises.

Accepted Answer

A) True 
 B)False

Question 6

The theory of consumer behavior assumes that consumers attempt to maximize:

Accepted Answer

A)   the difference between total and marginal utility.
B)   total utility.
C)   average utility.
D)   marginal utility.

Question 7

A consumer's demand curve for a product is downsloping because:

Accepted Answer

A)   total utility falls below marginal utility as more of a product is consumed.
B)   marginal utility diminishes as more of a product is consumed.
C)   time becomes less valuable as more of a product is consumed.
D)   the income and substitution effects precisely offset each other.

Question 8

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.Which of the following represents the demand schedule for X?

Accepted Answer

A)   P‾ \underline{P} \quad\quadP​Qd‾\underline{Q_{d}}Qd​​  $42 \$ 4 \quad\quad2$42 2 5 \quad\quad 55 .
B)   P‾ \underline{P} \quad\quadP​Qd‾\underline{Q_{d}}Qd​​  $42 \$ 4 \quad\quad2$42 2 5 \quad\quad 55 
C)   P‾ \underline{P} \quad\quadP​Qd‾\underline{Q_{d}}Qd​​  $43 \$ 4 \quad\quad3$43 2 6 \quad\quad 66 
D)   P‾ \underline{P} \quad\quadP​Qd‾\underline{Q_{d}}Qd​​  $43 \$ 4 \quad\quad3$43 2 5 \quad\quad 55  .

Question 9

A budget line shows the:

Accepted Answer

A)   alternative combinations of two goods that a consumer can purchase with a given money income.
B)   alternative combinations of two goods that will yield the same level of total utility to a consumer.
C)   quantities of a particular good that a consumer will buy at various prices.
D)   ratio of money income to product price.

Question 10

Answer the question on the basis of the following total utility data for products L and M.Assume that the prices of L and M are $3 and $4 respectively and that the consumer's income is $18.   Units Total  of L  Utility 19215318420521 Units  of M  Total  Utility 116228336440542\begin{array}{l}\begin{array}{ccc}	ext { Units}&	ext{ Total }\	ext { of L } &  	ext { Utility } \\hline1 & 9 \2 & 15 \3 & 18 \4 & 20 \5 & 21\end{array}\begin{array}{ccc}\begin{array}{c}	ext { Units } \	ext { of M }\\hline\end{array} &  \begin{array}{c}	ext { Total } \	ext { Utility }\\hline\end{array} \1 & 16 \2 & 28 \3 & 36 \4 & 40 \5 & 42\end{array}\end{array} Units of L 12345​ Total  Utility 915182021​​ Units  of M ​​12345​ Total  Utility ​​1628364042​​  Refer to the data.What level of total utility does the rational consumer realize in equilibrium?

Accepted Answer

A)   87 utils.
B)   104 utils.
C)   51 utils.
D)   58 utils.

Question 11

Why do people tend to eat more at all-you-can-eat buffet restaurants than at restaurants where each item is purchased separately?

Accepted Answer

A)   Once the all-you-can-eat meal is purchased,consumers view additional trips back to the buffet as having a price of zero.
B)   MU/P is consistently greater at all-you-can-eat restaurants.
C)   People who eat at all-you-can-eat restaurants do not experience diminishing marginal utility.
D)   Food at all-you-can-eat restaurants tends to have fewer calories,so consumers feel the need to consume a greater volume of food.

Question 12

Edith is buying products X and Y with her money income.Suppose her budget line shifts rightward (outward) .This might be the result of:

Accepted Answer

A)   the prices of X and Y increasing while her money income remains constant.
B)   her money income decreasing while the prices of X and Y remain constant.
C)   her money income increasing more than proportionately to increases in the prices of X and Y.
D)   none of these.

Question 13

A consumer who has a limited budget will maximize utility or satisfaction when the:

Accepted Answer

A)   ratios of the marginal utility of each product purchased divided by its price are equal.
B)   total utility derived from each product purchased is the same.
C)   marginal utility of each product purchased is the same.
D)   price of each product purchased is the same.

Question 14

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.

Question 15

If money income increases and the prices of products A and B both increase,then the budget line:

Accepted Answer

A)   must shift to the right.
B)   must shift to the left.
C)   may shift either to the right or the left,or not at all.
D)   will no longer be tangent to an indifference curve.

Question 16

Where total utility is at a maximum,marginal utility is:

Accepted Answer

A)   negative.
B)   positive and increasing.
C)   zero.
D)   positive but decreasing.

Question 17

An indifference curve shows all:

Accepted Answer

A)   possible equilibrium positions on an indifference map.
B)   equilibrium combinations of two products that are obtainable with a given money income.
C)   combinations of two products yielding the same total utility to a consumer.
D)   possible combinations of two products that a consumer can purchase,given her income and the prices of the products.

Question 18

(Last Word) All of the following would reduce property crime by increasing its "price," except:

Accepted Answer

A)   imposing greater penalties for those who are caught and convicted.
B)   using more sophisticated security systems.
C)   enhancing the legitimate earnings of potential criminals.
D)   cutting out the middlemen ("fences") by selling stolen goods via Internet auction sites.

Question 19

The marginal rate of substitution:

Accepted Answer

A)   may increase or decrease on a given indifference curve,depending on whether the substitution or the income effect is dominant.
B)   increases as one moves southeast along an indifference curve.
C)   is constant at all points on the budget line.
D)   declines as one moves southeast along an indifference curve.

Question 20

Suppose that MUx/Px exceeds MUy/Py.To maximize utility,the consumer who is spending all her money income should buy:

Accepted Answer

A)   less of X only if its price rises.
B)   more of Y only if its price rises.
C)   more of Y and less of X.
D)   more of X and less of Y.

Exam 7: Utility Maximization

The theory of consumer behavior assumes that consumers attempt to maximize:

Correct Answer
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Why do people tend to eat more at all-you-can-eat buffet restaurants than at restaurants where each item is purchased separately?

Correct Answer
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Correct Answer
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A consumer's demand curve for a product is downsloping because:

Correct Answer
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Correct Answer
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An indifference curve shows all:

Correct Answer
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A budget line shows the:

Correct Answer
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Correct Answer
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Where total utility is at a maximum,marginal utility is:

Correct Answer
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The marginal rate of substitution:

Correct Answer
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A consumer who has a limited budget will maximize utility or satisfaction when the:

Correct Answer
verified

Edith is buying products X and Y with her money income.Suppose her budget line shifts rightward (outward) .This might be the result of:

Correct Answer
verified

A consumer is maximizing her utility with a particular money income when:

Correct Answer
verified

If money income increases and the prices of products A and B both increase,then the budget line:

Correct Answer
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(Last Word) All of the following would reduce property crime by increasing its "price," except:

Correct Answer
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The theory of consumer behavior assumes that:

Correct Answer
verified

Correct Answer
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Suppose that MU_x/P_x exceeds MU_y/P_y.To maximize utility,the consumer who is spending all her money income should buy:

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

Correct Answer
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When a consumer shifts purchases from X to Y,the marginal utility of X falls and the marginal utility of Y rises.

Correct Answer
verified

Exam 7: Utility Maximization

The theory of consumer behavior assumes that consumers attempt to maximize:

Correct AnswerverifiedShow Answer

Why do people tend to eat more at all-you-can-eat buffet restaurants than at restaurants where each item is purchased separately?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A consumer's demand curve for a product is downsloping because:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An indifference curve shows all:

Correct AnswerverifiedShow Answer

A budget line shows the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Where total utility is at a maximum,marginal utility is:

Correct AnswerverifiedShow Answer

The marginal rate of substitution:

Correct AnswerverifiedShow Answer

A consumer who has a limited budget will maximize utility or satisfaction when the:

Correct AnswerverifiedShow Answer

Edith is buying products X and Y with her money income.Suppose her budget line shifts rightward (outward) .This might be the result of:

Correct AnswerverifiedShow Answer

A consumer is maximizing her utility with a particular money income when:

Correct AnswerverifiedShow Answer

If money income increases and the prices of products A and B both increase,then the budget line:

Correct AnswerverifiedShow Answer

(Last Word) All of the following would reduce property crime by increasing its "price," except:

Correct AnswerverifiedShow Answer

The theory of consumer behavior assumes that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that MUx/Px exceeds MUy/Py.To maximize utility,the consumer who is spending all her money income should buy:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When a consumer shifts purchases from X to Y,the marginal utility of X falls and the marginal utility of Y rises.

Correct AnswerverifiedShow Answer

Correct Answer
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Suppose that MU_x/P_x exceeds MU_y/P_y.To maximize utility,the consumer who is spending all her money income should buy:

Correct Answer
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Correct Answer
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Correct Answer
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