Question 1

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px. Assume that P = $8, I = 200, and Px = $10.
-_____ is the change in total utility that occurs because one more unit of a good is consumed or acquired.

Accepted Answer

A)  Total utility
B)  Marginal utility
C)  Disutility
D)  Diminishing marginal utility
E)  Expected utilityF) A) and B)
G) B) and E)

Question 2

The table below shows the total utility associated with various units of goods X and Y.Table 7.5
 
-When a good becomes more expensive, it yields less satisfaction per dollar, so consumers buy less of it and more of other goods. This is called the _____ effect.

Accepted Answer

A)  substitution
B)  income
C)  replacement
D)  augmentation
E)  disbursementF) B) and D)
G) C) and E)

Question 3

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px. Assume that P = $8, I = 200, and Px = $10.
-Marginal utility is _____.

Accepted Answer

A)  always greater than total utility
B)  utility that is not as good as normal utility
C)  the extra utility derived from consuming one additional unit of a good or service
D)  always positive
E)  not related to total utilityF) B) and C)
G) A) and D)

Question 4

The table below shows the total utility associated with various units of goods X and Y.Table 7.5
 
-When the price of a good changes, the substitution effect occurs because:

Accepted Answer

A)  the consumers' real income measured in terms of that good changes.
B)  the relative price of that good changes compared to other goods in the consumption bundle.
C)  the total utility of that good decreases.
D)  the marginal utility of that good decreases.
E)  consumers have an incentive to substitute irrational behavior for rational behavior.F) B) and E)
G) C) and D)

Question 5

The table below shows the total utility associated with various units of goods X and Y.Table 7.5
 
-The income and substitution effects of a price change occur because:

Accepted Answer

A)  consumer incomes are not constant.
B)  consumer substitution rates are not constant.
C)  income and substitution effects never occur simultaneously.
D)  of diminishing marginal utility and the equimarginal principle.
E)  of increasing marginal utility and the equimarginal principle.F) A) and B)
G) B) and E)

Question 6

The table given below records the total utility derived from the consumption of avocados.Table 7.2
 
-Refer to Table 7.2. The law of diminishing marginal utility holds _____.

Accepted Answer

A)  for any number of avocados
B)  up to five avocados
C)  only for one or two avocados
D)  only after five avocados are consumed
E)  for the first three avocadosF) B) and E)
G) C) and D)

Question 7

The table given below depicts the total utility derived from the consumption of a good.Table 7.1
 
-According to Table 7.1, which of the following units of the good yields disutility?

Accepted Answer

A)  Units 1 and 4
B)  Units 2 and 3
C)  Unit 3
D)  Units 3, 4, and 5
E)  Units 4 and 5F) A) and D)
G) All of the above

Question 8

The below table shows the average utility (in utils)  obtained from the consumption of goods A and B.Table 7.3
 
-Refer to Table 7.3. The total utility of the third unit of A is _____ utils.

Accepted Answer

A)  15
B)  12
C)  21
D)  20
E)  7F) B) and D)
G) A) and D)

Question 9

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3
 
-If cherries cost twice as much as dates, and the last cherry consumed provides twice as much utility as the last date consumed, the consumer is maximizing utility.

Accepted Answer

A) True 
 B)False

Question 10

The table given below depicts the total utility derived from the consumption of a good.Table 7.1
 
-Which of the following statements about marginal utility is correct?

Accepted Answer

A)  When marginal utility is negative, an increase in the quantity will increase total utility.
B)  When marginal utility is decreasing, an increase in quantity will decrease total utility.
C)  When marginal utility is positive, an increase in quantity will decrease total utility.
D)  When marginal utility is zero, an increase in quantity will leave total utility unchanged.
E)  When total utility is increasing, marginal utility will be negative.F) B) and C)
G) A) and E)

Question 11

The table below shows the total utility associated with various units of goods X and Y.Table 7.5
 
-According to the concept of framing, when a customer calls a hotel regarding a reservation the hotel reservationists generally state room rates as the _____.

Accepted Answer

A)  lowest they charge during peak demand periods
B)  average they charge during peak demand periods
C)  highest they charge during peak demand periods and then discount those rates
D)  lowest they charge during off-peak demand periods
E)  highest they charge during off-peak demand periods and then discount those ratesF) A) and D)
G) A) and E)

Question 12

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3
 
-The substitution effect occurs because when the price of one good increases, consumers will buy fewer substitute goods.

Accepted Answer

A) True 
 B)False

Question 13

The below indifference map shows the various combinations of hours of music and apples that yield different levels of utility.Figure 7.1
 
-Which of the following will most likely happen when a person's income increases, other things equal?

Accepted Answer

A)  The budget line will shift outward
B)  The budget line will become steeper
C)  The budget line will become flatter
D)  The indifference curves will shift outward
E)  The indifference curves will shift downwardF) B) and C)
G) A) and E)

Question 14

The table below shows the total utility associated with various units of goods X and Y.Table 7.5
 
-The demand curve for a product slopes downward and to the right because:

Accepted Answer

A)  total utility decreases as more of the product is consumed.
B)  total utility derived from both, the product and its substitutes is the same.
C)  marginal utility of the product diminishes as more of the product is consumed.
D)  there are no substitutes for the product.
E)  when the price falls, the income effect causes consumers to buy less of the product.F) None of the above
G) A) and B)

Question 15

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3
 
-One explanation for the status quo bias is an aversion to loss.

Accepted Answer

A) True 
 B)False

Question 16

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3
 
-Neuroeconomics suggests that the frontal lobe carries out most decision making and strategic thinking takes place in the prefrontal cortex.

Accepted Answer

A) True 
 B)False

Question 17

The table below shows the total utility associated with various units of goods X and Y.Table 7.5
 
-An indifference curve shows _____.

Accepted Answer

A)  the relationship between total and marginal utility
B)  the relationship between the quantity of a good and the maximum attainable satisfaction
C)  the various combinations of two goods that give a consumer the same amount of satisfaction
D)  the relationship between the price and quantity of a good that a consumer is able to purchase
E)  that the quantities of a good that give a consumer maximum satisfaction are directly related to priceF) A) and D)
G) All of the above

Question 18

The table given below depicts the total utility derived from the consumption of a good.Table 7.1
 
-Which one of the following is based on the idea that the marginal utility of income diminishes as income increases?

Accepted Answer

A)  Progressive taxation
B)  Capital controls
C)  Minimum wages
D)  Price controls
E)  Employee compensation regulationsF) A) and B)
G) C) and D)

Question 19

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3
 
-As the price of a good increases, the marginal utility per dollar spent on that good will also increase.

Accepted Answer

A) True 
 B)False

Question 20

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px. Assume that P = $8, I = 200, and Px = $10.
-Total utility is maximized when _____.

Accepted Answer

A)  the marginal utility is maximized
B)  the marginal utility is the same for all goods consumed
C)  the marginal utility per dollar expenditure is maximized
D)  the marginal utility per dollar expenditure is the same for all goods consumed
E)  any change in purchases from good A to good B reduces marginal satisfactionF) C) and E)
G) All of the above

Exam 7: Demand: Consumer Choice

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3 -As the price of a good increases, the marginal utility per dollar spent on that good will also increase.

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The table below shows the total utility associated with various units of goods X and Y.Table 7.5 -The income and substitution effects of a price change occur because:

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The table below shows the total utility associated with various units of goods X and Y.Table 7.5 -According to the concept of framing, when a customer calls a hotel regarding a reservation the hotel reservationists generally state room rates as the _____.

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The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3 -Refer to Table 7.3. The total utility of the third unit of A is _____ utils.

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The table given below depicts the total utility derived from the consumption of a good.Table 7.1 -According to Table 7.1, which of the following units of the good yields disutility?

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Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px. Assume that P = $8, I = 200, and Px = $10. -Marginal utility is _____.

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The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3 -If cherries cost twice as much as dates, and the last cherry consumed provides twice as much utility as the last date consumed, the consumer is maximizing utility.

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The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3 -One explanation for the status quo bias is an aversion to loss.

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The below indifference map shows the various combinations of hours of music and apples that yield different levels of utility.Figure 7.1 -Which of the following will most likely happen when a person's income increases, other things equal?

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Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px. Assume that P = $8, I = 200, and Px = $10. -_____ is the change in total utility that occurs because one more unit of a good is consumed or acquired.

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Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px. Assume that P = $8, I = 200, and Px = $10. -Total utility is maximized when _____.

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The table below shows the total utility associated with various units of goods X and Y.Table 7.5 -The demand curve for a product slopes downward and to the right because:

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The table given below depicts the total utility derived from the consumption of a good.Table 7.1 -Which one of the following is based on the idea that the marginal utility of income diminishes as income increases?

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The table below shows the total utility associated with various units of goods X and Y.Table 7.5 -An indifference curve shows _____.

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The table below shows the total utility associated with various units of goods X and Y.Table 7.5 -When a good becomes more expensive, it yields less satisfaction per dollar, so consumers buy less of it and more of other goods. This is called the _____ effect.

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The table given below depicts the total utility derived from the consumption of a good.Table 7.1 -Which of the following statements about marginal utility is correct?

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The table below shows the total utility associated with various units of goods X and Y.Table 7.5 -When the price of a good changes, the substitution effect occurs because:

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The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3 -Neuroeconomics suggests that the frontal lobe carries out most decision making and strategic thinking takes place in the prefrontal cortex.

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The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3 -The substitution effect occurs because when the price of one good increases, consumers will buy fewer substitute goods.

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The table given below records the total utility derived from the consumption of avocados.Table 7.2 -Refer to Table 7.2. The law of diminishing marginal utility holds _____.

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Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -Marginal utility is _____.

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Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -_____ is the change in total utility that occurs because one more unit of a good is consumed or acquired.

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Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -Total utility is maximized when _____.

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