Question 1

Anthony has set aside $120 each month for his favorite activities-buying records and going to concerts. The price of a record is $10, and the price of a concert ticket is $30. He currently consumes three records and three concerts each month. If the price of a concert increases to $40, the substitution effect predicts that Anthony will consume:

Accepted Answer

A)  more records and concerts.
B)  fewer records and concerts.
C)  more records and fewer concerts.
D)  fewer records and more concerts.E) B) and C)
F) A) and D)

Question 2

Gabriel has set aside $150 each month for his favorite activities-going to movies and going to concerts. The price of a movie ticket is $15, and the price of a concert ticket is $30. He currently goes to six movies and two concerts each month. Suppose the price of a movie ticket falls to $10 and, as a result, Gabriel decides to go to seven movies and three concerts each month. Which of the following statements is true?

Accepted Answer

A)  The substitution effect outweighed the income effect.
B)  The income effect outweighed the substitution effect.
C)  Movies must be an inferior good for Gabriel.
D)  Gabriel previously followed the income effect but now follows the substitution effect.E) B) and D)
F) None of the above

Question 3

The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items.

If we assume Jack is a rational utility maximizer, then we can predict he will buy _____with his $10.

Accepted Answer

A)  bundle A
B)  bundle B
C)  bundle C
D)  bundle DE) None of the above
F) A) and D)

Question 4

Roberto and Pasua like to eat pizza twice a week, burritos once a week, and steak four days a week. This variety of dinner choices illustrates the concept of:

Accepted Answer

A)  instable preferences.
B)  negative marginal utility.
C)  diminishing marginal utility.
D)  income maximization.E) A) and B)
F) B) and C)

Question 5

Katya just finished drinking a bottle of Coke. Using the concept of marginal utility, we can say that the utility Katya will receive if she drinks another bottle of Coke:

Accepted Answer

A)  will reduce her total utility.
B)  will increase her total utility.
C)  will be the same as that of her first.
D)  may reduce or increase her total utility.E) All of the above
F) C) and D)

Question 6

What are Veblen goods?

Accepted Answer

A)  Goods that exemplify the individual nature of utility
B)  Goods which consumers buy to show how wealthy they are
C)  Goods that people buy more of when their income decreases
D)  Inferior goodsE) B) and C)
F) A) and B)

Question 7

Courtney rides her bike for one hour and received a marginal utility of 8. After that first hour, she stops to eat an ice cream cone and then rides her bike for another hour. Which of the following statements is true?

Accepted Answer

A)  The utility she would have received from eating a second ice cream cone would have been more than the utility she received from biking for a second hour.
B)  The utility she received from eating the ice cream cone was more than 8.
C)  The utility she received from eating the ice cream cone was less than the utility she received from the second hour of bike riding.
D)  The utility she would have received from a third hour of biking would have been less than the utility she gained from eating an ice cream cone.E) None of the above
F) A) and B)

Question 8

Quinn has $100 a month to spend on two normal goods-bowling and eating out. It costs $10 to bowl for the night, and it costs $20 for Quinn to eat at a restaurant. Quinn currently consumes four nights of bowling and three meals at a restaurant each month. If the price of a night of bowling increases to $15, the income effect predicts that Quinn will:

Accepted Answer

A)  increase her consumption of both bowling and eating out.
B)  decrease her consumption of both bowling and eating out.
C)  bowl more often and eat out less often.
D)  bowl less often and eat out more often.E) A) and B)
F) A) and C)

Question 9

Assume the graph shown represents Grace's budget constraint. Which of the following is true?

Accepted Answer

A)  Grace's total utility is constant along her budget constraint.
B)  The marginal utility Grace receives is the same for each combination of goods on her budget constraint.
C)  Grace's total spending is constant along her budget constraint.
D)  Grace is indifferent between consuming any bundle that lies on the budget constraint.E) A) and B)
F) A) and C)

Question 10

Assume Victoria's budget constraint is represented in the graph shown. If the price of video games decreases, the slope of Victoria's budget constraint will become _____, reflecting the fact that _____ are now relatively _____ expensive.

Accepted Answer

A)  flatter; video games; less
B)  steeper; video games; more
C)  flatter; comic books; less
D)  steeper; comic books; moreE) B) and C)
F) A) and D)

Question 11

Catarina has just eaten her second bowl of cereal. Which of the following is likely true?

Accepted Answer

A)  Her second bowl reduced her total utility.
B)  Her second bowl added less to her total utility than the first.
C)  Her third bowl will decrease her total utility.
D)  Her third bowl will increase her total utility by at least as much as the second.E) A) and B)
F) All of the above

Question 12

Utility measurements are:

Accepted Answer

A)  a relative ranking of how much different people enjoy a particular good.
B)  used to compare one person's preference for a good to another person's preference.
C)  a relative ranking of the satisfaction a person gets from alternative combinations of things.
D)  None of these are true.E) A) and B)
F) A) and C)

Question 13

Mariana has an hour of free time during which she could either go for a run or swim at the local pool. She decides to swim. Economists would conclude that Mariana:

Accepted Answer

A)  is revealing a preference for swimming over running.
B)  will receive less utility from swimming than playing soccer.
C)  was unable to go for a run at that time.
D)  is more skilled at swimming than running.E) None of the above
F) A) and B)

Question 14

Utility is:

Accepted Answer

A)  a way of describing a consumer's satisfaction.
B)  only applicable to goods that are purchased.
C)  a measure of a consumer's income.
D)  All of these are correct.E) A) and D)
F) A) and B)

Question 15

Assume Elijah's budget constraint is represented by line A in the graph shown. What would cause his budget constraint to shift to line B?

Accepted Answer

A)  His income decreases.
B)  The price of soda increases.
C)  The price of soda decreases.
D)  The price of milk increases.E) All of the above
F) None of the above

Question 16

Assume Bryce's budget constraint is represented by line C in the graph shown. Which of the following would cause Bryce's budget constraint to shift to line A?

Accepted Answer

A)  Bryce's income increases.
B)  Bryce's income decreases.
C)  Bryce's preferences for books and movies decrease.
D)  Bryce's preferences for books and movies increase.E) None of the above
F) C) and D)

Question 17

Assume Claudia's budget constraint is represented by line A in the graph shown. Which of the following would cause Claudia's budget constraint to shift to line C?

Accepted Answer

A)  Claudia's income increases.
B)  Claudia's income decreases.
C)  Claudia's preferences for these two goods decrease.
D)  The prices of both goods decrease.E) B) and C)
F) All of the above

Question 18

A utility function is an equation for calculating:

Accepted Answer

A)  the maximum utility an individual can derive.
B)  the total utility an individual derives from consuming a particular good over a particular time period.
C)  the total utility a group of people derive from consuming a particular good.
D)  the total utility that an individual derives from consuming a particular combination of goods and services.E) B) and C)
F) A) and B)

Question 19

Revealed preference is:

Accepted Answer

A)  the idea that people's preferences can be determined by observing their choices and behavior.
B)  the notion that people reveal the utility they get by reporting it on a numerical scale.
C)  the method that psychologists, anthropologists, and economists use to measure utility.
D)  All of these are correct.E) All of the above
F) C) and D)

Question 20

The budget constraint represented by line A is _____ than the budget constraint represented by line B. Thus, soda is relatively _____ expensive in line A than in line B.

Accepted Answer

A)  steeper; less
B)  steeper; less.
C)  flatter; more
D)  flatter; more.E) A) and B)
F) B) and C)

Exam 7: Consumer Behavior

Assume Elijah's budget constraint is represented by line A in the graph shown. What would cause his budget constraint to shift to line B?

Correct Answer
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Revealed preference is:

Correct Answer
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Correct Answer
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Assume Victoria's budget constraint is represented in the graph shown. If the price of video games decreases, the slope of Victoria's budget constraint will become ___, reflecting the fact that _ are now relatively ___ expensive.

Correct Answer
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Katya just finished drinking a bottle of Coke. Using the concept of marginal utility, we can say that the utility Katya will receive if she drinks another bottle of Coke:

Correct Answer
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Assume the graph shown represents Grace's budget constraint. Which of the following is true?

Correct Answer
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Utility measurements are:

Correct Answer
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Correct Answer
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Assume Bryce's budget constraint is represented by line C in the graph shown. Which of the following would cause Bryce's budget constraint to shift to line A?

Correct Answer
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Assume Claudia's budget constraint is represented by line A in the graph shown. Which of the following would cause Claudia's budget constraint to shift to line C?

Correct Answer
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What are Veblen goods?

Correct Answer
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The budget constraint represented by line A is _ than the budget constraint represented by line B. Thus, soda is relatively _ expensive in line A than in line B.

Correct Answer
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The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items. If we assume Jack is a rational utility maximizer, then we can predict he will buy _____with his $10.

Correct Answer
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A utility function is an equation for calculating:

Correct Answer
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Catarina has just eaten her second bowl of cereal. Which of the following is likely true?

Correct Answer
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Courtney rides her bike for one hour and received a marginal utility of 8. After that first hour, she stops to eat an ice cream cone and then rides her bike for another hour. Which of the following statements is true?

Correct Answer
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Mariana has an hour of free time during which she could either go for a run or swim at the local pool. She decides to swim. Economists would conclude that Mariana:

Correct Answer
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Roberto and Pasua like to eat pizza twice a week, burritos once a week, and steak four days a week. This variety of dinner choices illustrates the concept of:

Correct Answer
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Utility is:

Correct Answer
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Exam 7: Consumer Behavior

Assume Elijah's budget constraint is represented by line A in the graph shown. What would cause his budget constraint to shift to line B?

Correct AnswerverifiedShow Answer

Revealed preference is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume Victoria's budget constraint is represented in the graph shown. If the price of video games decreases, the slope of Victoria's budget constraint will become _____, reflecting the fact that _____ are now relatively _____ expensive.

Correct AnswerverifiedShow Answer

Katya just finished drinking a bottle of Coke. Using the concept of marginal utility, we can say that the utility Katya will receive if she drinks another bottle of Coke:

Correct AnswerverifiedShow Answer

Assume the graph shown represents Grace's budget constraint. Which of the following is true?

Correct AnswerverifiedShow Answer

Utility measurements are:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume Bryce's budget constraint is represented by line C in the graph shown. Which of the following would cause Bryce's budget constraint to shift to line A?

Correct AnswerverifiedShow Answer

Assume Claudia's budget constraint is represented by line A in the graph shown. Which of the following would cause Claudia's budget constraint to shift to line C?

Correct AnswerverifiedShow Answer

What are Veblen goods?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The budget constraint represented by line A is _____ than the budget constraint represented by line B. Thus, soda is relatively _____ expensive in line A than in line B.

Correct AnswerverifiedShow Answer

The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items. If we assume Jack is a rational utility maximizer, then we can predict he will buy _____with his $10.

Correct AnswerverifiedShow Answer

A utility function is an equation for calculating:

Correct AnswerverifiedShow Answer

Catarina has just eaten her second bowl of cereal. Which of the following is likely true?

Correct AnswerverifiedShow Answer

Courtney rides her bike for one hour and received a marginal utility of 8. After that first hour, she stops to eat an ice cream cone and then rides her bike for another hour. Which of the following statements is true?

Correct AnswerverifiedShow Answer

Mariana has an hour of free time during which she could either go for a run or swim at the local pool. She decides to swim. Economists would conclude that Mariana:

Correct AnswerverifiedShow Answer

Roberto and Pasua like to eat pizza twice a week, burritos once a week, and steak four days a week. This variety of dinner choices illustrates the concept of:

Correct AnswerverifiedShow Answer

Utility is:

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Assume Victoria's budget constraint is represented in the graph shown. If the price of video games decreases, the slope of Victoria's budget constraint will become ___, reflecting the fact that _ are now relatively ___ expensive.

Correct Answer
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The budget constraint represented by line A is _ than the budget constraint represented by line B. Thus, soda is relatively _ expensive in line A than in line B.

Correct Answer
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Correct Answer
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