Question 1

Assume Kevin's income to spend on the two goods in the graph shown is $48,and books cost $12.If Kevin's budget constraint is one of the lines in the graph,which one must it be?

Accepted Answer

A)  A
B)  B
C)  C
D)  It could be either A or B.E) B) and C)
F) A) and C)

Question 2

Assume Alan's budget constraint is demonstrated by line A in the graph shown.Which of the following could cause Alan's budget constraint to change to line B?

Accepted Answer

A)   Alan could have experienced a drop in income.
B)   The price of books could have increased.
C)   Alan could have decided he doesn't like going to the movies as much as he used to.
D)   The price of movie tickets could have increased.E) None of the above
F) All of the above

Question 3

Johnny spends his day doing a variety of activities; he spends the morning exercising and doing yard work,reads in the afternoon,and hosts a dinner party in the evening.Economists would say his choice to do a variety of activities instead of spending all of his time on one activity illustrates the concept of:

Accepted Answer

A)   tastes and preferences
B)   budget constraints
C)   diminishing marginal utility
D)   income effectE) None of the above
F) A) and B)

Question 4

Assume Alan's budget constraint is demonstrated by line A in the graph shown.Which of the following could cause Alan's budget constraint to change to line B?

Accepted Answer

A)   The price of books could have decreased.
B)   The price of books could have increased.
C)   The price of movie tickets could have increased.
D)   The price of movie tickets could have decreased.E) A) and B)
F) All of the above

Question 5

This graph shows three different budget constraints: A,B,and C.  If Joe has budget constraint C in the graph shown,what is the relative price of three gallons of milk?

Accepted Answer

A)  2 cases of soda
B)  4 cases of soda
C)  $12
D)  $9E) A) and D)
F) B) and D)

Question 6

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10.  Considering the information in the table shown,if we assume Jack is a rational utility maximizer,then we can predict he will buy which bundle with his $10?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) All of the above
F) B) and C)

Question 7

Seth is a surgeon who goes to Cambodia each summer and donates two weeks of his time to local hospitals.From an economic standpoint,utility is gained by:

Accepted Answer

A)   Seth's patients.
B)   Seth, knowing he is doing a good deed.
C)   Seth, knowing the local paper writes a story about his trip every time he comes home.
D)   All of these are true.E) B) and D)
F) None of the above

Question 8

In general,a change in the price of a good:

Accepted Answer

A)   causes a substitution effect only.
B)   causes an income effect only.
C)   causes both an income and substitution effect.
D)   usually has no effect.E) A) and B)
F) A) and C)

Question 9

Claire has just eaten her second bowl of cereal.We can say:

Accepted Answer

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

Question 10

Assume Bridget's budget constraint is shown in the graph shown.If she has $48 to spend on these two items,then earrings must cost:

Accepted Answer

A)   $8.
B)   $6.
C)   $4.
D)   $12.E) B) and D)
F) None of the above

Question 11

In general,an increase in the price of a good:

Accepted Answer

A)   will cause the substitution effect to be bigger than the income effect.
B)   will cause the income effect to be bigger than the substitution effect.
C)   will cause both an income and substitution effect.
D)   usually will have no effect.E) B) and C)
F) B) and D)

Question 12

This graph shows three different budget constraints: A,B,and C.If Ted's budget constraint is shown by line A in the graph shown,and Ted's income for these two items is $36,what are the prices of the two goods?

Accepted Answer

A)  Soda costs $3 per case,and milk costs $4 a gallon.
B)  Soda costs $4 per case,and milk costs $3 a gallon.
C)  Soda costs $12 per case and milk costs $9 a gallon.
D)  Soda costs $6 per case and milk costs $3 a gallon.E) C) and D)
F) B) and D)

Question 13

Sadie has just eaten a donut and says it gave her a utility of 6.If she chooses to eat another donut:

Accepted Answer

A)   we can assume she will get an increase in utility of at least 6 from the additional donut.
B)   we can assume she will get a decrease in utility from the additional donut.
C)   we can assume she will get an increase in utility of less than 6 from the additional donut.
D)   we can assume Sadie's total utility will fall because of diminishing marginal utility.E) B) and C)
F) A) and D)

Question 14

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10.  Considering the information in the table shown,if Jack consumes 2 popsicles and 2 ice cream cones:

Accepted Answer

A)   Jack still has $4 left to spend.
B)   Jack still has $6 left to spend.
C)   Jack still has $8 left to spend.
D)   Jack still has $2 left to spend.E) All of the above
F) None of the above

Question 15

Assume Kara's budget constraint is represented by line A in the graph shown,and that her income to spend on these two items is $24.What would cause her budget constraint to move to B?

Accepted Answer

A)   The price of movie tickets falls to $4.
B)   The price of movie tickets increases to $4.
C)   The price of movie tickets falls to $6.
D)   The price of movie tickets increases to $6.E) A) and D)
F) A) and C)

Question 16

Billy is deciding whether to watch TV at home or go spend time with his friends.If Billy decides to stay home,we can conclude that:

Accepted Answer

A)   Billy is a homebody and never goes out.
B)   Billy will get more utility from watching TV than spending time with his friends.
C)   Billy will regret not spending more time with his friends.
D)   Billy's revealed preference is to always be alone.E) C) and D)
F) A) and B)

Question 17

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)   Grace's marginal utility of each good is the same for each combination of goods on her budget line.
C)   Grace's total expenditure is constant along her budget constraint.
D)   Grace is indifferent between consuming any bundle that lies on the budget constraint.E) A) and C)
F) None of the above

Question 18

The utility we get from something:

Accepted Answer

A)   is a measurement of our direct benefit of consuming the good.
B)   is a measurement of the benefit of consuming the good relative to the opportunity cost.
C)   is a measurement of outside perceptions and inner preferences.
D)   is a measurement of outside benefits and inner costs.E) B) and D)
F) B) and C)

Question 19

Assume Claudia's budget constraint is demonstrated 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)   The price of books dropped.
B)   The price of movie tickets dropped.
C)   Claudia's preferences for these two goods decreased.
D)   Claudia's income decreased.E) None of the above
F) B) and C)

Question 20

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 A?

Accepted Answer

A)   Bryce's income increased.
B)   Bryce's income decreased.
C)   Bryce's preferences for books and movies decreased.
D)   Bryce's preferences for books and movies increased.E) None of the above
F) B) and C)

Exam 7: Consumer Behavior

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. Considering the information in the table shown,if Jack consumes 2 popsicles and 2 ice cream cones:

Correct Answer
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This graph shows three different budget constraints: A,B,and C.If Ted's budget constraint is shown by line A in the graph shown,and Ted's income for these two items is $36,what are the prices of the two goods?

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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Assume Alan's budget constraint is demonstrated by line A in the graph shown.Which of the following could cause Alan's budget constraint to change to line B?

Correct Answer
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In general,a change in the price of a good:

Correct Answer
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The utility we get from something:

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Assume Bridget's budget constraint is shown in the graph shown.If she has $48 to spend on these two items,then earrings must cost:

Correct Answer
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In general,an increase in the price of a good:

Correct Answer
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Billy is deciding whether to watch TV at home or go spend time with his friends.If Billy decides to stay home,we can conclude that:

Correct Answer
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This graph shows three different budget constraints: A,B,and C. If Joe has budget constraint C in the graph shown,what is the relative price of three gallons of milk?

Correct Answer
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Claire has just eaten her second bowl of cereal.We can say:

Correct Answer
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This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. Considering the information in the table shown,if we assume Jack is a rational utility maximizer,then we can predict he will buy which bundle with his $10?

Correct Answer
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Assume Alan's budget constraint is demonstrated by line A in the graph shown.Which of the following could cause Alan's budget constraint to change to line B?

Correct Answer
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Seth is a surgeon who goes to Cambodia each summer and donates two weeks of his time to local hospitals.From an economic standpoint,utility is gained by:

Correct Answer
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Assume Claudia's budget constraint is demonstrated 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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Assume Kevin's income to spend on the two goods in the graph shown is $48,and books cost $12.If Kevin's budget constraint is one of the lines in the graph,which one must it be?

Correct Answer
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Assume Kara's budget constraint is represented by line A in the graph shown,and that her income to spend on these two items is $24.What would cause her budget constraint to move to B?

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 A?

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Sadie has just eaten a donut and says it gave her a utility of 6.If she chooses to eat another donut:

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Exam 7: Consumer Behavior

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. Considering the information in the table shown,if Jack consumes 2 popsicles and 2 ice cream cones:

Correct AnswerverifiedShow Answer

This graph shows three different budget constraints: A,B,and C.If Ted's budget constraint is shown by line A in the graph shown,and Ted's income for these two items is $36,what are the prices of the two goods?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume Alan's budget constraint is demonstrated by line A in the graph shown.Which of the following could cause Alan's budget constraint to change to line B?

Correct AnswerverifiedShow Answer

In general,a change in the price of a good:

Correct AnswerverifiedShow Answer

The utility we get from something:

Correct AnswerverifiedShow Answer

Assume Bridget's budget constraint is shown in the graph shown.If she has $48 to spend on these two items,then earrings must cost:

Correct AnswerverifiedShow Answer

In general,an increase in the price of a good:

Correct AnswerverifiedShow Answer

Billy is deciding whether to watch TV at home or go spend time with his friends.If Billy decides to stay home,we can conclude that:

Correct AnswerverifiedShow Answer

This graph shows three different budget constraints: A,B,and C. If Joe has budget constraint C in the graph shown,what is the relative price of three gallons of milk?

Correct AnswerverifiedShow Answer

Claire has just eaten her second bowl of cereal.We can say:

Correct AnswerverifiedShow Answer

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. Considering the information in the table shown,if we assume Jack is a rational utility maximizer,then we can predict he will buy which bundle with his $10?

Correct AnswerverifiedShow Answer

Assume Alan's budget constraint is demonstrated by line A in the graph shown.Which of the following could cause Alan's budget constraint to change to line B?

Correct AnswerverifiedShow Answer

Seth is a surgeon who goes to Cambodia each summer and donates two weeks of his time to local hospitals.From an economic standpoint,utility is gained by:

Correct AnswerverifiedShow Answer

Assume Claudia's budget constraint is demonstrated 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

Assume Kevin's income to spend on the two goods in the graph shown is $48,and books cost $12.If Kevin's budget constraint is one of the lines in the graph,which one must it be?

Correct AnswerverifiedShow Answer

Assume Kara's budget constraint is represented by line A in the graph shown,and that her income to spend on these two items is $24.What would cause her budget constraint to move to B?

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 A?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Sadie has just eaten a donut and says it gave her a utility of 6.If she chooses to eat another donut:

Correct AnswerverifiedShow Answer

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