Question 1

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $2 and $4, respectively, and that consumer income is $18.  How many units of the two products will the consumer buy to get maximum utility?

Accepted Answer

A)  4 of X and 2 of Y
B)  2 of X and 4 of Y
C)  3 of X and 3 of Y
D)  4 of X and 3 of YE) A) and B)
F) B) and C)

Question 2

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18.  If the price of X decreases from $3 to $2, while the price of Y and the consumer's income stay the same, then the utility-maximizing combination is such that the quantity of X

Accepted Answer

A)  increases from 2 to 3.
B)  decreases from 3 to 2.
C)  stays the same at 2.
D)  increases from 2 to 4.E) None of the above
F) A) and C)

Question 3

Suppose you have money income of $10, all of which you spend on Coke and popcorn. In the diagram, the prices of Coke and popcorn, respectively, are

Accepted Answer

A)  $.50 and $1.00.
B)  $1.00 and $.50.
C)  $1.00 and $2.00.
D)  $.40 and $.50.E) B) and C)
F) None of the above

Question 4

To derive the demand curve of a product in indifference curve analysis, the

Accepted Answer

A)  budget line is assumed to stay in a fixed position.
B)  money income of the consumer is assumed to be variable.
C)  prices of both products are assumed to be variable.
D)  tastes and preferences of the consumer are assumed to be fixed.E) B) and C)
F) A) and C)

Question 5

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.E) B) and C)
F) B) and D)

Question 6

The budget line shows all the combinations of two products that the consumer can buy, given money income and product prices.

Accepted Answer

A) True 
 B)False

Question 7

Suppose a consumer has an income of $24, the price of A is $3, and the price of B is $1. Which of the following combinations is on the consumer's budget line?

Accepted Answer

A)  4A and 10B
B)  2A and 18B
C)  8A and 24B
D)  5A and 7BE) B) and C)
F) A) and B)

Question 8

An increase in the price of product X causes a decrease in the quantity demanded for product X. One basic explanation for this is

Accepted Answer

A)  the law of increasing opportunity cost.
B)  the price-elasticity effect.
C)  the law of supply.
D)  the law of diminishing marginal utility.E) A) and B)
F) A) and C)

Question 9

What is shown by the budget line in a two-product (A andB)case? Describe what happens when there is a change in income or the price of a product.

Accepted Answer

The budget line shows all the combinatio...

Question 10

The table shows a consumer's utility schedule.  Based on the data in the table, you can conclude that the

Accepted Answer

A)  marginal utility of the second unit is 14.
B)  total utility of 3 units is 54.
C)  total utility of 4 units is 5.
D)  marginal utility of the fifth unit is 2.E) A) and D)
F) A) and B)

Question 11

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

Question 12

A child is given $4.00 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents and hard candies 80 cents each. The marginal utilities derived from each product are as shown in the following table.  Which combination would give the child the maximum utility out of spending $4?

Accepted Answer

A)  6 chocolates and 2 hard candies
B)  4 chocolates and 3 hard candies
C)  2 chocolates and 4 hard candies
D)  0 chocolates and 5 hard candiesE) B) and C)
F) A) and D)

Question 13

The individual demand curve that is implied by the budget constraints and indifference curves above will be

Accepted Answer

A)  perfectly elastic.
B)  relatively elastic.
C)  perfectly inelastic.
D)  relatively inelastic.E) None of the above
F) B) and C)

Question 14

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 $0.6 per bottle and $0.4 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) C) and D)
F) A) and D)

Question 15

Refer to the table. What is the marginal utility of the fourth unit?

Accepted Answer

A)  40
B)  44
C)  320
D)  116E) A) and D)
F) None of the above

Question 16

If consumers are convinced by ads that Brand X has a lot more value than they originally thought, then the MU/P of X will decrease.

Accepted Answer

A) True 
 B)False

Question 17

Given the indifference map and budget constraint lines above, what is the demand curve for sweaters?

Accepted Answer

A)  graph A
B)  graph B
C)  graph C
D)  graph DE) C) and D)
F) A) and D)

Question 18

When DVD players start becoming obsolete then, to potential thieves, the

Accepted Answer

A)  marginal utility of stealing them increases.
B)  marginal utility of stealing them decreases.
C)  marginal cost of stealing them increases.
D)  marginal cost of stealing them decreases.E) All of the above
F) A) and B)

Question 19

The table shows an indifference schedule for several combinations of X and Y.  How much of X is the consumer willing to give up to obtain the second unit of Y?

Accepted Answer

A)  2
B)  4
C)  6
D)  7E) A) and B)
F) A) and C)

Question 20

As a consumer moves from one point to another along an indifference curve, which of the following is assumed to stay constant?

Accepted Answer

A)  income or budget
B)  prices of the two goods
C)  total satisfaction from the two goods
D)  marginal utility of the two goodsE) B) and D)
F) None of the above

Exam 7: Utility Maximization

The budget line shows all the combinations of two products that the consumer can buy, given money income and product prices.

Correct Answer
verified

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $2 and $4, respectively, and that consumer income is $18. How many units of the two products will the consumer buy to get maximum utility?

Correct Answer
verified

The table shows an indifference schedule for several combinations of X and Y. How much of X is the consumer willing to give up to obtain the second unit of Y?

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

The table shows a consumer's utility schedule. Based on the data in the table, you can conclude that the

Correct Answer
verified

Suppose a consumer has an income of $24, the price of A is $3, and the price of B is $1. Which of the following combinations is on the consumer's budget line?

Correct Answer
verified

Suppose you have money income of $10, all of which you spend on Coke and popcorn. In the diagram, the prices of Coke and popcorn, respectively, are

Correct Answer
verified

An increase in the price of product X causes a decrease in the quantity demanded for product X. One basic explanation for this is

Correct Answer
verified

Correct Answer
verified

The individual demand curve that is implied by the budget constraints and indifference curves above will be

Correct Answer
verified

Given the indifference map and budget constraint lines above, what is the demand curve for sweaters?

Correct Answer
verified

Refer to the table. What is the marginal utility of the fourth unit?

Correct Answer
verified

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

Correct Answer
verified

What is shown by the budget line in a two-product (A andB)case? Describe what happens when there is a change in income or the price of a product.

Correct Answer
verified
The budget line shows all the combinatio...
View Answer

When DVD players start becoming obsolete then, to potential thieves, the

Correct Answer
verified

If consumers are convinced by ads that Brand X has a lot more value than they originally thought, then the MU/P of X will decrease.

Correct Answer
verified

As a consumer moves from one point to another along an indifference curve, which of the following is assumed to stay constant?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

To derive the demand curve of a product in indifference curve analysis, the

Correct Answer
verified

Exam 7: Utility Maximization

The budget line shows all the combinations of two products that the consumer can buy, given money income and product prices.

Correct AnswerverifiedShow Answer

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $2 and $4, respectively, and that consumer income is $18. How many units of the two products will the consumer buy to get maximum utility?

Correct AnswerverifiedShow Answer

The table shows an indifference schedule for several combinations of X and Y. How much of X is the consumer willing to give up to obtain the second unit of Y?

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 AnswerverifiedShow Answer

The table shows a consumer's utility schedule. Based on the data in the table, you can conclude that the

Correct AnswerverifiedShow Answer

Suppose a consumer has an income of $24, the price of A is $3, and the price of B is $1. Which of the following combinations is on the consumer's budget line?

Correct AnswerverifiedShow Answer

Suppose you have money income of $10, all of which you spend on Coke and popcorn. In the diagram, the prices of Coke and popcorn, respectively, are

Correct AnswerverifiedShow Answer

An increase in the price of product X causes a decrease in the quantity demanded for product X. One basic explanation for this is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The individual demand curve that is implied by the budget constraints and indifference curves above will be

Correct AnswerverifiedShow Answer

Given the indifference map and budget constraint lines above, what is the demand curve for sweaters?

Correct AnswerverifiedShow Answer

Refer to the table. What is the marginal utility of the fourth unit?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What is shown by the budget line in a two-product (A andB)case? Describe what happens when there is a change in income or the price of a product.

Correct AnswerverifiedThe budget line shows all the combinatio...View AnswerShow Answer

When DVD players start becoming obsolete then, to potential thieves, the

Correct AnswerverifiedShow Answer

If consumers are convinced by ads that Brand X has a lot more value than they originally thought, then the MU/P of X will decrease.

Correct AnswerverifiedShow Answer

As a consumer moves from one point to another along an indifference curve, which of the following is assumed to stay constant?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

To derive the demand curve of a product in indifference curve analysis, the

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The budget line shows all the combinatio...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified