Question 1

According to revealed preference, a consumer that chooses to smoke cigarettes:

Accepted Answer

A)  derives more utility from smoking than from other goods that could have been purchased with the money spent on cigarettes.
B)  derives more happiness from smoking than from other goods that could have purchased with the money spent on cigarettes.
C)  is minimizing utility given the options available.
D)  is behaving irrationally.E) None of the above
F) B) and C)

Question 2

Nikolaj makes a New Year's resolution to lose weight. On January 3 rd, he decides to go out for ice cream instead of going to the gym. Using the concept of revealed preference, economists would most likely conclude that Nikolaj:

Accepted Answer

A)  is not a rational individual.
B)  gains more utility from ice cream than working out.
C)  has changed his preferences.
D)  has no control over the actions he makes.E) A) and B)
F) A) and C)

Question 3

Howard has just smoked a cigarette. If he chooses to smoke a second one:

Accepted Answer

A)  he will experience a drop in total utility.
B)  he would not be acting rationally.
C)  he will derive less marginal utility from it than his first.
D)  None of these are true.E) A) and D)
F) B) and D)

Question 4

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

After consuming 2 popsicles and 2 ice cream cones Jack still has _____ left to spend.

Accepted Answer

A)  $4
B)  $6
C)  $8
D)  $2E) A) and D)
F) B) and C)

Question 5

Ethan enjoys buying books and going to the movies. He has income of $150 to spend on these two goods each month. The price of a book is $15 and the price of a movie ticket is also $15. He currently consumes four books and six movies each month. If the price of a book increases to $20, which of the following is true?

Accepted Answer

A)  The substitution and income effects both predict Ethan will consume more of both goods.
B)  The substitution and income effects both predict Ethan will consume less of both goods.
C)  The substitution effect predicts Ethan will consume more books and fewer movies, and the income effect predicts he will consume less of both goods.
D)  The substitution effect predicts Ethan will consume fewer books and more movies, and the income effect predicts he will consume less of both goods.E) A) and B)
F) B) and C)

Question 6

Weizhe is a surgeon who spends two weeks every summer traveling to remote areas and donating his skills to hospitals in need. From an economic standpoint, utility is gained by:

Accepted Answer

A)  Weizhe's patients.
B)  Weizhe, knowing he is doing a good deed.
C)  Weizhe, knowing his good deeds will be recognized by others.
D)  All of these are correct.E) C) and D)
F) B) and D)

Question 7

Assume Kerri's budget constraint is represented in the graph shown. If Kerri's income to spend on these two items increases, her budget constraint will:

Accepted Answer

A)  shift out, maintaining the same slope.
B)  shift out and become steeper.
C)  shift in, maintaining the same slope.
D)  shift out and become flatter.E) B) and D)
F) None of the above

Question 8

Assume Kiara's budget constraint is represented by the graph shown. If Kiara's grocery store discounts cases of soda by 50 percent, which of the following is true?

Accepted Answer

A)  One possible new consumption bundle is 4 cases of soda and 3 gallons of milk.
B)  The new x-intercept of the budget constraint will be 6, and the new y-intercept will be 2.
C)  The slope of the budget constraint will become flatter.
D)  Kiara will certainly buy fewer gallons of milk.E) A) and D)
F) None of the above

Question 9

In general, the income effect of an increase in the price of a normal good will cause an individual to buy _____ of that good because he or she has relatively _____ income.

Accepted Answer

A)  more; more
B)  less; less
C)  more; less
D)  less; moreE) A) and B)
F) C) and D)

Question 10

If the graph shown represents Tina's budget constraint, which of the following consumption bundles can Tina not afford?

Accepted Answer

A)  Three movies in the theater and six movie rentals
B)  Two movies in the theater and seven movie rentals
C)  Four movies in the theater and zero movie rentals
D)  One movie in the theater and ten movie rentalsE) All of the above
F) A) and C)

Question 11

Assume Larry's budget constraint is represented by line B in the graph shown. His opportunity cost of one gallon of milk is:

Accepted Answer

A)  6 cases of soda.
B)  exactly one case of soda.
C)  less than one case of soda.
D)  more than one case of soda.E) None of the above
F) All of the above

Question 12

One individual's budget constraint:

Accepted Answer

A)  will be the same as another individual's budget constraint if they have the same income.
B)  will be the same as another individual's budget constraint if they have the same income and preferences.
C)  will be the same as another individual's budget constraint if they have the same preferences.
D)  can never be the same as another individual's budget constraint.E) None of the above
F) A) and D)

Question 13

If Bella eats one piece of pie, she receives a utility of 10. If she continues eating, a second piece of pie will yield a marginal utility of 8, a third will yield a marginal utility of 2, and a fourth will yield a marginal utility of -2. Which of the following statements is true?

Accepted Answer

A)  Bella's marginal utility is not diminishing.
B)  Bella's total utility will decrease if she eats a third piece of pie.
C)  Bella's total utility will be maximized if she eats three pieces of pie.
D)  Bella's total utility decreases after the first piece of pie.E) A) and C)
F) B) and C)

Question 14

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

Accepted Answer

A)  An increase in the price of milk
B)  A decrease in the price of soda
C)  An increase in the price of soda
D)  None of these changes alone would cause a shift from line C to line B.E) A) and D)
F) A) and C)

Question 15

Assume Jayden's budget constraint is represented in the graph shown. Suppose Jayden initially has $24 to spend on these items. If Jayden's income decreases to $12, which of the following is true?

Accepted Answer

A)  One possible new consumption bundle is 2 cases of soda and 3 gallons of milk.
B)  The new x-intercept of the budget constraint will be 3, and the new y-intercept will be 2.
C)  The slope of the budget constraint will decrease.
D)  The budget constraint will shift, but it is impossible to know the new intercepts.E) A) and B)
F) B) and D)

Question 16

The table shown describes the different combinations of goods that Brianna can consume, given that she has $80 to spend on these two items.

Considering the information in the table, what is the price of a concert ticket?

Accepted Answer

A)  $20
B)  $10
C)  $40
D)  $15E) A) and D)
F) A) and B)

Question 17

Sam has $200 a month to spend on two normal goods-tanning sessions and rounds of golf. Tanning sessions are $20 each, and a round of golf is $40. Sam currently consumes six tanning sessions and two rounds of golf each month. If the price of a round of golf drops to $20, the income and substitution effects will cause Sam's consumption of tanning sessions to:

Accepted Answer

A)  increase.
B)  decrease.
C)  change, but the direction is dependent upon which effect is stronger.
D)  This cannot be answered without more information.E) B) and C)
F) A) and D)

Question 18

Assume Kevin has $48 to spend on the two items in the graph shown. If books cost $12, which line represents Kevin's budget constraint?

Accepted Answer

A)  Line A
B)  Line B
C)  Line C
D)  Either line A or BE) B) and C)
F) A) and C)

Question 19

Assume the graph shown represents Ayesha's budget constraint. If a movie rental costs $3, what must a movie theater ticket cost?

Accepted Answer

A)  $10.50
B)  $14
C)  $9
D)  $12E) A) and B)
F) C) and D)

Question 20

Nick has $300 a month to spend on either detailing his sports car or buying bottles of good wine. It costs $100 to have his car detailed and a bottle of wine is $50. He currently buys four bottles of wine each month and has his car detailed once. If the price of car detailing decreases to $75, Nick's budget constraint will:

Accepted Answer

A)  shift straight outward, because he is relatively wealthier.
B)  rotate and change its slope, because relative prices have changed.
C)  shift straight inward, because he is relatively wealthier.
D)  This cannot be answered without knowing the marginal utility of each good.E) C) and D)
F) A) and C)

Exam 7: Consumer Behavior

The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items. After consuming 2 popsicles and 2 ice cream cones Jack still has _____ left to spend.

Correct Answer
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If Bella eats one piece of pie, she receives a utility of 10. If she continues eating, a second piece of pie will yield a marginal utility of 8, a third will yield a marginal utility of 2, and a fourth will yield a marginal utility of -2. Which of the following statements is true?

Correct Answer
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One individual's budget constraint:

Correct Answer
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If the graph shown represents Tina's budget constraint, which of the following consumption bundles can Tina not afford?

Correct Answer
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Nikolaj makes a New Year's resolution to lose weight. On January 3 ^rd, he decides to go out for ice cream instead of going to the gym. Using the concept of revealed preference, economists would most likely conclude that Nikolaj:

Correct Answer
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Assume Jayden's budget constraint is represented in the graph shown. Suppose Jayden initially has $24 to spend on these items. If Jayden's income decreases to $12, which of the following is true?

Correct Answer
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According to revealed preference, a consumer that chooses to smoke cigarettes:

Correct Answer
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Howard has just smoked a cigarette. If he chooses to smoke a second one:

Correct Answer
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The table shown describes the different combinations of goods that Brianna can consume, given that she has $80 to spend on these two items. Considering the information in the table, what is the price of a concert ticket?

Correct Answer
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Weizhe is a surgeon who spends two weeks every summer traveling to remote areas and donating his skills to hospitals in need. From an economic standpoint, utility is gained by:

Correct Answer
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Assume Kevin has $48 to spend on the two items in the graph shown. If books cost $12, which line represents Kevin's budget constraint?

Correct Answer
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Assume Kiara's budget constraint is represented by the graph shown. If Kiara's grocery store discounts cases of soda by 50 percent, which of the following is true?

Correct Answer
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Assume Kerri's budget constraint is represented in the graph shown. If Kerri's income to spend on these two items increases, her budget constraint will:

Correct Answer
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Correct Answer
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In general, the income effect of an increase in the price of a normal good will cause an individual to buy _ of that good because he or she has relatively _ income.

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

Correct Answer
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Assume the graph shown represents Ayesha's budget constraint. If a movie rental costs $3, what must a movie theater ticket cost?

Correct Answer
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Assume Larry's budget constraint is represented by line B in the graph shown. His opportunity cost of one gallon of milk is:

Correct Answer
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Exam 7: Consumer Behavior

The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items. After consuming 2 popsicles and 2 ice cream cones Jack still has _____ left to spend.

Correct AnswerverifiedShow Answer

If Bella eats one piece of pie, she receives a utility of 10. If she continues eating, a second piece of pie will yield a marginal utility of 8, a third will yield a marginal utility of 2, and a fourth will yield a marginal utility of -2. Which of the following statements is true?

Correct AnswerverifiedShow Answer

One individual's budget constraint:

Correct AnswerverifiedShow Answer

If the graph shown represents Tina's budget constraint, which of the following consumption bundles can Tina not afford?

Correct AnswerverifiedShow Answer

Nikolaj makes a New Year's resolution to lose weight. On January 3 rd, he decides to go out for ice cream instead of going to the gym. Using the concept of revealed preference, economists would most likely conclude that Nikolaj:

Correct AnswerverifiedShow Answer

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Correct AnswerverifiedShow Answer

Assume Jayden's budget constraint is represented in the graph shown. Suppose Jayden initially has $24 to spend on these items. If Jayden's income decreases to $12, which of the following is true?

Correct AnswerverifiedShow Answer

According to revealed preference, a consumer that chooses to smoke cigarettes:

Correct AnswerverifiedShow Answer

Howard has just smoked a cigarette. If he chooses to smoke a second one:

Correct AnswerverifiedShow Answer

The table shown describes the different combinations of goods that Brianna can consume, given that she has $80 to spend on these two items. Considering the information in the table, what is the price of a concert ticket?

Correct AnswerverifiedShow Answer

Weizhe is a surgeon who spends two weeks every summer traveling to remote areas and donating his skills to hospitals in need. From an economic standpoint, utility is gained by:

Correct AnswerverifiedShow Answer

Assume Kevin has $48 to spend on the two items in the graph shown. If books cost $12, which line represents Kevin's budget constraint?

Correct AnswerverifiedShow Answer

Assume Kiara's budget constraint is represented by the graph shown. If Kiara's grocery store discounts cases of soda by 50 percent, which of the following is true?

Correct AnswerverifiedShow Answer

Assume Kerri's budget constraint is represented in the graph shown. If Kerri's income to spend on these two items increases, her budget constraint will:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In general, the income effect of an increase in the price of a normal good will cause an individual to buy _____ of that good because he or she has relatively _____ income.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume the graph shown represents Ayesha's budget constraint. If a movie rental costs $3, what must a movie theater ticket cost?

Correct AnswerverifiedShow Answer

Assume Larry's budget constraint is represented by line B in the graph shown. His opportunity cost of one gallon of milk is:

Correct AnswerverifiedShow Answer

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Nikolaj makes a New Year's resolution to lose weight. On January 3 ^rd, he decides to go out for ice cream instead of going to the gym. Using the concept of revealed preference, economists would most likely conclude that Nikolaj:

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In general, the income effect of an increase in the price of a normal good will cause an individual to buy _ of that good because he or she has relatively _ income.

Correct Answer
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