Question 1

Maxine has a fixed income per month to spend on goods and services,so in allocating her limited income over a set of goods,she should purchase the goods that

Accepted Answer

A)   have the highest utility regardless of price.
B)   have the highest marginal utility.
C)   provide the most utility per dollar spent.
D)   have equal marginal utilities.E) All of the above
F) B) and D)

Question 2

Table 7.8
-Refer to Table 7.8.Jessy spends no more than $75 per month on movies and eating out.The price of a movie is $8 and the price of a meal out is $15.If Jessy watches two movies per month,what is her marginal utility per dollar?

Accepted Answer

A)   80
B)   12
C)   10
D)   9E) All of the above
F) B) and D)

Question 3

What is the equimarginal rule?

Accepted Answer

A consumer is maximizing utili...

Question 4

________ is a simple rule for dealing with a complex situation which provides a "fast and frugal" decision.

Accepted Answer

A)   A present bias
B)   The Nacc
C)   Cognitive response
D)   HeuristicE) A) and B)
F) B) and D)

Question 5

If marginal utility is positive,consuming an additional unit of a product will cause total utility to decline.

Accepted Answer

A) True 
 B)False

Question 6

If a decrease in consumer prices and a decrease of a consumer's nominal income offset each other by the same amount,the consumer's real income is not changed.

Accepted Answer

A) True 
 B)False

Question 7

The budget line and the demand curve are both similar in the way that both show the price of a good that a consumer can buy.

Accepted Answer

A) True 
 B)False

Question 8

As an individual consumes more of a good,total utility always increases and marginal utility always decreases.

Accepted Answer

A) True 
 B)False

Question 9

Table 7.3
-Refer to Table 7.3.The effect of the law of diminishing marginal utility is seen after

Accepted Answer

A)   the first movie and the first book.
B)   the fifth movie and the second book.
C)   the eighth movie and eighth book.
D)   None of the above; this is a case where the law does not apply.E) B) and D)
F) None of the above

Question 10

If marginal utility is negative,consuming an additional unit of a product will cause total utility to decline.

Accepted Answer

A) True 
 B)False

Question 11

One explanation for the development of online music services is

Accepted Answer

A)   these services will help reduce the incidence of of piracy.
B)   consumers do not care about the price they pay for one song.
C)   consumers stopped purchasing CDs.
D)   the government mandated this market.E) B) and C)
F) All of the above

Question 12

When the price of a good falls,the ratio of the marginal utility of that good divided by its price ________ and as a result,consumers purchase ________ of that good.

Accepted Answer

A)   rises; more
B)   falls; more
C)   rises; less
D)   falls; lessE) B) and D)
F) All of the above

Question 13

Neuroscientists have developed techniques to do which of the following?

Accepted Answer

A)   map activity involved in the valuation of the benefits and costs of various actions, including a consumer's product choice
B)   discover the ways to learn about the opportunity costs
C)   learn how people react when they are better off
D)   observe the responsiveness to discountsE) A) and C)
F) A) and B)

Question 14

Recall the Application about the appropriate amount for a cigarette tax to answer the following question(s) .
-A cigarette tax imposes a relatively large tax burden on ________ households,and the authors of the study suggest that the cigarette tax would be beneficial for ________ households.

Accepted Answer

A)   low-income; low-income
B)   high-income; high-income
C)   high-income; middle-income
D)   middle-income; high-incomeE) A) and C)
F) C) and D)

Question 15

Recent work in neuroscience shows that different regions of the brain are involved in the valuation of the benefits and costs of possible actions.

Accepted Answer

A) True 
 B)False

Question 16

Marginal utility is defined as the

Accepted Answer

A)   additional utility gained by consuming an extra unit of a good.
B)   total utility from all units consumed of a good.
C)   total utility from all units consumed divided by the number of units consumed.
D)   additional utility gained divided by the price of the good.E) All of the above
F) A) and D)

Question 17

Table 7.2
-Refer to Table 7.2.The marginal utility of the fourth slice of pie per day is

Accepted Answer

A)   75.
B)   20.
C)   15.
D)   3.E) A) and B)
F) A) and C)

Question 18

Neuron activity in the insula represents the dollar cost of buying a product.Although the mechanism that calibrates the insula has so far been elusive,we do know that the ________ the price of a product,the ________ the insula activity.

Accepted Answer

A)   lower; stronger
B)   higher; stronger
C)   higher; weaker
D)   none of the aboveE) C) and D)
F) A) and D)

Question 19

What is the difference between total utility and marginal utility?

Accepted Answer

Total utility is the total amount of sat...

Question 20

-Refer to Figure 7.3.The total utility from consuming 2 slices of pie is

Accepted Answer

A)   4.
B)   7.
C)   12.
D)   15.E) C) and D)
F) A) and B)

Exam 7: Consumer Choice: Utility Theory and Insights From Neuroscience

-Refer to Figure 7.3.The total utility from consuming 2 slices of pie is

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If marginal utility is negative,consuming an additional unit of a product will cause total utility to decline.

Correct AnswerverifiedShow Answer

If marginal utility is positive,consuming an additional unit of a product will cause total utility to decline.

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Recall the Application about the appropriate amount for a cigarette tax to answer the following question(s) . -A cigarette tax imposes a relatively large tax burden on ________ households,and the authors of the study suggest that the cigarette tax would be beneficial for ________ households.

Correct AnswerverifiedShow Answer

Neuroscientists have developed techniques to do which of the following?

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Table 7.2 -Refer to Table 7.2.The marginal utility of the fourth slice of pie per day is

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Marginal utility is defined as the

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Table 7.8 -Refer to Table 7.8.Jessy spends no more than $75 per month on movies and eating out.The price of a movie is $8 and the price of a meal out is $15.If Jessy watches two movies per month,what is her marginal utility per dollar?

Correct AnswerverifiedShow Answer

As an individual consumes more of a good,total utility always increases and marginal utility always decreases.

Correct AnswerverifiedShow Answer

The budget line and the demand curve are both similar in the way that both show the price of a good that a consumer can buy.

Correct AnswerverifiedShow Answer

What is the equimarginal rule?

Correct AnswerverifiedA consumer is maximizing utili...View AnswerShow Answer

One explanation for the development of online music services is

Correct AnswerverifiedShow Answer

________ is a simple rule for dealing with a complex situation which provides a "fast and frugal" decision.

Correct AnswerverifiedShow Answer

If a decrease in consumer prices and a decrease of a consumer's nominal income offset each other by the same amount,the consumer's real income is not changed.

Correct AnswerverifiedShow Answer

What is the difference between total utility and marginal utility?

Correct AnswerverifiedTotal utility is the total amount of sat...View AnswerShow Answer

Table 7.3 -Refer to Table 7.3.The effect of the law of diminishing marginal utility is seen after

Correct AnswerverifiedShow Answer

Maxine has a fixed income per month to spend on goods and services,so in allocating her limited income over a set of goods,she should purchase the goods that

Correct AnswerverifiedShow Answer

Neuron activity in the insula represents the dollar cost of buying a product.Although the mechanism that calibrates the insula has so far been elusive,we do know that the ________ the price of a product,the ________ the insula activity.

Correct AnswerverifiedShow Answer

Recent work in neuroscience shows that different regions of the brain are involved in the valuation of the benefits and costs of possible actions.

Correct AnswerverifiedShow Answer

When the price of a good falls,the ratio of the marginal utility of that good divided by its price ________ and as a result,consumers purchase ________ of that good.

Correct AnswerverifiedShow Answer

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Recall the Application about the appropriate amount for a cigarette tax to answer the following question(s) . -A cigarette tax imposes a relatively large tax burden on households,and the authors of the study suggest that the cigarette tax would be beneficial for households.

Correct Answer
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A consumer is maximizing utili...
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Total utility is the total amount of sat...
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Neuron activity in the insula represents the dollar cost of buying a product.Although the mechanism that calibrates the insula has so far been elusive,we do know that the the price of a product,the the insula activity.

Correct Answer
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Correct Answer
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When the price of a good falls,the ratio of the marginal utility of that good divided by its price and as a result,consumers purchase of that good.

Correct Answer
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