Question 1

If the graph shown represents Stella's budget constraint,and she has income of $48 to spend on these two items,Stella could choose which consumption bundle?

Accepted Answer

A)   One pair of earrings and seven hairbands
B)   Four pairs of earrings and eight hairbands
C)   Three pairs of earrings and six hairbands
D)   Two pairs of earrings and four hairbandsE) A) and C)
F) All of the above

Question 2

You decide to donate $5 to Jerry's Kids at the grocery store checkout,and get to sign your name to a shamrock and hang it in their window.This is an example of the economic concept of:

Accepted Answer

A)   marginal utility.
B)   altruism.
C)   reciprocity.
D)   selfishness.E) B) and D)
F) All of the above

Question 3

When economists observe someone make a choice,they assume the individual chooses:

Accepted Answer

A)   what gives her the least utility.
B)   what gives her the most utility.
C)   what creates the most utility for society.
D)   what is the most efficient choice.E) C) and D)
F) B) and D)

Question 4

If the graph shown represents Donna's budget constraint,and the price of earrings were to decrease,the slope of Donna's budget constraint would become:

Accepted Answer

A)   steeper, reflecting the fact that hairbands are now relatively less expensive.
B)   flatter, reflecting the fact that hairbands are now relatively more expensive.
C)   steeper, reflecting the fact that earrings are now relatively less expensive.
D)   flatter, reflecting the fact that earrings are now relatively more expensive.E) A) and B)
F) B) and C)

Question 5

Consider budget constraints A and B in the graph shown.The slope of A compared to the slope of B:

Accepted Answer

A)  is steeper,showing that movie tickets are relatively more expensive in line A.
B)  is flatter,showing that books are relatively less expensive in line A.
C)  shows that the opportunity cost of books is smaller in line A.
D)  shows that the opportunity cost of books is greater in line A.E) C) and D)
F) A) 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 Jack consumes 3 popsicles and 1 ice cream cone,then:

Accepted Answer

A)   Jack still has $5 left to spend.
B)   the price of ice cream must have increased to $8.
C)   the price of popsicles must have decreased.
D)   None of these is true.E) C) and D)
F) B) and C)

Question 7

If the graph shown represents Steph's budget constraint,and the price of hairbands were to increase,the slope of Steph's budget constraint would become:

Accepted Answer

A)   steeper, reflecting the fact that hairbands are now relatively less expensive.
B)   flatter, reflecting the fact that hairbands are now relatively more expensive.
C)   steeper, reflecting the fact that earrings are now relatively less expensive.
D)   flatter, reflecting the fact that earrings are now relatively more expensive.E) A) and B)
F) A) and C)

Question 8

This graph shows three different budget constraints: A,B,and C. 
If Doug is on budget constraint C in the graph shown,what would cause it to shift to budget constraint B?

Accepted Answer

A)  Doug loses his job.
B)  Doug finds soda at a warehouse outlet for a lower price.
C)  Doug's grocery store raises the price of milk by 10 percent.
D)  Doug's grocery store has lowered all prices by 33 percent.E) None of the above
F) A) and B)

Question 9

A budget constraint is:

Accepted Answer

A)   a line that is composed of all the possible combinations of goods and services that maximize a consumer's total utility.
B)   a line that is composed of the additional utility gained from consuming possible combinations of goods and services that a consumer can buy with his or her income.
C)   a line that is composed of all the possible combinations of goods and services that a consumer can buy with his or her income.
D)   a line that is composed of the total utility gained from consuming all possible combinations of goods and services that a consumer can buy with his or her income.E) B) and D)
F) A) and C)

Question 10

Utility is:

Accepted Answer

A)   a quantitative measure of consumers' preferences.
B)   an objective measure of a person's happiness.
C)   as difficult to measure as an individual's income level.
D)   a meaningful number measuring a consumer's precise level of satisfaction.E) B) and C)
F) All of the above

Question 11

If the graph shown represents Hanna's budget constraint,and the price of hairbands were to decrease,the slope of Hanna's budget constraint would become:

Accepted Answer

A)   steeper, reflecting the fact that hairbands are now relatively less expensive.
B)   flatter, reflecting the fact that hairbands are now relatively more expensive.
C)   steeper, reflecting the fact that earrings are now relatively less expensive.
D)   flatter, reflecting the fact that earrings are now relatively more expensive.E) All of the above
F) B) and C)

Question 12

The concept of diminishing marginal utility:

Accepted Answer

A)   explains why individuals rarely maximize their total utility.
B)   is the change in total utility that comes from consuming one additional unit of a good or service.
C)   is the principle that the additional utility gained from consuming successive units of a good or service tends to be smaller than the utility gained from the previous unit.
D)   is the principle that the additional utility gained from consuming different bundles of goods and services tend to be smaller than the utility gained from consuming just one bundle of goods and services.E) A) and D)
F) All of the above

Question 13

Rational utility maximizing consumers tend to:

Accepted Answer

A)   buy the same bundle of goods regardless of the prices charged.
B)   choose the same bundle of goods regardless of their income.
C)   change their consumption choices when either prices or income changes.
D)   change their consumption choices only when both prices and income changes simultaneously.E) None of the above
F) C) and D)

Question 14

This graph shows three different budget constraints: A,B,and C.  If Daniel has budget constraint C in the graph shown,what would cause it to shift to budget constraint 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 could cause a shift from C to B.E) A) and D)
F) A) and C)

Question 15

Sam has $200 a month to spend on either tanning sessions or rounds of golf.Tanning sessions are $20 each,and a round of golf is $40.What can we say about Sam's utility?

Accepted Answer

A)   Sam will get more utility from each round of golf than each tanning session.
B)   Sam will get the same utility from one round of golf as he would from two tanning sessions.
C)   Sam will maximize his utility from 2 rounds of golf and 6 tanning sessions.
D)   We cannot say anything about Sam's utility from the consumption of these goods without more information.E) A) and B)
F) B) and C)

Question 16

The marginal utility gained from the consumption of successive units of a typical good:

Accepted Answer

A)   tends to decrease.
B)   tends to increase.
C)   may increase or decrease depending on the cost of the good.
D)   tends to stay the same.E) None of the above
F) All of the above

Question 17

Assume Bonnie has $64 to spend on hairbands and earrings.Her budget constraint is shown in the graph shown.Which of the following can be said about Bonnie's choices?

Accepted Answer

A)   Bonnie can buy twice as many hairbands as earrings.
B)   Earrings must cost $16 each.
C)   Hairbands must cost $8 each.
D)   All of these are true.E) A) and B)
F) A) and C)

Question 18

The slope of the budget line in the graph shown:

Accepted Answer

A)   represents the opportunity cost of the two goods relative to each other.
B)   represents the relative marginal utilities from consuming the two goods.
C)   measures the total utility the consumer gets from consuming the two goods.
D)   is the consumer's income level.E) All of the above
F) C) and D)

Question 19

Assume Mimi's budget constraint is shown in the graph shown.If earrings cost $7,then hairbands must cost:

Accepted Answer

A)   $3.50.
B)   $7.
C)   $5.25.
D)   $4.E) A) and C)
F) B) and C)

Question 20

Assume the graph shown represents Dawn's budget constraint.If Dawn's income to spend on these two items increased and Dawn spends all her income on these two goods,then Dawn's total utility from consuming these two goods:

Accepted Answer

A)   will likely go up, since she can afford more of both goods now.
B)   will likely go down, since her marginal utility of additional items decreases the more she consumes.
C)   will likely go down, since she is probably sick of these two things already.
D)   will likely go up, since her marginal utility of additional items increases the more she consumes.E) A) and D)
F) None of the above

Exam 7: Consumer Behavior

If the graph shown represents Donna's budget constraint,and the price of earrings were to decrease,the slope of Donna's budget constraint would become:

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Rational utility maximizing consumers tend to:

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This graph shows three different budget constraints: A,B,and C. If Doug is on budget constraint C in the graph shown,what would cause it to shift to budget constraint B?

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Consider budget constraints A and B in the graph shown.The slope of A compared to the slope of B:

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This graph shows three different budget constraints: A,B,and C. If Daniel has budget constraint C in the graph shown,what would cause it to shift to budget constraint B?

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A budget constraint is:

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The concept of diminishing marginal utility:

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The slope of the budget line in the graph shown:

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Sam has $200 a month to spend on either tanning sessions or rounds of golf.Tanning sessions are $20 each,and a round of golf is $40.What can we say about Sam's utility?

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Assume Bonnie has $64 to spend on hairbands and earrings.Her budget constraint is shown in the graph shown.Which of the following can be said about Bonnie's choices?

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You decide to donate $5 to Jerry's Kids at the grocery store checkout,and get to sign your name to a shamrock and hang it in their window.This is an example of the economic concept of:

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If the graph shown represents Stella's budget constraint,and she has income of $48 to spend on these two items,Stella could choose which consumption bundle?

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Utility is:

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When economists observe someone make a choice,they assume the individual chooses:

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Assume Mimi's budget constraint is shown in the graph shown.If earrings cost $7,then hairbands must cost:

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If the graph shown represents Hanna's budget constraint,and the price of hairbands were to decrease,the slope of Hanna's budget constraint would become:

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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 Jack consumes 3 popsicles and 1 ice cream cone,then:

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If the graph shown represents Steph's budget constraint,and the price of hairbands were to increase,the slope of Steph's budget constraint would become:

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Assume the graph shown represents Dawn's budget constraint.If Dawn's income to spend on these two items increased and Dawn spends all her income on these two goods,then Dawn's total utility from consuming these two goods:

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The marginal utility gained from the consumption of successive units of a typical good:

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