Question 1

Assume Hannah's budget constraint is represented in the graph shown. If the price of movie theater tickets increases, the slope of Hannah's budget constraint will become _____, reflecting the fact that _____ are now relatively _____ expensive.

Accepted Answer

A)  steeper; movie theater tickets; less
B)  flatter; movie theater tickets; more
C)  steeper; movie rentals; less
D)  flatter; movie rentals; moreE) C) and D)
F) B) and C)

Question 2

Assume Dana's budget constraint is represented in the graph shown. If Dana's income to spend on these two items decreases, which of the following could be said?

Accepted Answer

A)  Dana will buy more salads now because they are relatively less expensive.
B)  Dana will be able to buy less of both goods.
C)  Dana will derive more utility from each item, because she values each one more now that she's poorer.
D)  All of these are correct.E) B) and C)
F) A) and D)

Question 3

Which of the following statements about a budget constraint is true?

Accepted Answer

A)  Each bundle gives an individual a different amount of utility and costs a different amount of money.
B)  Each bundle gives an individual a different amount of utility, but costs the same amount of money.
C)  Each bundle gives an individual the same amount of utility and costs the same amount of money.
D)  Each bundle gives an individual the same amount of utility, but costs a different amount of money.E) B) and D)
F) A) and D)

Question 4

Grace has received a utility of 8 from eating a slice of pizza. If she chooses to eat a second slice:

Accepted Answer

A)  she will experience a drop in total utility.
B)  she would not be acting rationally.
C)  she will experience an increase in total utility.
D)  None of these are true.E) A) and B)
F) A) and D)

Question 5

Taylor is interviewing for a job. She decides to wear a suit to the interview in an effort to make a good first impression, even though she would be more comfortable in a simpler outfit of slacks and a blouse. Economic theory:

Accepted Answer

A)  cannot explain why someone would choose an outfit that provides less utility than another.
B)  would suggest that making a good impression will bring Taylor more utility than wearing the more comfortable outfit and making a bad impression.
C)  would suggest that Taylor values what the interviewer thinks and will derive negative utility if the interviewer is not impressed.
D)  would say that Taylor is behaving irrationally by choosing to wear a suit instead of the more comfortable outfit.E) B) and C)
F) B) and D)

Question 6

The principle of diminishing marginal utility states that:

Accepted Answer

A)  individuals rarely maximize their total utility, as it continually diminishes over time.
B)  the change in total utility that comes from consuming one additional unit of a good or service fluctuates depending on how many units are consumed in total.
C)  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)  the additional utility gained from consuming different bundles of goods and services tends to be smaller than the utility gained from consuming just one bundle of goods and services.E) C) and D)
F) B) and D)

Question 7

If successive units of a good are consumed, the marginal utility gained typically:

Accepted Answer

A)  increases at the same rate for all people.
B)  increases at different rates for different people.
C)  decreases at the same rate for all people.
D)  decreases at different rates for different people.E) None of the above
F) All of the above

Question 8

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 $50. Which of the following would be a point on Sam's budget constraint?

Accepted Answer

A)  20 tanning sessions and 8 rounds of golf
B)  10 tanning sessions and 5 rounds of golf
C)  10 tanning sessions and 4 rounds of golf
D)  5 Tanning sessions and 2 rounds of golfE) A) and B)
F) A) and C)

Question 9

Altruism describes a motive for action in which a person's utility:

Accepted Answer

A)  is unaffected when another's utility increases.
B)  is decreased when another's utility increases.
C)  is increased when another's utility increases.
D)  becomes negative when another's utility increases.E) B) and C)
F) A) and D)

Question 10

In general, the substitution effect of an increase in the price of a normal good will cause an individual to buy _____ of that good and _____ of others because it is relatively _____ expensive.

Accepted Answer

A)  more; more; less
B)  less; more; less
C)  more; less; less
D)  less; more; moreE) None of the above
F) A) and D)

Question 11

While checking out at the pet store, Diya is asked if she would like to donate to the World Wildlife Fund. She decides to donate $5, and in exchange her name is written on a heart decal that is hung in the store's window. This is an example of the economic concept of:

Accepted Answer

A)  marginal utility.
B)  altruism.
C)  reciprocity.
D)  selfishness.E) A) and D)
F) B) and C)

Question 12

Madison has set aside $24 for her snack budget this month. Her favorite snacks are ice cream and chips. The price of a pint of ice cream is $4 and the price of a bag of chips is $3. She currently consumes three pints of ice cream and four bags of chips each month. If the price of a pint of ice cream drops to $3, the substitution effect predicts that Madison will consume:

Accepted Answer

A)  more ice cream and more chips.
B)  equal amounts of ice cream and chips.
C)  more ice cream and fewer chips.
D)  less ice cream and more chips.E) All of the above
F) C) and D)

Question 13

Assume Kayla's budget constraint is represented in the graph shown. If the price of comic books decreases, the slope of Kayla's budget constraint will become _____, reflecting the fact that _____ are now relatively _____ expensive.

Accepted Answer

A)  steeper; video games; less
B)  flatter; video games; more
C)  steeper; comic books; less
D)  flatter; comic books; moreE) All of the above
F) B) and C)

Question 14

When the price of one good changes, while the prices of all other goods stay the same, the change in relative prices:

Accepted Answer

A)  is reflected in a change in the slope of the budget constraint.
B)  can be thought of as a change in the opportunity costs of each good.
C)  is reflected in a change in the marginal utility per dollar spent on each good.
D)  All of these statements are true.E) B) and D)
F) B) and C)

Question 15

Neema has an hour of free time she can spend doing one of three activities. Spending the hour reading would give her a utility of 4, playing video games would give her a utility of 2, and jogging would give her a utility of 6. Based on this information, economists could predict that Neema will:

Accepted Answer

A)  read.
B)  play video games.
C)  go jogging.
D)  do nothing, since no activity gives a utility greater than 10.E) A) and D)
F) All of the above

Question 16

Olivia decides to forgo a third slice of pizza and eats an ice cream cone instead. This behavior exemplifies the economic concept of:

Accepted Answer

A)  diminishing marginal utility.
B)  altruism.
C)  reciprocity.
D)  selfishness.E) A) and B)
F) A) and C)

Question 17

If the graph shown represents Taylor's budget constraint, which of the following consumption bundles could Taylor choose?I. Four video games and twelve comic booksII. Three video games and three comic booksIII. Two video games and eight comic booksIV. One video game and six comic books

Accepted Answer

A)  I only
B)  II and III
C)  II and IV
D)  I, II, and IIIE) All of the above
F) A) and D)

Question 18

Vihaan works for an environmental agency. Every day he brings a reusable water bottle to work, which he fills from the water purifier as needed, rather than buying plastic, disposable spring water bottles. Joe most likely derives utility from:

Accepted Answer

A)  the taste of purified water from his reusable bottle.
B)  the knowledge that he is doing something good for the environment by avoiding plastic bottles.
C)  the knowledge that others in his firm observe his environmentally-friendly choice.
D)  all three of these sources.E) None of the above
F) A) and B)

Question 19

Ethan has $150 a month to spend on two normal goods-books and movie theater tickets. 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 drops to $10, the substitution effect predicts that Ethan will consume:

Accepted Answer

A)  more books and more movies.
B)  fewer books and fewer movies.
C)  more books and fewer movies.
D)  fewer books and more movies.E) B) and C)
F) All of the above

Question 20

Quinn has $100 to spend on either bowling or eating out each month. It costs $10 to bowl for a night and $20 for Quinn to eat at a restaurant. Which of the following would be a point on Quinn budget constraint?

Accepted Answer

A)  4 nights of bowling and 3 trips to the restaurant
B)  3 nights of bowling and 4 trips to the restaurant
C)  2 nights of bowling and 5 trips to the restaurant
D)  10 nights of bowling and 5 trips to the restaurantE) A) and B)
F) None of the above

Exam 7: Consumer Behavior

Neema has an hour of free time she can spend doing one of three activities. Spending the hour reading would give her a utility of 4, playing video games would give her a utility of 2, and jogging would give her a utility of 6. Based on this information, economists could predict that Neema will:

Correct Answer
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When the price of one good changes, while the prices of all other goods stay the same, the change in relative prices:

Correct Answer
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Grace has received a utility of 8 from eating a slice of pizza. If she chooses to eat a second slice:

Correct Answer
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Which of the following statements about a budget constraint is true?

Correct Answer
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Altruism describes a motive for action in which a person's utility:

Correct Answer
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Correct Answer
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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 $50. Which of the following would be a point on Sam's budget constraint?

Correct Answer
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The principle of diminishing marginal utility states that:

Correct Answer
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Assume Kayla's budget constraint is represented in the graph shown. If the price of comic books decreases, the slope of Kayla's budget constraint will become ___, reflecting the fact that _ are now relatively ___ expensive.

Correct Answer
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Assume Hannah's budget constraint is represented in the graph shown. If the price of movie theater tickets increases, the slope of Hannah's budget constraint will become ___, reflecting the fact that _ are now relatively ___ expensive.

Correct Answer
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In general, the substitution effect of an increase in the price of a normal good will cause an individual to buy ___ of that good and _ of others because it is relatively ___ expensive.

Correct Answer
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Quinn has $100 to spend on either bowling or eating out each month. It costs $10 to bowl for a night and $20 for Quinn to eat at a restaurant. Which of the following would be a point on Quinn budget constraint?

Correct Answer
verified

Olivia decides to forgo a third slice of pizza and eats an ice cream cone instead. This behavior exemplifies the economic concept of:

Correct Answer
verified

Vihaan works for an environmental agency. Every day he brings a reusable water bottle to work, which he fills from the water purifier as needed, rather than buying plastic, disposable spring water bottles. Joe most likely derives utility from:

Correct Answer
verified

While checking out at the pet store, Diya is asked if she would like to donate to the World Wildlife Fund. She decides to donate $5, and in exchange her name is written on a heart decal that is hung in the store's window. This is an example of the economic concept of:

Correct Answer
verified

Correct Answer
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If successive units of a good are consumed, the marginal utility gained typically:

Correct Answer
verified

If the graph shown represents Taylor's budget constraint, which of the following consumption bundles could Taylor choose?I. Four video games and twelve comic booksII. Three video games and three comic booksIII. Two video games and eight comic booksIV. One video game and six comic books

Correct Answer
verified

Taylor is interviewing for a job. She decides to wear a suit to the interview in an effort to make a good first impression, even though she would be more comfortable in a simpler outfit of slacks and a blouse. Economic theory:

Correct Answer
verified

Assume Dana's budget constraint is represented in the graph shown. If Dana's income to spend on these two items decreases, which of the following could be said?

Correct Answer
verified

Exam 7: Consumer Behavior

Neema has an hour of free time she can spend doing one of three activities. Spending the hour reading would give her a utility of 4, playing video games would give her a utility of 2, and jogging would give her a utility of 6. Based on this information, economists could predict that Neema will:

Correct AnswerverifiedShow Answer

When the price of one good changes, while the prices of all other goods stay the same, the change in relative prices:

Correct AnswerverifiedShow Answer

Grace has received a utility of 8 from eating a slice of pizza. If she chooses to eat a second slice:

Correct AnswerverifiedShow Answer

Which of the following statements about a budget constraint is true?

Correct AnswerverifiedShow Answer

Altruism describes a motive for action in which a person's utility:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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 $50. Which of the following would be a point on Sam's budget constraint?

Correct AnswerverifiedShow Answer

The principle of diminishing marginal utility states that:

Correct AnswerverifiedShow Answer

Assume Kayla's budget constraint is represented in the graph shown. If the price of comic books decreases, the slope of Kayla's budget constraint will become _____, reflecting the fact that _____ are now relatively _____ expensive.

Correct AnswerverifiedShow Answer

Assume Hannah's budget constraint is represented in the graph shown. If the price of movie theater tickets increases, the slope of Hannah's budget constraint will become _____, reflecting the fact that _____ are now relatively _____ expensive.

Correct AnswerverifiedShow Answer

In general, the substitution effect of an increase in the price of a normal good will cause an individual to buy _____ of that good and _____ of others because it is relatively _____ expensive.

Correct AnswerverifiedShow Answer

Quinn has $100 to spend on either bowling or eating out each month. It costs $10 to bowl for a night and $20 for Quinn to eat at a restaurant. Which of the following would be a point on Quinn budget constraint?

Correct AnswerverifiedShow Answer

Olivia decides to forgo a third slice of pizza and eats an ice cream cone instead. This behavior exemplifies the economic concept of:

Correct AnswerverifiedShow Answer

Vihaan works for an environmental agency. Every day he brings a reusable water bottle to work, which he fills from the water purifier as needed, rather than buying plastic, disposable spring water bottles. Joe most likely derives utility from:

Correct AnswerverifiedShow Answer

While checking out at the pet store, Diya is asked if she would like to donate to the World Wildlife Fund. She decides to donate $5, and in exchange her name is written on a heart decal that is hung in the store's window. This is an example of the economic concept of:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If successive units of a good are consumed, the marginal utility gained typically:

Correct AnswerverifiedShow Answer

If the graph shown represents Taylor's budget constraint, which of the following consumption bundles could Taylor choose?I. Four video games and twelve comic booksII. Three video games and three comic booksIII. Two video games and eight comic booksIV. One video game and six comic books

Correct AnswerverifiedShow Answer

Taylor is interviewing for a job. She decides to wear a suit to the interview in an effort to make a good first impression, even though she would be more comfortable in a simpler outfit of slacks and a blouse. Economic theory:

Correct AnswerverifiedShow Answer

Assume Dana's budget constraint is represented in the graph shown. If Dana's income to spend on these two items decreases, which of the following could be said?

Correct AnswerverifiedShow Answer

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Assume Kayla's budget constraint is represented in the graph shown. If the price of comic books decreases, the slope of Kayla's budget constraint will become ___, reflecting the fact that _ are now relatively ___ expensive.

Correct Answer
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Assume Hannah's budget constraint is represented in the graph shown. If the price of movie theater tickets increases, the slope of Hannah's budget constraint will become ___, reflecting the fact that _ are now relatively ___ expensive.

Correct Answer
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In general, the substitution effect of an increase in the price of a normal good will cause an individual to buy ___ of that good and _ of others because it is relatively ___ expensive.

Correct Answer
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