Q&A Hero

Q: In human behavioral economics, a choice to do an activity means a. choosing not to do the next best activity. b. choosing not to do a more desirable activity. c. evaluating that activity versus an alternative group of activities. d. that activity should be put at the top of a to-do list. e. that activity must have an observable characteristic to be valid in a behavioral sense.

Q: In July 2012, it cost $125 to purchase a ticket to visit the parks at Disneyland for one day. A five-day pass to the same parks cost only $290. Disneyland charges less for the additional days because ofa. the real-income effect. b. diminishing marginal utility. c. marginal utility.d. the substitution effect.e. the consumer optimum.

Q: Individuals who havent studied economics may not understand how all-you-can-eat buffets manage to make money. This can be explained by the concept of ________, which makes each trip to the buffet line less satisfactory than the previous one.a. real-income effect b. marginal utility c. diminishing marginal utilityd. the substitution effecte. the consumer optimum

Q: Refer to the following figure to answer the following questions: When marginal utility declines as consumption increases, the consumer is experiencinga. diminishing marginal utility.b. the real-income effect. c. marginal utility.d. the substitution effect.e. the consumer optimum.

Q: Refer to the following figure to answer the following questions: Diminishing marginal utilitya. occurs when the additional utility for each good declines as consumption increases.b. is the additional satisfaction derived from consuming one more unit of a good or service.c. is the combination of goods and services that maximizes utility for a given income.d. occurs when a consumer buys more of a good as a result of a relative price change.e. occurs when there is a change in purchasing power as a result of a change in the price of a good.

Q: Refer to the following figure to answer the following questions: When given the marginal utility of the first five units of a product, we can calculate the total utility bya. finding the difference between the fourth and fifth units.b. finding the difference between the first and fifth units.c. looking at the marginal utility of the fifth unit.d. adding the fourth and fifth units.e. adding the marginal utilities of the first five units.

Q: Refer to the following figure to answer the following questions: This consumer experiences diminishing marginal utilitya. across all levels of consumption.b. until he consumes his fifth cupcake.c. until he consumes his seventh cupcake.d. from his seventh cupcake on.e. for his fifth and sixth cupcakes only.

Q: Refer to the following figure to answer the following questions: Total utility is highest at the ________ cupcake.a. first b. eighth c. ninthd. seventhe. sixth

Q: Refer to the following figure to answer the following questions: Marginal utility is negativea. at all levels of consumption.b. from the consumers eighth cupcake on.c. never.d. for the consumers fifth and sixth cupcakes only.e. when marginal utility is positive.

Q: Refer to the following table to answer the following questions:SodasConsumedTotal Utility(Utils per Soda)00135260380490590675750820This consumer experiences diminishing marginal utilitya. over all levels of consumption.b. up until she consumes her fifth soda.c. up until she consumes her sixth soda.d. from her sixth soda on.e. for her fifth and sixth sodas only.

Q: Marginal utility is negative a. at all levels of consumption. b. from the sixth soda on. c. never. d. for the fifth and sixth sodas only. e. when marginal utility is positive.

Q: This consumer experiences diminishing marginal utility a. over all levels of consumption. b. up until she consumes her fifth taco. c. up until she consumes her sixth taco. d. from her sixth taco on. e. for her fifth and sixth tacos only.

Q: Marginal utility is negative a. at all levels of consumption. b. from this consumers sixth taco on. c. never. d. for this consumers fifth and sixth tacos only. e. when marginal utility is positive.

Q: Refer to the following figure to answer the following questions:Total utility is negativea. at all levels of consumption.b. from this consumers sixth taco on.c. at no time.d. for this consumers fifth and sixth tacos only.e. when marginal utility is positive.

Q: Refer to the following figure to answer the following questions:The marginal utility experienced from consuming the seventh taco isa. 32 utils. b. 9 utils. c. 27 utils.d. 12 utils.e. 3 utils.

Q: When marginal utility is negative, total utilitya. increases. b. decreases. c. can increase or decrease.d. stays the same.e. is equal to zero.

Q: When marginal utility is positive, total utilitya. increases. b. decreases. c. can increase or decrease.d. stays the same.e. equals zero.

Q: The additional satisfaction derived from consuming one more unit of a good or service is calleda. diminishing marginal utility. b. the real-income effect. c. marginal utility.d. the substitution effect.e. the consumer optimum.

Q: Marginal utility a. occurs when total utility declines as consumption increases. b. is the additional satisfaction derived from consuming one more unit of a good or service. c. is the combination of goods and services that maximizes utility for a given income. d. occurs when a consumer buys more of a good as a result of a relative price change. e. occurs when there is a change in purchasing power as a result of a change in the price of a good.

Q: Umberto gets 20 utils from consuming guacamole and 15 utils from consuming salsa; Fabian gets 30 utils from the same guacamole and 15 utils from salsa. Given this information, a researcher can conclude that a. Fabian gets more satisfaction from both guacamole and salsa. b. Umberto will get more satisfaction from consuming one more unit of guacamole than Fabian will. c. Umberto and Fabian prefer to consume a combination of guacamole and salsa. d. Umberto and Fabian both prefer guacamole to salsa. e. Umberto will get more satisfaction from consuming one more unit of salsa than Fabian will.

Q: Jenna and Walter are on a road trip across the country. They both say that they get 25 utils from peanut butter sandwiches and 25 utils from trail mix. Knowing this, we can conclude that Jenna a. gets the same satisfaction from peanut butter sandwiches that Walter does. b. gets more satisfaction from trail mix than Walter does. c. gets more satisfaction from trail mix than from peanut butter sandwiches. d. and Walter are both indifferent between other food than peanut butter sandwiches or trail mix. e. and Walter will consume the same amount of peanut butter sandwiches and trail mix on the road trip.

Q: A big concern with trying to measure utility is that a. individuals cannot place utility values on different goods and services. b. it is difficult to measure marginal utility. c. there is no distinction between utility for goods and utility for services. d. to measure utility, you need monetary values of the goods and services. e. each individual has a unique personal scale for his or her utility measures.

Q: Economists expect the firm to maximize ________, the laborer to accept the best ________, and the consumer to find the combination of goods that gives the most ________.a. utility; profits; offers b. utility; offer; profit c. profit; offer; utilityd. profits; utility; offerse. offers; profits; utility

Q: Which of the following statements is true about utility? a. Economists measure utility with a unit they refer to as an utte. b. Everyone receives different levels of satisfaction from the same good or service. c. All products produce the same level of utility. d. Everyone receives the same level of satisfaction from the same good or service. e. Utility is easy to measure across individuals.

Q: When making personal buying decisions, two important issues to consider are the a. satisfaction you receive from the choices that you make and the satisfaction others receive from your choices. b. satisfaction others receive from your choices and the constraints of a limited budget. c. shape of your indifference curve and the satisfaction you receive from the choices that you make. d. satisfaction you receive from the choices that you make and the constraints of a limited budget. e. satisfaction you receive from the choices that you make and the future value of the purchases that you make.

Q: American consumers make thousands of purchasing decisions each year. These decisions a. involve several trade-offs. b. are always consistent with economic theory. c. do not depend on the consumers budgets. d. are called utils. e. always maximize utility.

Q: Utility theory seeks to measurea. supply. b. costs. c. ability.d. profits.e. satisfaction.

Q: CHAPTER 16: Consumer ChoiceA measure of the relative levels of satisfaction that consumers enjoy from the consumption of goods and services is calleda. consumer optimum. b. the real-income effect. c. utility.d. the substitution effect.e. the diamondwater paradox.

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Q: SHORT ANSWER1. Anon is a graduate student at Lock Haven University studying human behavior. Three subjects, Felicity, Terrance, and Lola, listed their utility for pineapple and watermelon. Anon believes he will be able to tell which subject likes pineapple the most by referring to the levels of utility each one reported. His adviser, Dr. Util, tells him his research is flawed. Explain why Dr. Util feels this way.

Q: A new ________ that is parallel to the first one, but just tangent to the new indifference curve, will reveal the real-income effect.a. maximization point b. perfect substitute curve c. perfect complement curved. budget constraint linee. indifference curve

Q: For a low-priced good, the ________ is generally negligible and the substitution effect tends to ________.a. maximization point; disappear b. maximization point; magnify c. real-income effect; yieldd. real-income effect; dominatee. complement effect; increase

Q: Graphing only a change in price for a good does not distinguish the contribution of the ________ from the ________. a. substitution effect; real-income effect b. perfect substitute; perfect complement c. indifference curve; maximization point d. rotation; shift e. consumer optimum; marginal rate of substitution

Q: A change in price results in a(n) ________ of the budget constraint line.a. rotation b. shift c. stretchd. narrowinge. widening

Q: The maximization point is the location at which an indifference curve and the budget constraint line a. parallel each other. b. completely overlap. c. are tangent to one another. d. are secant to one another. e. intersect a second indifference curve.

Q: The slope of the indifference curve for perfect substitutes a. is either positive or 0. b. is always positive. c. is always negative. d. varies based on the marginal rate of substitution. e. varies based on the marginal rate of utility.

Q: A typical indifference curve that reflects the trade-off between two goods that are not ________ or ________ has a marginal rate of substitution that falls between these two extremes. a. goods; bads b. perfect substitutes; perfect complements c. opportunity costs; utility costs d. right angles; straight lines e. intersections; intrasections

Q: ________ exist(s) when a consumer is interested in consuming two goods in fixed proportions.a. Perfect substitutes b. Ratio complements c. Perfect complementsd. Unit complementse. Complementary rigidity

Q: ________ exist(s) when a consumer is completely indifferent between two goods.a. Perfect complements b. Perfect substitutes c. Perfect indifferenced. Imperfect selectione. Improper preference

Q: Perfect substitutes produce an indifference curve with a(n) ________ marginal rate of substitution.a. increasing b. decreasing c. inversed. constante. right-angle

Q: Each point along an indifference curve indicates a combination at which a consumer does not have a preference. Two divergent indifference curves can produce at least two points where there are distinct preferences. Therefore, indifference curves CANNOTa. trend toward zero. b. bisect either axes. c. be parallel to one another.d. trend toward infinity.e. intersect one another.

Q: A consumer cannot be indifferent about two combinations that yield disparate levels of utility. Therefore, an indifference curve cannot bea. flat. b. linear.c. thin. d. thick.e. segmented.

Q: Since two goods are subject to diminishing marginal utility, the marginal rate of substitution is a. constant. b. always decreasing. c. always increasing. d. the inverse slope of the indifference curve. e. variant.

Q: The marginal rate of substitution is obtained from two points ________ the indifference curve.a. along b. to the right of c. to the left ofd. tangent toe. above and below

Q: If a combination of items exists to the right of the budget constraint line, the consumer a. must consume less of one item in order to afford. b. cannot afford. c. must increase the variety of items in the combination. d. must decrease the variety of items in the combination. e. will be able to afford sometime in the future.

Q: In producing a budget constraint line for combinations of staples and paper clips, which are sold by the box, a student labels the points (0,5) and (10,0) along the line. Staples occupy the vertical axis, while paper clips are situated on the horizontal axis. Therefore, boxes of a. staples cost twice as much as boxes of paper clips. b. paper clips cost twice as much as boxes of staples. c. staples cost $10. d. paper clips cost $5. e. staples cost the same as boxes of paper clips.

Q: The ________ line, and the area underneath, contain all of the possible combinations that a consumer can afford.a. indifference b. Maginot c. optimizationd. redactione. budget constraint

Q: Why is the preferred path to the highest utility one in which both items are economic goods? a. Since indifference curves are not thick, there is only one path to the highest utility. b. Goods produce an upward-sloping curve and is the only way up to the maximization point. c. Goods reduce economic bads and permit movement to the maximization point from all four directions. d. People are unlikely to willingly pay in order to feel worse. e. The combination of goods produces both an upward- and a downward-sloping curve that converge at the maximization point.

Q: The point at which a certain combination of two goods yields the most utility is thea. interference point. b. indifference point. c. balance point.d. maximization point.e. intersection curve.

Q: A(n) ________ is a line of equal utility.a. maximization point b. interference point c. consumer optimumd. indifference curvee. substitution curve

Q: Consuming past the maximization point produces a(n) ________ marginal utility.a. indifferent b. positive c. negatived. equale. increasing

Q: When presented with two choices for afternoon entertainment, Riana has a clear favorite: going to the movies provides her with 40 utils, while attending a baseball game provides 32 utils. The price for both tickets is $5, causing Riana to choose the movies. What price for a baseball game ticket would cause Riana to choose that instead? a. $3.99 b. $4.00 c. $4.01 d. $1.60 e. The ticket price is irrelevant because the marginal utility will always be greater.

Q: A friend of Dylans is operating a concession stand for a youth sporting league and wants Dylans advice on pricing. He plans to sell popcorn for $4, but is unsure of the price to charge for peanuts. Popcorn provides Dylan with 36 utils, while peanuts provide 27 utils. Dylan offers his personal preference as a suggestion, so what is the maximum price Dylan is willing to pay for peanuts?a. $9 b. $7 c. $4d. $3e. $1.50

Q: When does an increase in price produce a substitution effect? a. only if purchasing power is impacted significantly b. only if there is a real-income effect c. only if marginal utility per dollar decreases relative to another good d. only if marginal utility per dollar increases relative to another good e. always

Q: When does a change in price produce a real-income effect? a. only if purchasing power is impacted significantly b. only if purchasing power is impacted negatively c. only if there is a substitution effect d. only if there is an optimum effect e. always

Q: After reading the nutritional label on the box of his favorite cookies, Ernesto was shocked to discover the high sugar content. As a result, cookies dont bring him the same satisfaction anymore, falling from 25 utils to 12 utils. Benefiting from more efficient machinery, Ernestos favorite cookie manufacturer also lowered the price per box. What happens to Ernestos marginal utility per dollar spent? a. It increases. b. It decreases. c. It stays the same. d. The rate of change decreases. e. There is not enough information to determine.

Q: Sharon has eaten a lot of pizza in the past few years. In fact, shes growing tired of pizza. Recently, she realized that pizza no longer brings her the same satisfaction, falling from 12 utils to 7 utils. Benefiting from higher productivity, Sharons favorite pizzeria also lowered prices from $2 to $1 per slice. What happens to Sharons marginal utility per dollar spent? a. It increases. b. It decreases. c. It stays the same. d. The rate of change decreases. e. There is not enough information to determine.