Question 1

FIGURE 6-7
-Refer to Figure 6-7. Suppose that price is P0. The market value of the quantity purchased is given by the area

Accepted Answer

A)   under the demand curve to the left of Q0.
B)   under the demand curve.
C)   below P0 and to the left of Q0.
D)   under the demand curve and above P0.
E)   under the demand curve and to the right of Q0.F) B) and C)
G) A) and B)

Question 2

In which of the following situations will an individualʹs purchasing power be unaffected?

Accepted Answer

A)   money income doubles and the prices of all goods and services are cut in half
B)   money income remains constant and the prices of all goods and services double
C)   money income is cut in half and the prices of all goods and services double
D)   money income is cut in half and the prices of all goods and services remains constant
E)   money income doubles and the prices of all goods and services doubleF) B) and E)
G) All of the above

Question 3

FIGURE 6-2
-Refer to Figure 6-2. Suppose that the price of Y is $1 and the consumerʹs income is $10. Initially, the price of X is $2 and the consumer is buying 4 units of good Y. If the price of X then falls to $1, which of the following pairs of quantities of X correctly completes the demand schedule below?

Accepted Answer

A)   2; 4
B)   4; 4
C)   4; 3
D)   6; 3
E)   6; 4F) None of the above
G) B) and D)

Question 4

The diagram below shows a set of budget lines facing a household.
  FIGURE 6-8
-Refer to Figure 6-8. The movement of the budget line from ab to ef could be caused by

Accepted Answer

A)   a decrease in money income.
B)   a decrease in the price of either food or housing.
C)   an equal percentage decrease in the price of both food and housing.
D)   an equal percentage increase in the price of both food and housing.
E)   an increase in the price of either food or housing.F) A) and B)
G) A) and C)

Question 5

Suppose a utility-maximizing person consumes only two goods, hamburgers and milkshakes. Suppose the price of milkshakes rises and all other variables remain constant. As a result, this person will certainly

Accepted Answer

A)   purchase more milkshakes and fewer hamburgers.
B)   reduce his/her consumption of both milkshakes and hamburgers.
C)   consume more hamburgers and the same amount of milkshakes.
D)   not increase his consumption of both milkshakes and hamburgers.
E)   increase his/her consumption of milkshakes.F) A) and E)
G) B) and E)

Question 6

FIGURE 6-2
-Refer to Figure 6-2. Suppose that the price of X is $2, the price of Y is $1, the consumerʹs income is $10, and the consumer is buying 3 units of good X and 4 units of good Y. What is the total utility the consumer obtains from this combination of X and Y?

Accepted Answer

A)   18
B)   30
C)   40
D)   60
E)   72F) All of the above
G) A) and D)

Question 7

The ʺlawʺ of diminishing marginal utility implies that the

Accepted Answer

A)   first unit of a good consumed will contribute most to the consumerʹs satisfaction.
B)   last unit of a good consumed will contribute most to the consumerʹs satisfaction.
C)   total utility is negative.
D)   total utility is constant as more units are consumed.
E)   marginal utility of a good diminishes over time.F) D) and E)
G) All of the above

Question 8

FIGURE 6-2
-The Smith family is allocating its monthly household expenditure between only two goods, food and clothing. Suppose that the price of food is $12 per unit, and the price of clothing is $16 per unit and that the marginal utility that the family is receiving from its consumption of clothing is currently 200. What is the familyʹs marginal utility from its consumption of food if it is maximizing its utility?

Accepted Answer

A)   200
B)   150
C)   75
D)   16
E)   12F) B) and D)
G) B) and C)

Question 9

The figures below show Chrisʹs consumption of specialty coffee per week.
  FIGURE 6-10
-Refer to Figure 6-10. The line connecting points A, B and C is . The line connecting points D, E and F is .

Accepted Answer

A)   the price-consumption line; the demand curve
B)   the income-consumption line; the demand curve
C)   the income-consumption line; the budget line
D)   the budget line; the price-consumption line
E)   the demand curve; the budget lineF) B) and E)
G) A) and B)

Question 10

FIGURE 6-5
-Refer to Figure 6-5. For both goods, the price increases from P0 to P1. The substitution effect is illustrated by the change in quantity demanded from A to B; the income effect is illustrated by the change in quantity demanded from B to C. Good Y is certainly an)  good.

Accepted Answer

A)   inferior
B)   normal
C)   luxury
D)   necessity
E)   GiffenF) C) and D)
G) B) and E)

Question 11

FIGURE 6-7
-Refer to Figure 6-7. Suppose that price is P0. Total consumer surplus is then given by the area

Accepted Answer

A)   under the demand curve to the left of Q0.
B)   below P0 and to the left of Q0.
C)   under the demand curve to the left of Q0, but above P0.
D)   under the entire demand curve.
E)   above the market price.F) A) and E)
G) A) and D)

Question 12

The table below shows the quantities of toffee bars and bags of cashews that a consumer could consume over a 1-week period.  TABLE 6-1
-Refer to Table 6-1. If this consumer purchases 3 toffee bars and 4 bags of cashews per week, his/her total utility will be

Accepted Answer

A)   7.
B)   23.
C)   31.
D)   54.
E)   57.F) A) and D)
G) All of the above

Question 13

If all consumers in an economy have maximized their utility, and they face a given set of market prices, then each consumer will have identical

Accepted Answer

A)   total utilities for each good.
B)   marginal utilities for each good.
C)   marginal utilities per unit of each good.
D)   ratios of marginal utility to price for each good.
E)   consumption of each good.F) All of the above
G) B) and C)

Question 14

An indifference curve plotted for two different goods on the axes

Accepted Answer

A)   shifts when real income changes.
B)   shows all combinations of the two goods that give the same level of utility.
C)   changes its slope as the relative prices of the two goods change.
D)   shows the combinations of the two goods that will just use up a consumerʹs income.
E)   shows the different combinations of two goods that the same income can purchase.F) B) and C)
G) C) and D)

Question 15

FIGURE 6-9
-Refer to Figure 6-9. In part i) , the consumer is able to move from point A to point B because of

Accepted Answer

A)   a decrease in the price of milk.
B)   a decrease in the price of bread.
C)   a decrease in money income.
D)   an increase in real income.
E)   a decrease in the price of one good and an increase in money income.F) D) and E)
G) C) and D)

Question 16

FIGURE 6-2
-Refer to Figure 6-2. Suppose the price of Y is $1, the consumerʹs income is $10, and the consumer is currently buying 3 units of good X and 4 units of good Y. If this consumer is maximizing her utility, then the price of X must be

Accepted Answer

A)   $1.
B)   $2.
C)   $3.
D)   $4.
E)   Impossible to tell with the given information.F) All of the above
G) C) and D)

Question 17

Assume the quantity of good X is measured on the horizontal axis and the quantity of good Y on the vertical axis. Initial prices are PX = $5 and PY = $10. The consumerʹs income is $100. If PY increases to $20, then

Accepted Answer

A)   the entire budget line shifts parallel toward the origin.
B)   the budget line will rotate toward the origin, slope remaining constant.
C)   the budget line will rotate toward the origin with the slope changing from 1/2 to 1/4 in absolute values) .
D)   the entire budget line shifts parallel away from the origin.
E)   the budget line will rotate away from the origin with the slope changing from 1/4 to 1/2 in absolute values) .F) C) and D)
G) A) and D)

Question 18

Assume you are consuming two goods, X and Y. Suppose the absolute prices for X and Y remain unchanged, but your money income falls by 50%. What happens to your consumption of good X?

Accepted Answer

A)   it increases
B)   it stays the same
C)   it increases or decreases, depending on whether it is normal or inferior
D)   it decreases
E)   it decreases by 50%F) B) and C)
G) D) and E)

Question 19

FIGURE 6-11
-Refer to Figure 6-11. The line joining points E1 and E3 is known as , which shows how .

Accepted Answer

A)   a price consumption line; consumption changes as one price changes, with money income held constant
B)   an income consumption line; consumption changes as income changes, with relative prices held constant
C)   a price consumption line; consumption changes as money income and relative prices change
D)   an income consumption line; consumption changes with changing relative prices and constant incomeE) A) and B)
F) All of the above

Question 20

A consumer maximizes his or her utility when expenditures are allocated such that

Accepted Answer

A)   the total utility from each good is equal.
B)   the total number of dollars spent on each good is equal.
C)   the utility received from the last unit of each good is equal.
D)   the utility received per dollar spent on the last unit of each good is equal.
E)   the marginal utility is zero for each good consumed utility.F) B) and E)
G) None of the above

Exam 6: Consumer Behaviour

The figures below show Chrisʹs consumption of specialty coffee per week. FIGURE 6-10 -Refer to Figure 6-10. The line connecting points A, B and C is . The line connecting points D, E and F is .

Correct Answer
verified

The ʺlawʺ of diminishing marginal utility implies that the

Correct Answer
verified

If all consumers in an economy have maximized their utility, and they face a given set of market prices, then each consumer will have identical

Correct Answer
verified

An indifference curve plotted for two different goods on the axes

Correct Answer
verified

FIGURE 6-7 -Refer to Figure 6-7. Suppose that price is P0. Total consumer surplus is then given by the area

Correct Answer
verified

FIGURE 6-2 -Refer to Figure 6-2. Suppose that the price of X is $2, the price of Y is $1, the consumerʹs income is $10, and the consumer is buying 3 units of good X and 4 units of good Y. What is the total utility the consumer obtains from this combination of X and Y?

Correct Answer
verified

Assume you are consuming two goods, X and Y. Suppose the absolute prices for X and Y remain unchanged, but your money income falls by 50%. What happens to your consumption of good X?

Correct Answer
verified

FIGURE 6-2 -Refer to Figure 6-2. Suppose the price of Y is $1, the consumerʹs income is $10, and the consumer is currently buying 3 units of good X and 4 units of good Y. If this consumer is maximizing her utility, then the price of X must be

Correct Answer
verified

FIGURE 6-5 -Refer to Figure 6-5. For both goods, the price increases from P0 to P1. The substitution effect is illustrated by the change in quantity demanded from A to B; the income effect is illustrated by the change in quantity demanded from B to C. Good Y is certainly an) good.

Correct Answer
verified

FIGURE 6-11 -Refer to Figure 6-11. The line joining points E1 and E3 is known as , which shows how .

Correct Answer
verified

Assume the quantity of good X is measured on the horizontal axis and the quantity of good Y on the vertical axis. Initial prices are PX = $5 and PY = $10. The consumerʹs income is $100. If PY increases to $20, then

Correct Answer
verified

The table below shows the quantities of toffee bars and bags of cashews that a consumer could consume over a 1-week period. TABLE 6-1 -Refer to Table 6-1. If this consumer purchases 3 toffee bars and 4 bags of cashews per week, his/her total utility will be

Correct Answer
verified

FIGURE 6-7 -Refer to Figure 6-7. Suppose that price is P0. The market value of the quantity purchased is given by the area

Correct Answer
verified

Suppose a utility-maximizing person consumes only two goods, hamburgers and milkshakes. Suppose the price of milkshakes rises and all other variables remain constant. As a result, this person will certainly

Correct Answer
verified

In which of the following situations will an individualʹs purchasing power be unaffected?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

FIGURE 6-9 -Refer to Figure 6-9. In part i) , the consumer is able to move from point A to point B because of

Correct Answer
verified

The diagram below shows a set of budget lines facing a household. FIGURE 6-8 -Refer to Figure 6-8. The movement of the budget line from ab to ef could be caused by

Correct Answer
verified

A consumer maximizes his or her utility when expenditures are allocated such that

Correct Answer
verified

Exam 6: Consumer Behaviour

The figures below show Chrisʹs consumption of specialty coffee per week. FIGURE 6-10 -Refer to Figure 6-10. The line connecting points A, B and C is . The line connecting points D, E and F is .

Correct AnswerverifiedShow Answer

The ʺlawʺ of diminishing marginal utility implies that the

Correct AnswerverifiedShow Answer

If all consumers in an economy have maximized their utility, and they face a given set of market prices, then each consumer will have identical

Correct AnswerverifiedShow Answer

An indifference curve plotted for two different goods on the axes

Correct AnswerverifiedShow Answer

FIGURE 6-7 -Refer to Figure 6-7. Suppose that price is P0. Total consumer surplus is then given by the area

Correct AnswerverifiedShow Answer

FIGURE 6-2 -Refer to Figure 6-2. Suppose that the price of X is $2, the price of Y is $1, the consumerʹs income is $10, and the consumer is buying 3 units of good X and 4 units of good Y. What is the total utility the consumer obtains from this combination of X and Y?

Correct AnswerverifiedShow Answer

Assume you are consuming two goods, X and Y. Suppose the absolute prices for X and Y remain unchanged, but your money income falls by 50%. What happens to your consumption of good X?

Correct AnswerverifiedShow Answer

FIGURE 6-2 -Refer to Figure 6-2. Suppose the price of Y is $1, the consumerʹs income is $10, and the consumer is currently buying 3 units of good X and 4 units of good Y. If this consumer is maximizing her utility, then the price of X must be

Correct AnswerverifiedShow Answer

FIGURE 6-5 -Refer to Figure 6-5. For both goods, the price increases from P0 to P1. The substitution effect is illustrated by the change in quantity demanded from A to B; the income effect is illustrated by the change in quantity demanded from B to C. Good Y is certainly an) good.

Correct AnswerverifiedShow Answer

FIGURE 6-11 -Refer to Figure 6-11. The line joining points E1 and E3 is known as , which shows how .

Correct AnswerverifiedShow Answer

Assume the quantity of good X is measured on the horizontal axis and the quantity of good Y on the vertical axis. Initial prices are PX = $5 and PY = $10. The consumerʹs income is $100. If PY increases to $20, then

Correct AnswerverifiedShow Answer

The table below shows the quantities of toffee bars and bags of cashews that a consumer could consume over a 1-week period. TABLE 6-1 -Refer to Table 6-1. If this consumer purchases 3 toffee bars and 4 bags of cashews per week, his/her total utility will be

Correct AnswerverifiedShow Answer

FIGURE 6-7 -Refer to Figure 6-7. Suppose that price is P0. The market value of the quantity purchased is given by the area

Correct AnswerverifiedShow Answer

Suppose a utility-maximizing person consumes only two goods, hamburgers and milkshakes. Suppose the price of milkshakes rises and all other variables remain constant. As a result, this person will certainly

Correct AnswerverifiedShow Answer

In which of the following situations will an individualʹs purchasing power be unaffected?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

FIGURE 6-9 -Refer to Figure 6-9. In part i) , the consumer is able to move from point A to point B because of

Correct AnswerverifiedShow Answer

The diagram below shows a set of budget lines facing a household. FIGURE 6-8 -Refer to Figure 6-8. The movement of the budget line from ab to ef could be caused by

Correct AnswerverifiedShow Answer

A consumer maximizes his or her utility when expenditures are allocated such that

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified