Q&A Hero

Q: The change in utils for each change in units consumed is known as thea. total utility. b. slope. c. diminishing marginal utility.d. unity of utility.e. marginal utility.

Q: ________ is the sum of the satisfaction gained from all additional units of consumption.a. Marginal utility b. Total utility c. Partial additive utilityd. Diminishing utilitye. Consumptive utility

Q: Utility is a balance between ________ and ________ factors.a. transitive; intransitive b. capital; labor c. economic; personald. production; consumptione. good; bad

Q: Freda and Stefano are presented with two dessert options: ice cream or cookies. Freda values ice cream at 5 utils and cookies at 10 utils. For Stefano, its 10 and 5, respectively. What can we assume with certainty? a. Stefano prefers cookies over ice cream. b. Freda prefers ice cream of over cookies. c. Fredas preference for ice cream is equal in magnitude to Stefanos preference for cookies. d. Fredas preference for cookies is equal in magnitude to Stefanos preference for ice cream. e. Freda prefers cookies, and Stefano prefers ice cream.

Q: A(n) ________ is a quantification of relative satisfaction.a. number b. util c. enjoymentd. marginalitye. model

Q: According to the following figure, the movement from point (4,3) to point A is a function of ________, while the subsequent movement from point A to point (2,3) results from ________.a. an increase in the price of pizza; a decrease in the price of Pepsib. a decrease in the price of pizza; an increase in the price of Pepsic. a combination of the substitution and real-income effects; a decrease in the price of pizzad. the substitution effect alone; the real-income effect alonee. the real-income effect alone; the substitution effect alone

Q: The power of indifference curve analysis is its ability to display how ________ changes affect ________ choices.a. input; pricing b. price; input c. consumption; pricingd. price; consumptione. supply; consumption

Q: Indifference curves for ________ are drawn as straight lines, while indifference curves for ________ are drawn as right angles. a. perfect substitutes; perfect complements b. perfect complements; perfect substitutes c. economic goods; economic bads d. economic bads; economic goods e. imperfect substitutes; imperfect complements

Q: What are the two exceptions to convex indifference curves? a. imperfect substitutes and imperfect complements b. perfect substitutes and perfect complements c. imperfect substitutes and perfect complements d. perfect substitutes and imperfect complements e. There are no exceptions to convex indifference curves.

Q: Refer to the following indifference curve. The marginal rate of substitution (MRS) between points A and B isa. -1 b. -2 c. -1/2d. 1/2e. 1

Q: The rate at which a consumer is willing to purchase one good instead of another is calleda. the maximization rate. b. opportunity cost. c. the total rate of substitution.d. the marginal rate of substitution.e. the budget constraint.

Q: Indifference curves are typically a. vertical. b. horizontal. c. bowed inward. d. bowed outward. e. either vertical or horizontal, depending on the consumer.

Q: It is NOT true that indifference curves a. represent the various combinations of two goods that yield the same level of utility. b. are typically bowed inward. c. cannot be thick. d. cannot intersect. e. are modeled based on the assumption that people make irrational decisions.

Q: Budget constraint is the a. set of consumption bundles that represents the amount the consumer cannot afford. b. set of consumption bundles that represents the minimum amount the consumer can afford. c. set of consumption bundles that represents the maximum amount the consumer can afford. d. set of consumption bundles facing a consumer with an unlimited budget and no opportunity costs. e. price at which an economic good becomes an economic bad.

Q: Refer to the following figure. Which is the most affordable path to the highest utility?a. Quadrant Ib. Quadrant IIc. Quadrant IIId. Quadrant IVe. All four quadrants are equally affordable paths to the highest utility.

Q: Refer to the following figure to answer the following questions: Indifference curves visually lead upward to a point called the ________ point.a. maximization b. total utility c. maximum utilityd. satisfactione. maximum consumption

Q: Refer to the following figure to answer the following questions: A(n) ________ represents the various combinations of two goods that yield the same level of satisfaction or utility.a. maximization point b. economic good c. economic badd. indifference curvee. budget constraint

Q: Refer to the following figure to answer the following questions: The products marginal utility in dollars is equal toa. $250. b. $500. c. $150.d. $15.e. $20.

Q: Refer to the following figure to answer the following questions: Which of the following statements is true?a. Water costs more than diamonds.b. The total utility of diamonds is greater than the total utility of water.c. The marginal utility of diamonds is greater than the marginal utility of water.d. The diamondwater paradox does not exist.e. The marginal utility of water is greater than the marginal utility of diamonds.

Q: Refer to the following graph to answer the following questions: The marginal utility is represented by thea. area a. b. price P. c. area b.d. quantity Q.e. area c.

Q: Refer to the following graph to answer the following questions: The area that represents total utility isa. a. b. b. c. c.d. d.e. a + b.

Q: Graphically, total utility can be determined by the amount of a. deadweight loss enjoyed from a transaction. b. producer surplus enjoyed from a transaction. c. consumer surplus enjoyed from a transaction plus the amount of producer surplus enjoyed from a transaction. d. consumer surplus enjoyed from a transaction. e. consumer surplus enjoyed from a transaction minus the amount of producer surplus enjoyed from a transaction.

Q: One explanation for the existence of the diamondwater paradox is that a. the demand for diamonds is greater than the demand for water. b. people fail to recognize that demand and supply are both equally important in determining the value of a product. c. the supply of diamonds is greater than the supply of water. d. people fail to recognize that demand and supply do not matter in determining the value of a product. e. people fail to recognize that the marginal utility of diamonds is less than the marginal utility of water.

Q: The diamondwater paradox unfairly compares the a. amount of marginal utility a person receives from a small quantity of something rare with the total utility from a small quantity of something after already consuming a large amount. b. amount of total utility a person receives from a small quantity of something rare with the marginal utility from a small quantity of something after already consuming a large amount. c. amount of marginal utility a person receives from a small quantity of something rare with the marginal utility from a small quantity of something after already consuming a large amount. d. price of water with the price of diamonds. e. law of demand with the prices of water and diamonds.

Q: The diamondwater paradox explains why a. water, which is essential to life, is inexpensive, whereas diamonds, which do not sustain life, are expensive. b. water, which is essential to life, is expensive, whereas diamonds, which do not sustain life, are inexpensive. c. the demand for diamonds, which do not sustain life, is greater than the demand for water, which is essential to life. d. the total utility in society for diamonds, which do not sustain life, is greater than the total utility in society for water, which is essential to life. e. diamonds and water are usually purchased in separate transactions.

Q: The fact that water, which is essential to life, is inexpensive, whereas diamonds, which do not sustain life, are expensive can be explained by the a. law of diminishing marginal utility. b. diamondwater paradox. c. diamondwater theory. d. diamondwater comparison. e. law of demand.

Q: Refer to the following table to answer the following questions:Soccer Games AttendedTotal Utility (Utils per Game)0011502275337544505500652575008400Suppose Tamaras favorite arcade game, PAC-MAN, costs $1 to play and her second-favorite arcade game, Street Fighter, costs 50 cents to play. If she receives 10 utils when she plays Street Fighter, what is the least number of utils she must receive from PAC-MAN to play PAC-MAN over Street Fighter?a. 15 b. 10 c. 25d. 5e. 20

Q: If a decrease in price results in only a small amount in savings, the enhanced purchasing power is effectivelya. equal to the substitution effect. b. large. c. greater than the substitution effect.d. negative.e. zero.

Q: Which of the following statements about the real-income effect and the substitution effect is true? a. The real-income effect always exists, but the substitution effect does not always exist. b. The real-income effect and the substitution effect always exist. c. The real-income effect does not always exist, but the substitution effect always exists. d. The real-income effect and the substitution effect cannot occur at the same time. e. The real-income effect and the substitution effect occur only with an increase in price.

Q: For a consumer, which of the following statements about the real-income effect is true? a. It matters only when prices change enough to cause a measurable effect on the purchasing power of a consumers income. b. It can be observed for any price change. c. It occurs when a consumer buys more of a good as a result of a relative price change. d. It matters only when prices change enough to cause a consumer to purchase more of the good whose price changed. e. The purchasing power of your income increases when the price of a good increases.

Q: Lower prices increase the marginal utility per dollar spent and cause consumers to buy more of a good. On the other hand, higher prices lower the marginal utility per dollar spent and cause consumers to buy less of a good. This is a way of restating ________ in terms of marginal utility.a. diminishing marginal utility b. satisfaction c. the law of demandd. the law of supplye. the real-income effect

Q: If the price of a good decreases, the marginal utility per dollar spent ________ and consumers buy ________ of the good.a. remains the same; more b. remains the same; less c. decreases; mored. increases; lesse. increases; more

Q: If the price of a good increases, the marginal utility per dollar spent ________ and consumers buy ________ of the good.a. remains the same; more b. remains the same; less c. decreases; mored. decreases; lesse. increases; more

Q: The substitution effect and the real-income effect are two effects that happen whena. marginal utility increases. b. marginal utility decreases. c. total utility decreases.d. a price changes.e. total utility increases.

Q: When there is a change in purchasing power as a result of a change in the price of a good, economists call ita. the real-income effect. b. the substitution effect. c. marginal utility.d. diminishing marginal utility.e. the consumer optimum.

Q: The real-income effect a. occurs when 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: When a consumer buys more of a good as a result of a relative price change, economists call ita. diminishing marginal utility. b. the substitution effect. c. marginal utility.d. the real-income effect.e. the consumer optimum.

Q: The substitution effect a. occurs when 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: When a price changes, there are two effects: the ________ effect and the ________effect.a. real-income; consumer optimum b. substitution; marginal utility c. real-income; substitutiond. marginal utility; substitutione. consumer optimum; substitution

Q: Higher prices a. lower the marginal utility per dollar spent and cause consumers to buy less of a good. b. increase the marginal utility per dollar spent and cause consumers to buy less of a good. c. do not change the marginal utility per dollar. d. lower the marginal utility per dollar spent and cause consumers to buy more of a good. e. increase the marginal utility per dollar spent and cause consumers to buy more of a good.

Q: Lower prices a. lower the marginal utility per dollar spent and cause consumers to buy less of a good. b. increase the marginal utility per dollar spent and cause consumers to buy less of a good. c. do not change the marginal utility per dollar. d. lower the marginal utility per dollar spent and cause consumers to buy more of a good. e. increase the marginal utility per dollar spent and cause consumers to buy more of a good.

Q: To reach the consumer optimum for two goods, the a. ratio of marginal utility to price for both goods must be equal. b. marginal utility for both goods must be equal. c. total utility for both goods must be equal. d. ratio of total utility to price for both goods must be equal. e. price of both goods must be equal.

Q: Peter is deciding between consuming Good X and Good Y. At his current level of consumption, his marginal utility per dollar for Good X is less than the marginal utility per dollar for Good Y. To achieve the consumer optimum, Peter needs to a. consume more of Good Y until the marginal utility per dollar for Good X is greater than the marginal utility for Good Y. b. consume less of Good X or more of Good Y until the marginal utility per dollar for Good X and Good Y is equal. c. consume more of both Good X and Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X. d. consume less of both Good X and Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X. e. continue at his current level of consumption.

Q: Joanna is deciding between consuming Good X and Good Y. At her current level of consumption, her marginal utility per dollar for Good X is greater than the marginal utility per dollar for Good Y. To achieve the consumer optimum, Joanna needs to a. consume more of Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X. b. consume more of Good X until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X. c. consume more of both Good X and Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X. d. consume more of Good X or less of Good Y until the marginal utility per dollar for Good X and Good Y is equal. e. continue at her current level of consumption.

Q: Refer to the following table to answer the following questions:Chips ConsumedMarginal UtilitySoda ConsumedMarginal Utility0u20140u201411811221521031238494656546 36 27070For 2 chips and 5 sodas to be a combination of goods that maximizes someones utility per dollar, the price of chips must be ________ if the price of soda is $1.00.a. $2.00 b. $3.00 c. $2.50d. $3.50e. $3.75

Q: Refer to the following table to answer the following questions:Strawberries ConsumedTotal UtilityApples ConsumedTotal Utility000017114213226318336422444525550627654728756If the purchase of 5 strawberries and 5 apples maximizes your utility per dollar, the price of strawberries must be ________ if the price of apples is $3.00.a. $1.00 b. $2.00 c. $1.50d. $2.50e. $3.00

Q: The combination of Good X and Good Y that will maximize your utility will have which of the following properties?a. b. c. d. e.

Q: Kati-Lyn has to choose between eating Chinese food and Indian food. Both Chinese food and Indian food cost the same. Which of the following equations, where MU is marginal utility and U is total utility, will lead to the optimal level of consumption?a. MUChinese< MUIndian b. MUChinese> MUIndian c. MUChinese= MUIndiand. UChinese= UIndiane. UChinese> UIndian

Q: Eating a steak gives Greta satisfaction equal to 55 utils, whereas eating a hamburger gives her a satisfaction of 25 utils. Greta should a. always choose to eat steak over hamburger. b. always choose to eat hamburger over steak. c. eat steak only if it is cheaper than hamburger. d. eat hamburger only if she has recently eaten steak. e. eat hamburger only if it is cheaper per util than steak.

Q: Timothy is trying to figure out what combination of bags of peanuts and bags of popcorn he should buy with his $15 budget. The price of peanuts is currently $5 per bag and the price of popcorn is currently $2 per bag. If Timothys marginal utility from consuming his third bag of peanuts is 15 utils and his marginal utility from consuming his second bag of popcorn is 6 utils, Timothy should a. consume more bags of popcorn. b. consume more bags of peanuts. c. not change his consumption. d. consume fewer bags of peanuts. e. consume fewer bags of popcorn.

Q: Assume that Thomas can afford to buy as many candy bars and ice cream cones as he wants. He would continue to consume both candy bars and ice cream until the a. marginal utility of each decreases. b. marginal utility of each becomes negative. c. total utility of each becomes negative. d. marginal utility of candy bars and ice cream bars is equal. e. total utility of candy bars and ice cream bars is equal.

Q: Emilia is trying to figure out what combination of bags of peanuts and bags of popcorn she should buy with her $13 budget. The price of peanuts is currently $3 per bag and the price of popcorn is currently $2 per bag. Emilia is currently deciding whether to purchase one more bag of peanuts or one more bag of popcorn. She should choose the a. peanuts every time. b. popcorn every time. c. peanuts, if the marginal utility of peanuts is greater than popcorn. d. popcorn, if the marginal utility of popcorn is greater than peanuts. e. peanuts, if the last bag she consumed was popcorn, and vice versa.

Q: Which of the following statements is always true when determining the consumer optimum? a. Maximizing utility does not take budget restraints into consideration. b. Maximizing utility is easy if you are considering only two goods. c. Maximizing utility requires the marginal utility per dollar to be equal for each good consumed. d. Maximizing utility requires the total utility per dollar to be equal for each good consumed. e. Maximizing utility requires the marginal utility to be equal for each good.

Q: The old saying getting the biggest bang for your buck means that a. consumers never experience diminishing marginal utility. b. consumers maximize their utility. c. consumers spend every dollar in their budget. d. the real-income effect is equal to the substitution effect. e. consumers stop consuming when the marginal utilities of each good are equal regardless of the prices of each good.

Q: To maximize ones satisfaction when deciding between two goods a. one must consume at the point where the marginal utility of each good is equal, no matter the price of each good. b. one does not need to consider opportunity costs. c. one must spend more money than one has. d. one must get the most satisfaction out of every dollar spent. e. the price of each good considered must be equal.

Q: Maximizing utility a. requires that consumers get the most satisfaction out of every dollar they spend. b. is very easy for consumers to achieve. c. always requires that consumers spend more money than they have. d. requires that the marginal utility of each good consumed is equal, no matter the price of each good consumed. e. requires that the price of each good is equal.

Q: The combination of goods and services that maximizes utility for a given income is calleda. diminishing marginal utility. b. the real-income effect. c. marginal utility.d. the substitution effect.e. the consumer optimum.

Q: The consumer optimum a. occurs when 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: Cell phone companies rely on the ________ of conversation to make unlimited night and weekend minutes on cell phone plans profitable.a. real-income effectb. consumer optimum c. marginal utilityd. diminishing marginal utilitye. substitution effect

Q: A company in Irvine, California, is interested in buying season tickets to the local baseball team. Tickets for scheduled games are sold individually for $12 each, but season tickets are only $4 each. The reason why the local baseball team has to charge less for season tickets can be explained bya. the real-income effect. b. the consumer optimum. c. marginal utility.d. the substitution effect.e. diminishing marginal utility.

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Q: Why are job training programs a better tool to combat poverty than cash or in-kind transfer programs? a. Of the factors that lead to income inequality, training and education is the only one that individuals have any direct control over. b. They arent; job training does nothing to satisfy individual needs for survival. c. Cash transfers force individuals to pay income taxes, and taxing the poor only perpetuates poverty. d. In-kind transfer programs can be abused and may fuel a persons gambling, drug, or drinking habit. e. Job training leads to greater employability, and as hours worked and pay increases, the Earned Income Tax Credit continues to grow.

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Q: The minimum wage is an ineffective antipoverty measure for all EXCEPT which of the following reasons? a. The wage ceiling created by minimum wage laws falls below the equilibrium price, producing a shortage of labor. b. The wage mandated by law often exceeds the value created by low-skill workers, resulting in a move away from labor-intensive processes. c. The wage floor created by minimum wage laws lies above the equilibrium price, producing a surplus of labor. d. Increased wages can force small businesses, who are less able to adapt to changes in costs, to close their operations, reducing the total quantity of jobs. e. An increase in wages may cause employees to lose working hours, resulting in a net change in pay that is negative.

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Q: Which social welfare policy is most likely to produce unemployment? a. Subsidized Nutritional Assistance Program (SNAP) b. Earned Income Tax Credit (EITC) c. minimum wage d. Medicaid e. Supplemental Security Income (SSI)