All multiple choice questions from Ch. 10, 16, 17, 19

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Suppose that the following bundles appear on the same indifference curve: 10 shirts and 5 shoes, and 8 shirts and 9 shoes. On a different indifference curve, the bundles 12 shirts and 6 shoes, and 8 shirts and 7 shoes appear. Which properties of indifference curves, if any, are violated? a) Indifference curves cannot cross b) Indifference curves are downward sloping and they cannot cross c) Indifference curves are downward sloping d) These indifferences curves are well behaved

a) Indifference curves cannot cross

Miles is 3 years old and because his grandparents love to spoil him, they have given him money to spend at the toy store as a birthday present. Miles' number-one favorite thing to play with are building blocks. Assume that Miles' utility will increase by 100 units if he purchases a new set of building blocks and and it will cost him $50. Miles's second favorite thing to play with are firetrucks. Firetrucks cost $20 and each new firetruck improves his utility by 80 units. Miles' third favorite toy are trains. Trains improve his utility by 15 units and cost $5 each. Miles doesn't have to spend all of his money at once, but wants to get as much happiness as possible from his money. If Miles buys only one toy, which should he buy to maximize his utility? a) a fire truck b) building blocks c) a train

a) a fire truck

If Jerry cannot tell the difference at all between Coke and Pepsi, what would Jerry's indifference curves for Coke and Pepsi look like? a) they would be straight lines (linear) b) they would be upward sloping c) they would be bowed out (concave) from the origin d) they would be bowed in (convex) from the origin

a) they would be straight lines (linear)

If you receive 10 units of utility from consuming one cup of coffee and 16 units of utility from consuming two cups of coffee, which of the following is the likely amount of utility you will receive from consuming three cups of coffee? a) 6 units of utility b) 18 units of utility c) 22 units of utility d) 26 units of utility

b) 18 units of utility

Which of the following bundles could not be on the same indifference curve as the others? a) 2 TVs and 3 computers b) 3 TVs and 3 computers c) 1 TV and 4 computers d) 3 TVs and 2 computers

b) 3 TVs and 3 computers

Each month, you have $15 to spend on toys and treats for your cat. Cat toys cost $3 each, and cat treats cost $1.50 each. Which of the following combinations of toys and treats would appear on your budget line? a) 5 cat toys and 10 cat treats b) 3 cat toys and 4 cat treats c) 2 cat toys and 5 cat treats d) 1 cat toy and 6 cat treats

b) 3 cat toys and 4 cat treats

The last roll of sushi gave Enrique 20 units of utility and cost $5, while the last plate of sashimi gave Enrique 30 units of utility and cost $10. To maximize utility, how should Enrique change his consumption? a) He should consume less sushi and more sashimi. b) He should consume more sushi and less sashimi. c) He should not change his consumption because his marginal utility per dollar is equal. d) He should not change his consumption because sashimi, the more expensive good, is giving him more utility.

b) He should consume more sushi and less sashimi.

Marginal utility becomes negative with the consumption of which pepper? a) With the consumption of the 5th pepper b) With the consumption of the 6th pepper c) With the consumption of the 1st pepper d) With the consumption of the 8th pepper

b) With the consumption of the 6th pepper

Lower levels of satisfaction are found on indifference curves that are: a) farther away from the origin b) closer to the origin c) linear d) upward sloping

b) closer to the origin

Last week, Brian went to the club twice and to the cinema once. Because he received his paycheck, this week he goes to the club three times and to the cinema once. It can be inferred that Brian has: a) moved to a lower point on his indifference curve b) moved to a new indifference curve farther from the origin c) moved to a higher point on his indifference curve d) moved to a new indifference curve closer to the origin

b) moved to a new indifference curve farther from the origin

The graph shows two budget lines (BL 1 and BL 2) and four consumption points of tacos and burritos (A, B, C, and D). Assume that consumers try to maximize utility and that their income done not change. Fill in the blanks to make each statement correct. If burritos are a Giffen good, a consumer will move from point A to which other point as the budget line changes from BL 1 to BL 2? a) point A b) point B c) point C d) point D

b) point B

An increase in the price of good X while holding income and the price of good Y constant will: a)have a positive substitution effect, leading the consumer to increase consumption of good X because of the increase in the marginal utility per dollar spent on good X. b)have a negative substitution effect, leading the consumer to decrease consumption of good X because of the decrease in the marginal utility per dollar spent on good X. c) cause the consumer to substitute away from good Y toward good X. d) cause the consumer to purchase more units of good X because of the income effect.

b)have a negative substitution effect, leading the consumer to decrease consumption of good X because of the decrease in the marginal utility per dollar spent on good X.

Assume that the marginal utilities for the first three units of a good consumed are 200, 150, and 125, respectively. The total utility when two units are consumed is: a) 150. b) 200. c) 350. d) 475.

c) 350.

Jack has $60 to spend on lunch each week. He eats either at the Taco Hut, which costs $10, or the Pizza Shack, which costs $12. Which of the following combinations is on Jack's budget line? a) 4 lunches at Taco Hut and 2 lunches at Pizza Shack. b) 0 lunches at Taco Hut and 6 lunches at Pizza Shack. c) 6 lunches at Taco Hut and 0 lunches at Pizza Shack. d) 3 lunches at Taco Hut and 3 lunches at Pizza Shack.

c) 6 lunches at Taco Hut and 0 lunches at Pizza Shack.

Jon enjoys fishing (which costs $20) and golf (which costs $30). Last month, Jon fished four times and golfed twice. The last fishing outing provided Jon a marginal utility of 50, and the last round of golf provided a marginal utility of 120. Did Jon maximize his utility according to the utility maximization rule? a) Yes, Jon's utility is maximized c) No, the marginal utility per dollar from fishing was higher than that for golf c) No, the marginal utility per dollar from gold was higher than that for fishing d) No, Jon should have spent less time on both activities

c) No, the marginal utility per dollar from golf was higher than that for fishing

Suppose that at the baseball game, you consumed 3 hot dogs (each priced at S5) and 4 sodas (each priced at S3). The 3rd hot dog provided a marginal utility of 20, while the 4th soda provided a marginal utility of 15. In order to maximize utility, should you have changed your consumption bundle? a) No, you had maximized your utility. b) yes, you should have consumed more hot dogs and fewer sodas. c) Yes, you should have consumed more sodas and fewer hot dogs, d) Yes, you should have consumed fewer of both hot dogs and sodas.

c) Yes, you should have consumed more sodas and fewer hot dogs,

Assume that this person has a total of $18 to spend on brownies and ice cream cones. Assume that at point A, the marginal utility from a brownie is 10 and the marginal utility for an ice cream cone is 18. This person a) is utility maximizing b) should consume more ice cream cones and fewer brownies c) should consume more brownies and fewer ice cream cones

c) should consume more brownies and fewer ice cream cones

Cameron receives some utility from consuming a frozen dinner (an inferior good) but would much rather purchase healthier food (a normal good). Suppose the price of a frozen dinner increases and the quantity that Cameron purchases increases. Assume that a frozen dinner is not a Giffen good. Which effect causes Cameron's quantity demanded of a frozen dinner to decrease? a) income effect b) marginal effect c) substitution effect d) framing effect

c) substitution effect

An increase in the price of good X while holding income and the price of good Y constant will: a)increase the marginal utility provided by good X. b)increase the marginal utility per dollar spent on good Y. c)decrease the marginal utility per dollar spent on good X. d)reduce the individual's preference for good X.

c)decrease the marginal utility per dollar spent on good X.

Poppy likes to eat hot peppers. A co worker brought Poppy a jar of extremely hot ghost peppers. The graph below Illustrates Poppy's total utility for these peppers. Use the curve to answer the question and assume that Poppy seeks to maximize her utility. Poppy asks if she should consume 7 peppers What would be your advice be? a) There is not enough information in the problem to give Poppy good advice b) You are consuming optimally. c) Consume more than 7 peppers and you'll be better off. d) Consume fewer than 7 peppers and you'll be better off.

d) Consume fewer than 7 peppers and you'll be better off.

When the price of a good on one's budget line decreases, how does this affect the budget line? a) The budget line does not change. b) There is a parallel shift inward. c) There is a parallel shift outward. d) The budget line pivots outward.

d) The budget line pivots outward

Suppose that Joe consumes cupcakes and apps. The price of cupcakes is $5 and the price of apps is $10. The table below shows Joe's utility from the consumption of each good, and each row represents a possible consumption bundle. Currently, Joe is consuming 18 cupcakes and 9 apps. To increase total utility without increasing spending, should Joe change the amount of consumption of either good? a) Yes, Joe should choose more cupcakes and fewer apps b) Yes, Joe should choose more cupcakes and more apps c) No, Joe is already consuming at the optimal consumption bundle d) Yes, Joe should choose fewer cupcakes and more apps

d) Yes, Joe should choose fewer cupcakes and more apps

The graph shows two budget lines (BL 1 and BL 2) and four consumption points of tacos and burritos (A, B, C, and D). Assume that consumers try to maximize utility and that their income done not change. Fill in the blanks to make each statement correct. If a consumer goes from BL 1 to BL 2, then the price of a) tacos has increased b) tacos has decreased c) burritos has increased d) burritos has decreased

d) burritos has decreased

Cameron receives some utility from consuming a frozen dinner (an inferior good) but would much rather purchase healthier food (a normal good). Suppose the price of a frozen dinner increases and the quantity that Cameron purchases increases. Assume that a frozen dinner is not a Giffen good. Which effect causes Cameron's quantity demanded of a frozen dinner to increase? a) framing effect b) substitution effect c) marginal effect d) income effect

d) income effect

Adam is currently consuming a large quantity of orange juice and just a small amount of milk every day. Assuming an indifference curve with orange juice measured on the vertical axis and milk measured on the horizontal axis, we can conclude that Adam's marginal rate of substitution of orange juice for milk is: a) high b) zero c) just about the same d) low

d) low


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