CHAPTER 6 ECON QUIZ

The term _____ refers to the additional utility provided by one additional unit of consumption. A) utility B) marginal utility C) added utility D) Giffen utility

B) marginal utility

Jay and Jen are married with two children. They are preparing a household budget for the coming year. Based of statistical information for American households, approximately what portion of this family's annual consumption will most likely be budgeted for food and vehicle expenses A) one-fourth B) one-third C) one quarter D) two-thirds

B) one-third

The _____ arises when a price changes because consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lover price A) income effect B) substitution effect C) backward bending supply curve D) preference effect

B) substitution effect

In microeconomic terms, the ability of a good or service to satisfy wants is called... A) opportunity cost B) utility C) utility maximization D) profit potential

B) utility

The term _____ is used to describe the common pattern whereby each marginal unit of a consumed good provides less of an addition to utility than the previous unit A) diminishing marginal utility B) marginal utility patern C) marginal income utility D) decreasing marginal utility

A) diminishing marginal utility

When economists attempt to predict the spending patterns of U.S. households, they will typically view the _____ as a primary determining factor that influences the individual consumption choices that each will make A) income level of each household B) national average spending level C) national average savings level D) nation's perennial political debate

A) income level of each household

Marginal utility can... A) be positive or negative, but not zero B) decrease but not become negative C) be positive, negative, or zero D) increase positively but not negatively

C) be positive, negative, or zero

How does the U.S. Bureau of Labor Statistics gather information with regard to the typical consumption choices of Americans? A) consumer spending survey B) consumer income budget survey C) consumer expenditure survey D) consumer income survey

C) consumer expenditure survey

The term _____ describes a situation where a _____ causes a reduction in the buying power of income, even though actual income has not changed A) substitution effect; lower price B) inter temporal budget; higher price C) income effect; higher price D) inter temporal budget; lower price

C) income effect; higher price

Which of the following is most likely to cause variation in American household spending patterns A) differing levels of family income B) geographical location of households C) each household's personal preferences D) each of the above will cause a variation

D) each of the above will cause a variation

Approximately what portion of annual consumption is typically spent by American households on shelter A) one-fourth B) one-half C) one quarter D) one-third

D) one-third

Economic theory offers _____ about the full range of possible events and responses which can prevent _____ about how households will respond to changes in prices or incomes A) one budget constraint theory; unrealistic possibilities B) a systematic way of thinking; misguided conclusions C) two budget constraint theories; misguided possibilities D) systematic consumption choices; unrealistic conclusions

B) a systematic way of thinking; misguided conclusions

When Marietta chooses to only purchase a combination of goods that lie within her budget line, she... A) is decreasing utility B) is maximizing utility C) likely has negative savings D) must reduce the quantity

B) is maximizing utility

Which of the following occurs simultaneously with an income effect A) backward bending supply curve B) given good effect C) preferences effect D) substitution effect

D) substitution effect

Economists are able to determine total utility by..... A) multiplying the marginal utility of the first unit consumed by the number of units consumed B) multiplying the marginal utility of the last unit consumed by the number of units consumed C) multiplying the marginal utility of the last unit consumed by the unit price D) summing up the marginal utilities of each unit consumed

D) summing up the marginal utilities of each unit consumed