ECON Exam 1: Chapter 6 mult choice

2. 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 pattern C. marginal income utility D. decreasing marginal utility

A.

Bob budgets $12 a week for entertainment. He splits his time between going to the movies and going to the gym. Each movie costs $3 and each session at the gym also costs $3. The total utility from each of these activities is shown in the table below. Bob's utility maximizing point is: A. 3 movies; 3 gym workout sessions B. 4 movies; 0 gym workout sessions C. 4 movies; 2 gym workout sessions D. 1 movie; 5 gym workout sessions (involved pictures)

A.

The marginal utility of two goods changes ______________. A. with the quantities consumed B. for the better, if taxes are imposed C. if they are intertemporal choices D. if the mother controls the household budget

A.

The most common pattern for marginal utility is ____________________. A. diminishing marginal utility B. a budget constraint model C. a long-term perspective theoretical model D. substitute consumption

A.

The typical pattern revealed in a budget constraint model shows that as the quantity consumed rises, A. total utility rises, but marginal utility falls. B. marginal utility increases. C. total utility decreases, but marginal utility rises. D. total utility decreases.

A.

1. 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.

As a general rule, utility-maximizing choices between consumption goods occur where the: A. rise in income has created the greatest utility. B. price ratio and marginal utilities ratio of two goods is equal. C. higher-income households have the greatest satisfaction. D. constraints on budget expenditures has fallen substantially.

B.

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

B.

Jed's weekly budget for lunch is $24. He eats only pizza and burgers. Each pizza costs $6 and each burger costs $3. Jed knows that 2 pizzas and 4 burgers will give him a utility of 8. At his utility-maximizing point, Jed's utility is: A. 4 B. 8 C. 6 D. 10

B.

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 lower price. A. income effect B. substitution effect C. backward-bending supply curve D. preferences effect

B.

The government wants to make medicare benefits available to more people, but to achieve this goal, it needs to make cuts in the existing medicare budget. The two areas where they are considering cuts are non-essential elective surgery and 6-12 month mental health care programs. Applying the concept of diminishing marginal utility, the budget cuts should be made for spending on: A. mental health therapy due to its higher marginal return rate. B. elective surgery due to its lower marginal return rate. C. both programs, which have the same marginal return rate. D. neither can be compared by measuring marginal utility.

B.

The step-by-step process of finding the choice with highest total utility involves a comparison of the: A. budget constraint and low-income housing expenses. B. marginal utility gained and lost from different choices along the budget constraint. C. household consumption choice budget and the labor-leisure budget using an utilimometer. D. various categories of economic proverbial wisdom.

B.

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.

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.

Which of the following is considered to be a tell-tale signal that the point with the highest total utility has been found? A. the marginal utility per dollar is the same for both goods B. the marginal utility per dollar is controlled by trade-offs C. the quantities demanded change so total utility rises D. the demand curves are flatter reducing quantity

A.

Kim has $24 per week in her entertainment budget. She splits her time between going to the movies and yoga classes. Each movie costs $8 while each yoga class costs $3. The total utility from each of these activities is set out in the table below. What is Kim's total utility maximizing point? A. 0 movies, 8 yoga classes B. 1 movie, 5 yoga classes C. 2 movies, 2 yoga classes D. 3 movies, 0 yoga classes

B. (involves picture)

12. In terms of microeconomic analysis, what is the function of "utils"? A. a form of budget constraint B. applies to changes in income C. a measurement of utility D. relates to a consumers original choice

C.

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.

The key assumption that accompanies the use of numbers for measuring utility is that: A. utility cannot be measured by an outside party. B. utility can be perfectly measured. C. individuals choose based on their preferences. D. people make consumption decisions.

C.

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. intertemporal budget; higher price C. income effect; higher price D. intertemporal budget; lower price

C.

Alex has $18 per week in his entertainment budget. He splits his time between going to the movies and renting video games. Each movie costs $6 while each video game rental costs $3. The measured total utility of each of his activities is shown in the table below. What is Alex's utility maximizing point? A. 2 movies, 2 video game rentals B. 0 movies, 6 video game rentals C. 5 movies, 7 video game rentals D. 1 movie, 4 video game rentals (involved picture)

D.

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.

Substitution and income effects of a change in price of a good may be used to explain the: A. direct relationship between price and quantity purchased. B. inverse relationship between price and quantity demanded. C. direct relationship between price and quantity supplied. D. direct relationship between income and demand.

D.

Which of the following occurs simultaneously with an income effect? A. backward-bending supply curve B. Giffen good effect C. preferences effect D. substitution effect

D.